Exhibit 10.4
CERTIFICATE OF AMENDMENT
OF
WARRANT
To Purchase Stock of
Power Efficiency Corporation
a Delaware corporation
This Certificate of Amendment (the "Amendment") to the Warrant To
Purchase Stock of Power Efficiency Corporation, a Delaware Corporation, that
expires on June 14, 2012 (the "Warrant"), is by and between Power Efficiency
Corporation, a Delaware corporation (the "Company") and Summit Energy
Ventures, LLC, a Delaware limited liability company (the "Holder") and is
dated May 8, 2003.
WHEREAS, the Company and the Holder have entered into a Revolving Credit
Note of even date herewith (the "Note");
WHEREAS, as consideration for the Note, the Company agreed to amend the
Warrant as provided below;
NOW, THEREFORE, the Company and the Holder hereby mutually agree that the
Warrant is hereby amended by changing the Warrant so that, as amended, the
definition of Stock Unit in Section 1 shall read as follows:
"Stock Unit" shall mean one share of Common Stock or one-half share of
Series A-2 Convertible Preferred Stock, at the election of the Holder of the
Warrant.
NOW, THEREFORE, the Company and the Holder hereby mutually agree that the
Warrant is hereby amended by changing the Warrant so that, as amended, Section
2 shall read as follows:
Section 2. Exercise of Warrant. The Holder of this Warrant may, at any time
on or after the Vesting Date, exercise this Warrant in whole or in part for the
number of Stock Units which such Holder is then entitled to purchase hereunder.
In order to exercise this Warrant, in whole or in part, the Holder hereof shall
deliver to the Company at its office maintained for such purpose pursuant to
Section 17: (i) a written notice of such Holder's election to exercise this
Warrant, (ii) this Warrant, and (iii) the total purchase price for the shares
being purchased upon such exercise by delivery in cash, by wire transfer or
certified or official bank check of immediately available funds in an amount
equal to the product of the Current Warrant Price multiplied by the number of
Stock Units being purchased upon such exercise (the "Aggregate Purchase Price"),
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Such notice may be in the form of the Subscription set out at the end of
this Warrant. Upon receipt thereof, the Company shall, as promptly as
practicable and in any event within ten (10) Business Days thereafter, cause
to be executed and delivered to such Holder a certificate or certificates
representing the aggregate number of fully paid and nonassessable shares of
Warrant Stock issuable upon such exercise.
The Holder of this Warrant may purchase the number of Stock Units
calculated in the following manner:
SU = (XC/(1-X)) - P
where:
SU = the number of Stock Units the Holder of this Warrant may
purchase upon exercise of this Warrant.
C = the number of shares of Common Stock outstanding on the
exercise date; the number of shares of Common Stock reserved for
issuance pursuant to the Company's stock option plans existing
on the exercise date (whether or not such options have been
issued); the number of shares of Common Stock issuable under all
warrants outstanding on the exercise date; plus the number of
shares of Common Stock issuable upon conversion of all
Convertible Instruments outstanding on the exercise date, other
than (i) the Series A-1 Convertible Preferred Stock sold by the
Company pursuant to the Stock Purchase Agreement, and (ii) the
stock issuable (but unissued) upon conversion of the Revolving
Credit Note issued by the Company to Summit on May 8, 2003.
P = the number of shares of Common Stock issuable on the exercise
date upon conversion of all the Series A-1 Convertible
Preferred Stock sold by the Company pursuant to the Stock
Purchase Agreement.
X = the percent that is obtained by the following formula:
X = 51% + (Y/1,000,000) * 9.1%
where:
Y = the dollar amount that has been converted into Series A-1
Preferred Stock pursuant to the Revolving Credit Note dated May
8, 2003.
Upon the first exercise of any right under the Warrant or Warrants by any
Holder (the "First Exercise"), the Current Warrant Price and the remaining
Stock Units purchasable under the Warrant or Warrants by all Holders shall be
fixed upon such first exercise. The remaining Stock Units purchasable under
the Warrant or Warrants shall be equal to the number of Stock Units that could
have been purchased had all the Warrants been exercised minus the number of
Stock Units that were actually purchased at the First Exercise; and (ii) the
Current Warrant Price of all remaining Warrants shall be fixed at the Current
Warrant Price determined for the Warrants that were exercised at the First
Exercise.
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The stock certificate or certificates for Warrant Stock so delivered shall
be endorsed with a legend in the form contained in Section 4.1 of the Amended
and Restated Stockholders' Agreement dated June 14, 2002, and shall be in such
denominations as may be specified in said notice and shall be registered in
the name of such Holder or such other name or names as shall be designated in
said notice. Such certificate or certificates shall be deemed to have been
issued and such Holder or any other Person so designated to be named therein
shall be deemed to have become a holder of record of such shares, including to
the extent permitted by law the right to vote such shares or to consent or to
receive notice as a stockholder, as of the time said notice is received by the
Company as aforesaid.
Except as otherwise provided in Section 8 hereof, the Company shall pay
all expenses, transfer taxes and other charges payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2,
except that, in case such stock certificates shall be registered in a name or
names other than the name of the Holder of this Warrant, funds sufficient to
pay all stock transfer taxes which shall be payable upon the issuance of such
stock certificate or certificates shall be paid by the Holder hereof at the
time of delivering the notice of exercise mentioned above.
All shares of Warrant Stock issuable upon the exercise of this Warrant
shall be validly issued, fully paid and nonassessable, and free from all liens
and other encumbrances thereon.
The Company will not close its books against the transfer of this Warrant
or of any share of Warrant Stock in any manner which interferes with the
timely exercise of this Warrant. With the consent of the Holder of this
Warrant, the Company will from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Stock
acquirable upon exercise of this Warrant is at all times equal to or less than
the Current Warrant Price then in effect.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant.
[signature page to immediately follow]
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IN WITNESS WHEREOF, the Company and the Holder have caused this
Certificate of Amendment of Warrant to be executed.
POWER EFFICIENCY CORPORATION, a
Delaware corporation
By:
---------------------------------------------
Name: Raymond J. Skiptunis
Title: President & Chief Executive Officer
SUMMIT ENERGY VENTURES, LLC, a
Delaware limited liability company
By: Northwest Power Management, its manager
By:
---------------------------------------------
Name: Steven Strasser
Title: President
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