Exhibit 10.3
 
WARRANT PURCHASE AGREEMENT
 
 
    THIS WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of
April 26, 2010 (the “Effective Date”), by and between WindTamer Corporation, a
New York corporation (the “Company”), and the investors listed on Schedule 1
hereto (each, an “Investor” and, collectively, the “Investors”).
 
    WHEREAS, the Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “Securities Act”);   
 
    WHEREAS, the Investors intend to purchase warrants from the Company, which
warrants will be exercisable to purchase up to an aggregate of 29,000,000 shares
of the Company’s common stock at an exercise price of $0.25 per share;
 
    WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit B (the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act, the rules and regulations
promulgated thereunder and applicable state securities laws; and
 
    WHEREAS, the parties hereto wish to provide for the sale and issuance of
such warrants in consideration of (i) the agreement by each Investor except for
Gerald E. Brock to provide their respective guarantee (the “Guarantees”) in
favor of the Company’s lender, First Niagara Bank, N.A., in connection with that
certain Loan Agreement between the Company and First Niagara Bank, N.A., dated
of even date herewith (the “Credit Loan Agreement”), and (ii) the agreement by
Gerald E. Brock, to pledge his shares of the Company’s common stock as
collateral under that certain Stock Pledge Agreement dated of even date herewith
(the “Stock Pledge Agreement”).
 
    NOW, THEREFORE, in consideration of the agreement on and as of the date
hereof by each Investor as provided above and the other terms and conditions
herein, the Company and each Investor hereby agree as follows:
 
    1.  Issuance of the Warrants.  The Company hereby sells and issues to the
Investors warrants (the “Warrants”) to purchase shares of the Company’s common
stock, par value $.0001 per share (collectively, the “Common Stock”) in the
respective amounts set forth on Schedule 1 attached hereto, with an exercise
price of $0.25 per share, in consideration of the agreement by the Investors to
provide the Guarantees in favor of the Company’s lender, First Niagara Bank,
N.A., as collateral for the percentage of the Company’s indebtedness under the
Credit Loan Agreement, as set forth on Schedule 1, or in the case of Investor
Gerald E. Brock, the pledge of his shares of the Company’s common stock under
that certain Stock Pledge Agreement, as set forth on Schedule 1, as contemplated
by the Warrants. The Warrants shall be in the form attached hereto as Exhibit A.
 
 
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    2.   Representations and Warranties of the Investors.  In connection with
the transactions provided for herein, each Investor hereby represents and
warrants to the Company, severally but not jointly, that:
 
    2.1  Authorization.  This Agreement constitutes the Investor’s valid and
legally binding obligation, enforceable in accordance with its terms.
 
    2.2  Purchase Entirely for Own Account.  Each Investor acknowledges that
this Agreement is made with the Investors in reliance upon each Investor’s
representation to the Company that the Warrants and the Common Stock issuable
upon exercise of the Warrants (collectively, the “Securities”) will be acquired
for investment for each Investor’s own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, each Investor
further represents that it does not have any contract, undertaking, agreement,
or arrangement with any person to sell, transfer, or grant participations to
such person or to any third person, with respect to the Securities. Each
Investor represents that it has full power and authority to enter into this
Agreement.
 
    2.3  Disclosure of Information.  Each Investor acknowledges that it has
received all the information it considers necessary or appropriate for deciding
whether to acquire the Securities. Each Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Securities as such
investor has deemed relevant in making its investment decision.
 
    2.4  Investment Experience.  Each Investor is an investor in securities and
acknowledges that it can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Securities. Each
Investor also represents that it has not been organized solely for the purpose
of acquiring the Securities.
 
    2.5  Accredited Investor.  Each Investor is an “accredited investor” within
the meaning of Rule 501 of Regulation D of the SEC, as presently in effect.
 
    2.6  Restricted Securities.  Each Investor understands that the Securities
are characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, each Investor represents
that it is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
 
 
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    2.7  Legend.  It is understood that the Securities shall bear a legend
substantially in the form of the following:
 
    ”These securities have not been registered under the Securities Act of 1933.
They may not be sold, offered for sale, pledged, hypothecated, or otherwise
transferred except pursuant to an effective registration statement under the
Securities Act of 1933 or an opinion of counsel satisfactory to the Company that
registration is not required under such Act or unless sold pursuant to Rule 144
under such Act.”
 
    2.8  Reliance on Exemptions. The Investors understand that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Investors’
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Investors set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investors to acquire
the Securities.
 
