AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the “Agreement”), dated as of June 1, 2009, is by and among Akeena Solar, Inc., a Delaware corporation (the “Company”) and the investors signatory hereto (each, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, the Company and the Purchasers are parties to that certain Securities Purchase Agreement (the “Purchase Agreement”), dated February 26, 2009, pursuant to which the Company issued to the Purchasers common stock, preferred stock and common stock purchase warrants, including, the Series G Common Stock Purchase Warrants to purchase up to 2,196,400 shares of Common Stock, in the aggregate, in the individual amounts set forth on Schedule A attached hereto (the “February Series G Warrants”).
WHEREAS, the Company and the Purchasers are parties to that certain Amendment Agreement (the “April Amendment”), dated April 20, 2009, pursuant to which, among other things, the Company issued to the Purchasers additional Series G Common Stock Purchase Warrants to purchase up to 1,275,000 shares of Common Stock, in the aggregate (the “April Series G Warrants” and together with the outstanding February Series G Warrants, the “Outstanding Series G Warrants”).
WHEREAS, the parties wish to amend certain terms of the Outstanding Series G Warrants, provide for the current exercise of a portion of the Outstanding Series G Warrants, and provide for the issuance to the Purchases of new warrants, all pursuant to the terms hereof.
WHEREAS, capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to such terms as set forth in the Purchase Agreement, the April Amendment or the Outstanding Series G Warrants, as applicable.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Purchasers and the Company agree as follows:
1. Exercise of Outstanding Series G Warrants. Each Purchaser hereby agrees, severally and not jointly with the other Purchasers, to exercise the number of such Purchaser’s Outstanding Series G Warrants set forth on Schedule B attached hereto simultaneously with or prior to the Closing, at an exercise price equal to $1.12 per share, for aggregate gross cash proceeds to be received by the Company simultaneously with or prior to the Closing from all Purchasers of $700,000, otherwise pursuant to the terms of the Outstanding Series G Warrants. The cash exercise price to be paid by each Purchaser shall be referred to as such Purchaser’s “Exercise Amount” and shall be as set forth on Schedule B. Each Purchaser shall execute and deliver such Purchaser’s Exercise Amount to the bank account designated in writing by the Company set forth on Schedule C attached hereto; provided, however, that a Purchaser shall not be required to exercise such certain portion of its Outstanding Series G Warrant to the extent that Section 2(e) of the Outstanding Series G Warrant is violated by the resulting Common Stock issuance of such certain portion. Immediately upon delivery of the Exercise Amount, the Company shall instruct the Transfer Agent to deliver, on an expedited basis, a certificate for the shares purchased hereunder by crediting the account of such Purchaser’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission system, as set forth on each Purchaser’s signature page hereto.
2. Amendments to the Outstanding Series G Warrants.
(a) Term. The term of the Outstanding Series G Warrants shall be extended such that the Termination Date thereof shall be on or prior to November 6, 2009.
(b) Adjustments for Subsequent Rights Offerings and Pro Rata Distributions. Section 3(c) and Section 3(d) of the Outstanding Series G Warrants shall each be deleted in its entirety.
(c) Adjustments for Fundamental Transaction. The option for the Purchaser to receive the Black Scholes Value upon a Fundamental Transaction shall be deleted from the Outstanding Series G Warrants. As such, Section 3(e) of the Outstanding Series G Warrants shall be amended and restated in its entirety with the following:
“(e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Warrant, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.”
(d) Adjustments for Variable Rate Transaction. The option for the Purchaser to receive an adjustment upon a Variable Rate Transaction shall be deleted from the Outstanding Series G Warrants. As such, Section 3(g)(i) of the Outstanding Series G Warrants shall be amended and restated in its entirety with the following:
“i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.”
3. No Variable Rate Transactions. From the date hereof until the 12 month anniversary of the date hereof, the Company agrees that it shall not effect or enter into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration involving a Variable Rate Transaction, as defined below; provided, however, that from and after December 1, 2009, the Company is permitted to enter into, put into effect and draw upon an equity line of credit, so long as any sales of Common Stock by the Company thereunder are at prices per share not less than $2.68 (as appropriately adjusted for stock splits, recapitalizations, and like events). “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
4. Issuance of New Series H Warrants. Each Purchaser shall be issued new Series H Common Stock Purchase Warrants, which shall (a) be exercisable at any time after the 181st day following the date hereof, (b) have a term of exercise equal to 6 months following the initial date of exercise and an exercise price equal to $1.34, subject to adjustment therein and (c) be registered in the name of such Purchaser to purchase up to a number of shares of Common Stock as set forth on Schedule D hereto (the “Series H Warrants”). The Series H Warrants shall be the form attached hereto as Exhibit A. The shares of Common Stock underlying such Series H Warrants shall be referred to herein as the “Warrant Shares” as defined pursuant to the Purchase Agreement.
