Exhibit 4.3
WARRANT
NEITHER THE ISSUANCE NOR SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD
RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT.
OPEN ENERGY
CORPORATION
WARRANT TO PURCHASE COMMON
STOCK
Warrant No.:
08-01
Number of Shares of
Common Stock:1,200,000
Date of Issuance:
August 31, 2007 (“ Issuance Date ”)
Open Energy
Corporation, a Nevada corporation (the “ Company
”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Everest Asset Management AG, the registered holder
hereof or its permitted assigns (the “ Holder
”), is entitled, subject to the terms set forth below, to
purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon surrender of this warrant to purchase Common
Stock (including any Warrants to purchase Common Stock issued in
exchange, transfer or replacement hereof, the “
Warrant ”), at any time or times on or after the date
hereof, but not after 11:59 p.m., New York time, on the Expiration
Date (as defined below), One Million Two Hundred Thousand
(1,200,000) fully paid nonassessable shares of Common Stock (as
defined below) (the “ Warrant Shares ”).
Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 15. This
Warrant is one of the series of Warrants to purchase Common Stock
issued pursuant to Section 1 of that certain Securities Purchase
Agreement, dated as of August 31, 2007 (the “ Subscription
Date ”), by and among the Company and the investors (the
“ Buyers ”) referred to therein (the “
Securities Purchase Agreement ”).
1. EXERCISE OF
WARRANT.
(a) Mechanics of Exercise
. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)),
this Warrant may be exercised by the Holder on any day on or after
six (6) months after the issuance of the
Convertible Note, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto
as Exhibit A (the “ Exercise Notice
”), of the Holder’s election to exercise this Warrant
and (ii) (A) payment to the Company of an amount equal to the
applicable Exercise Price multiplied by the number of Warrant
Shares as to which this Warrant is being exercised (the “
Aggregate Exercise Price ”) in cash or by wire
transfer of immediately available funds or (B) by notifying the
Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not
be required to deliver the original Warrant in order to effect an
exercise hereunder. Execution and delivery of the Exercise
Notice with respect to less than all of the Warrant Shares shall
have the same effect as cancellation of the original Warrant and
issuance of a new Warrant evidencing the right to purchase the
remaining number of Warrant Shares. On or before the second
(2 nd )
Business Day following the date on which the Company has received
each of the Exercise Notice and the Aggregate Exercise Price (or
notice of a Cashless Exercise) (the “ Exercise Delivery
Documents ”), the Company shall transmit by facsimile an
acknowledgment of confirmation of receipt of the Exercise Delivery
Documents to the Holder and the Company’s transfer agent (the
“ Transfer Agent ”). On or before the
third (3 rd )
Business Day following the date on which the Company has received
all of the Exercise Delivery Documents (the “ Share
Delivery Date ”), the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company
(“ DTC ”) Fast Automated Securities Transfer
Program, upon the request of the Holder, credit such aggregate
number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system, which balance account shall be
specified in the Exercise Notice, or (Y) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise. Upon delivery of the
Exercise Notice and Aggregate Exercise Price referred to in clause
(ii)(A) above or notification to the Company of a Cashless Exercise
referred to in Section 1(d), the Holder shall be deemed for all
corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the certificates
evidencing such Warrant Shares. If this Warrant is submitted
in connection with any exercise pursuant to this Section 1(a) and
the number of Warrant Shares represented by this Warrant submitted
for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than five (5) Business Days after
any exercise and at its own expense, issue a new Warrant (in
accordance with Section 7(d)) representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with
respect to which this Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number. The
Company shall pay any and all taxes which may be payable with
respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.
(b) Exercise Price .
For purposes of this Warrant, “ Exercise Price
” means the greater of fifty cents ($0.55) per share or the
closing bid price of the stock on the last trading day preceding
the Closing Date plus five cents ($0.05), subject to adjustment as
provided herein; provided that, in no event shall the
Exercise Price be reduced to less than $0.05 per share (such
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floor price to be adjusted in the same manner
that the Exercise Price is adjusted pursuant to Section
2).
(c) Company’s Failure to
Timely Deliver Securities . Upon the Company’s receipt of
an Exercise Notice or request for removal of restrictive legends on
the shares of Common Stock issuable in connection therewith, the
Company will deliver, or cause to be delivered, the certificates
evidencing such shares of Common Stock to the Holder within three
(3) Trading Days. If such delivery is made more than
two (2) additional Trading Days after exercise or request for
removal of legend, as the case may be, then the Company will
compensate the Holder at a rate of $100 per day for each of the
first ten (10) Trading Days and $200 per day thereafter for each
$10,000 of securities. In such event, after the first such
ten (10) Trading Days noted above, the Holder will also have the
right to rescind its Exercise Notice for the Warrants. If the
certificates have not been delivered by the fifth (5 th )
Trading Day after exercise or request for removal of legend, as the
case may be, and the Holder has purchased (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction
of a sale by the Holder of Common Stock issuable upon such
conversion that the Holder anticipated receiving from the Company
(a “ Buy-In ”), then the Company shall, within
three (3) Trading Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for
the shares of Common Stock so purchased (the “Buy-In
Price” ), at which point the Company’s obligation
to deliver such certificate (and to issue such Common Stock) shall
terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock
and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the
Conversion Date.
(d) Cashless Exercise
. Notwithstanding anything contained herein to the
contrary, if at any time after the twelve (12) month anniversary of
the Issuance Date, a Registration Statement (as defined in the
Registration Rights Agreement) covering the Warrant Shares that are
the subject of an Exercise Notice (the “ Unavailable
Warrant Shares ”) is not available for the resale of such
Unavailable Warrant Shares, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price,
elect instead to receive upon such exercise the “Net
Number” of shares of Common Stock determined according to the
following formula (a “ Cashless Exercise
”):
Net
Number = (A x B) - (A x C)
B
For
purposes of the foregoing formula:
A=
the total number of shares with respect to which this Warrant is
then being exercised.
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B=
the arithmetic average of the Weighted Average Prices of the shares
of Common Stock (as reported by Bloomberg) for the five (5)
consecutive Trading Days ending on the date immediately preceding
the date of the Exercise Notice.
C=
the Exercise Price then in effect for the applicable Warrant Shares
at the time of such exercise.
(e) Disputes . In the
case of a dispute as to the determination of the Exercise Price or
the arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
12.
(f) Limitations on
Exercises.
(i)
Beneficial Ownership . (A) The Holder shall not have
the right to exercise this Warrant, to the extent that after giving
effect to such exercise, such Person (together with such
Person’s affiliates) would beneficially own in excess of
4.99% (the “ Maximum Percentage I ”) of the
shares of Common Stock outstanding immediately after giving effect
to such exercise. For purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended. For purposes
of this Warrant, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in (1) the Company’s most
recent Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, Current
Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including
the SPA Notes and the SPA Warrants, by the Holder and its
affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. For purposes
hereof, the Company may rely on representations of Holder set forth
in applicable Exercise Notices. By written notice to the
Company, the Holder may from time to time increase or decrease the
Maximum Percentage I to any other percentage in excess of 4.99%
specified in such notice; provided that (i) any such increase will
not be effective until the sixty-first (61 st ) day
after such notice is delivered to the Company, and (ii) any such
increase or decrease will apply only to the Holder.
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Notwithstanding anything in this Warrant to the
contrary, the Company shall be entitled to treat the registered
holder of this Warrant as such appears in its records as the owner
of the Warrant for all purposes; provided that such records are
kept current with a reasonably satisfactory and customary method
intended for such purpose.
(B)
The Holder shall not have the right to exercise this Warrant, to
the extent that after giving effect to such exercise, such Person
(together with such Person’s affiliates) would beneficially
own in excess of 9.99% (the “ Maximum Percentage II
”) of the shares of Common Stock outstanding immediately
after giving effect to such exercise. For purposes of this
paragraph, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the
number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in
(1) the Company’s most recent Form 10-K, Form 10-KSB, Form
10-Q, Form 10-QSB, Current Report on Form 8-K or other public
filing with the Securities and Exchange Commission, as the case may
be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. In any case,
the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including the SPA Notes and the SPA
Warrants, by the Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. For purposes hereof, the Company may rely on
representations of Holder set forth in applicable Exercise
Notice. By written notice to the Company, the Holder may from
time to time increase or decrease the Maximum Percentage II to any
other percentage in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the
sixty-first (61 st ) day
after such notice is delivered to the Company, and (ii) any such
increase or decrease will apply only to the Holder.