5. Closing. The date of the closing of the exercise of the Outstanding Series G Warrants, the issuance of the New Series H Warrants and the other transactions contemplated hereunder shall be referred to as the “Closing”.
6. Registration Statement and Prospectus Supplement. The Series H Warrants and the Warrant Shares shall be issued pursuant to the effective Registration Statement (as defined in the Purchase Agreement), including the Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act) to be filed in connection herewith.
7. Effect on Transaction Documents. Except as expressly set forth herein, all of the terms and conditions of the Transaction Documents shall continue in full force and effect after the execution of this Agreement, and shall not be in any way changed, modified or superseded by the terms set forth herein. This Agreement shall not constitute a novation or satisfaction and accord of any Transaction Document.
8. Filing of Form 8-K. On or before 8:30 am (NY time) on the Trading Day immediately following the date hereof, the Company shall file a Current Report on Form 8-K, reasonably acceptable to the Holders disclosing the material terms of the transactions contemplated hereby and attaching this Agreement as an exhibit thereto.
9. Conditions to Purchasers’ Obligations. The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(a) the accuracy in all material respects on the date of the Closing of the representations and warranties of the Company contained herein;
(b) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing shall have been performed;
(c) all Purchasers that are party to the Purchase Agreements shall have agreed to the terms and conditions of this Agreement, including exercising their respective Outstanding Series G Warrants on a pro-rata basis pursuant to the terms hereunder;
(d) the delivery of an opinion of Company Counsel regarding this Agreement and the issuance and delivery of the Series H Warrants hereunder, in form and substance reasonably acceptable to the Purchasers;
(e) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(f) from the date hereof to the Closing, trading in the Common Stock shall not have been suspended by the Commission (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing, trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to consummate the transactions hereunder.
10. Conditions to Company’s Obligations. The obligations of the Company hereunder in connection with the Closing as to each Purchaser are subject to the following conditions being met:
(a) the accuracy in all material respects on the date of the Closing of the representations and warranties of such Purchaser contained herein;
(b) all obligations, covenants and agreements of such Purchaser required to be performed at or prior to the Closing shall have been performed; and
(c) receipt by the Company of the proceeds from exercise of the Outstanding Series G Warrants by such Purchaser, in the amount set forth on Schedule B.
11. Representations and Warranties of the Company. The Company hereby makes the representations and warranties set forth below to the Purchasers, that as of the date of its execution of this Agreement:
(a) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other material instrument (evidencing Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(c) Capitalization. The capitalization of the Company is as set forth in the Registration Statement or Prospectus Supplement. The Series H Warrants and Warrant Shares, when issued in accordance with the terms of this Agreement will be duly authorized, validly issued, fully paid and nonassessable. Except as described in this Section 11(c), the Registration Statement or Prospectus Supplement, or as set forth on Schedule 11(c), there are no issued or outstanding securities and no issued or outstanding options, warrants or other rights, or commitments or agreements of any kind, contingent or otherwise, to purchase or otherwise acquire shares of Common Stock or any issued or outstanding securities of any nature convertible into shares of Common Stock.
(d) Other Representations, Warranties and Covenants. Except as set forth on Schedule 11(d), the representations, warranties and covenants of the Company with respect to the Series H Warrants and Warrant Shares shall be identical in all respects to the representations, warranties and covenants of the Company with respect to the Outstanding Series G Warrants (and shares of Common Stock underlying the Outstanding Series G Warrants) issued pursuant to the Purchase Agreement and other Transaction Documents and the Company hereby makes such representations, warranties and covenants as though fully set forth herein as of the date hereof, and all such representations, warranties and obligations are incorporated herein by reference.
12. Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby makes the representations and warranties to the Company that it made in the Purchase Agreement as though fully set forth herein as of the date hereof (other than with respect to Section 3.2(e) thereof, as to which no bring-down is given), and all such representations and warranties are incorporated herein by reference including, without limitation, that (a) the execution and delivery of this Agreement by it and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on its behalf and (b) this Agreement has been duly executed and delivered by such Purchaser and constitutes the valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms.
13. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
14. Survival; Successors and Assigns. All warranties and representations (as of the date such warranties and representations were made) made herein or in any certificate or other instrument delivered by a party or on its behalf under this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the issuance of the Series H Warrants. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties; provided, however, that no party may assign this Agreement or the obligations and rights of such party hereunder without the prior written consent of the other parties hereto.
15. Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
16. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined pursuant to the Governing Law provision of the Purchase Agreement.
17. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
18. Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto. In addition, each and every reference to share prices in this Agreement shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
19. Entire Agreement. This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
20. Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser hereunder are several and not joint with the obligations of any other Purchasers hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.
21. Fees and Expenses. Except as expressly set forth herein, each party will be responsible for its own fees and expenses incurred in connection with the preparation, execution, delivery and performance of this Agreement, including payment of the fees and expenses of its advisers, counsel, accountants and other experts, if any.
22. Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before June 15, 2009; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties) which occurred prior to such date of termination.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