(g)
Insufficient Authorized Shares . If at any time while
any of the Warrants remain outstanding the Company does not have a
sufficient number of authorized and unreserved shares of Common
Stock (an “ Authorized Share Failure ”)
to satisfy its obligation to reserve for issuance upon exercise of
the Warrants no less than 120% of the number of shares of Common
Stock as shall from time to time be necessary to effect the
exercise of all of the Warrants then outstanding (the “
Required Reserve Amount ”), then the Company shall
immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve
Amount for the Warrants then outstanding. Without limiting
the generality of the foregoing sentence, as
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soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days after the occurrence of such Authorized Share
Failure, the Company shall hold a meeting of its stockholders for
the approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use
its best efforts to solicit its stockholders’ approval of
such increase in authorized shares of Common Stock and to cause its
board of directors to recommend to the stockholders that they
approve such proposal.
2. ADJUSTMENT OF
EXERCISE PRICE AND NUMBER OF WARRANT SHARES . The
Exercise Price and the number of Warrant Shares shall be adjusted
from time to time as follows:
(a) Adjustment upon Issuance of
shares of Common Stock . If the Company issues or sells,
or in accordance with this Section 2 is deemed to have issued or
sold, any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the
Company, but excluding shares of Common Stock deemed to have been
issued by the Company in connection with any Excluded Securities
(as defined in the SPA Notes) for a consideration per share (the
“ New Issuance Price ”) less than a price
(the “ Applicable Price ”) equal to the Exercise
Price in effect immediately prior to such issue or sale or deemed
issuance or sale (the foregoing a “ Dilutive Issuance
”), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to an amount equal
to the New Issuance Price. Upon each such adjustment of the
Exercise Price hereunder, the number of Warrant Shares shall be
adjusted to the number of shares of Common Stock determined by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares acquirable upon exercise
of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such
adjustment. For purposes of determining the adjusted Exercise
Price under this Section 2(a), the following shall be
applicable:
(i)
Issuance of Options . If the Company grants any
Options (except in connection with the issuance of any Excluded
Securities) and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or
upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the granting or sale of such Option for such price
per share. For purposes of this Section 2(a)(i), the
“lowest price per share for which one share of Common Stock
is issuable upon exercise of such Options or upon conversion,
exercise or exchange of such Convertible Securities” shall be
equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to any one share
of Common Stock upon the granting or sale of the Option, upon
exercise of the Option and upon conversion, exercise or exchange of
any Convertible Security issuable upon exercise of such
Option. No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such
shares of Common
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Stock or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such
shares of Common Stock upon conversion, exercise or exchange of
such Convertible Securities.
(ii)
Issuance of Convertible Securities . If the Company in
any manner issues or sells any Convertible Securities (except in
connection with the issuance of any Excluded Securities) and the
lowest price per share for which one share of Common Stock is
issuable upon the conversion, exercise or exchange thereof is less
than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this
Section 2(a)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or
exchange” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of
the Convertible Security and upon conversion, exercise or exchange
of such Convertible Security. No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the
actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section
2(a), no further adjustment of the Exercise Price or number of
Warrant Shares shall be made by reason of such issue or
sale.
(iii)
Change in Option Price or Rate of Conversion. If the
purchase price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise
or exchange of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exercisable or
exchangeable for shares of Common Stock increases or decreases at
any time (except in each case in connection with the issuance of
any Excluded Securities), the Exercise Price and the number of
Warrant Shares in effect at the time of such increase or decrease
shall be adjusted to the Exercise Price and the number of Warrant
Shares which would have been in effect at such time had such
Options or Convertible Securities provided for such increased or
decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this
Section 2(a)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 2(a)
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shall be made if such adjustment would result
in an increase of the Exercise Price then in effect or a decrease
in the number of Warrant Shares.
(iv)
Calculation of Consideration Received . In case any
Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated
transaction (except in connection with the issuance of any Excluded
Securities), the Options will be deemed to have been issued for the
difference of (x) the aggregate fair market value of such Options
and other securities issued or sold in such integrated transaction,
less (y) the fair market value of the securities other than such
Option, issued or sold in such transaction and the other securities
issued or sold in such integrated transaction will be deemed to
have been issued or sold for the balance of the consideration
received by the Company. If any shares of Common Stock,
Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the
Company therefor. If any shares of Common Stock, Options or
Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company
will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Weighted Average
Price of such security on the date of receipt. If any shares
of Common Stock, Options or Convertible Securities are issued to
the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity
as is attributable to such shares of The fair value of any
consideration other than cash or securities will be determined
jointly by the Company and the Required Holders. If such
parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “
Valuation Event ”), the fair value of such
consideration will be determined within five (5) Business Days
after the tenth day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company
and the Required Holders. The determination of such appraiser
shall be final and binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the
Company.
(v)
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