    2.9  Governmental Review. Each Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
 
    2.10  Other Approvals.  Each Investor understands that the exercise of any
Warrant is expressly conditioned upon all requisite approvals as required by New
York law.
 
    3.  Consideration; Completion of Sale.  The Company and each of the
Investors agree that it is their express intention that the Warrants are being
sold solely in consideration of each Investor’s agreement to provide a Guarantee
or enter into the Stock Pledge Agreement, as applicable, on and as of the date
of this Agreement, and as such all consideration for the sale of the Warrants
has been provided by the Investors as of the date hereof.  The Company and each
of the Investors further agree that because all consideration has been provided
and the sale and purchase of the Warrants is completed as of the date hereof,
neither the Investors nor the Company shall have grounds to seek the rescission,
cancellation or other termination of the Warrants based on the failure of future
consideration. Without limiting the foregoing, the failure for any reason of any
or all of the Investors to maintain the Guarantee shall not be deemed a failure
to provide consideration.
 
    4.  Miscellaneous.  
 
    4.1  Successors and Assigns.  Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
 
    4.2  Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflicts
of law principles.  With respect to any matters that may be heard before a court
of competent jurisdiction, the Investors and the Company consent to the
jurisdiction and venue of the state and federal courts located in Monroe County,
New York.
 
 
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    4.3  Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
 
    4.4  Titles and Subtitles.  The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
    4.5  Notices.  Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified, by delivery by
confirmed facsimile or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to such party at the
address set forth below, or at such other address as such party may designate by
ten (10) days’ advance written notice to the other parties:
 
To Company:
To the Investors:
WindTamer Corporation
c/o WindTamer Corporation
156 Court Street, Suite 7
156 Court Street, Suite 7
Geneseo, NY  14454
Geneseo, NY  14454
Facsimile:  (585) 243-4142
Facsimile: (585) 243-4142
Attention: Chief Executive Officer
Attention:  Gerald E. Brock
                    Michael Hughes
                    William A. Schmitz
                    Molly Hedges
 
 
With a copy, which shall not constitute notice to Company, to:
 
Woods Oviatt Gilman LLP
700 Crossroads Building
Two State Street
Rochester, NY  14614
Phone (585) 987-2800
Fax (585) 987-2975
Attention: Gregory W. Gribben, Esq.
 

 
    4.6  Finder’s Fee.  Each party represents that it neither is nor will be
obligated for any finder’s fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder’s fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investors or any of its officers, partners,
employees, or representatives is responsible.
 
 
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    4.7  Expenses.  If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys’ fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
 
    4.8  Reservation of Shares.  The Company shall reserve and keep available at
all times, free of preemptive rights, the full number of shares of Common Stock
issuable upon exercise of the Warrants.
 
    4.9  Entire Agreement; Amendments and Waivers.  This Agreement, the
Warrants, and the Registration Rights Agreement constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Investors. Any waiver or amendment effected in accordance
with this Section shall be binding upon the Investors, each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities have been converted), each future holder
of all such securities, and the Company.
 
    4.10  Severability.  If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
 
 
 
[Signature Page Follows]
 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 

  WINDTAMER CORPORATION          
 
By:
/s/William Schmitz          William A. Schmitz       Chief Executive Officer    
         
 
 
    INVESTORS             By:
/s/ Gerald Brock
      Gerald E. Brock              
 
 
    By: /s/ Michael Hughes       Michael Hughes              
 
 
   
By:
/s/ William Schmitz       William A. Schmitz              
 
 
   
By:
/s/ Molly Hedges
     
Molly Hedges
 

 

 
 
 
[Signature Page to Warrant Purchase Agreement]
 
 
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Schedule 1
 

Investor
 
Aggregate Number of
Warrant Shares
 
Percentage of Guarantee
         
Gerald E. Brock
 
6,000,000
 
0%1
         
Michael Hughes
 
19,550,000
 
85%
         
William A. Schmitz
 
2,300,000
 
10%
         
Molly Hedges
 
1,150,000
 
5%
                             

__________________________
 1 Mr. Brock has pledged 20,000,000 shares of Common Stock owned by him pursuant
to the Stock Pledge Agreement.  Each Investor other than Mr. Brock has provided
to First Niagara Bank, N.A. a limited guaranty of the Company’s obligations
under the Credit Loan Agreement.
 
 
 
 

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EXHIBIT A
FORM OF WARRANT
 
 
 
 
 
 
 
 
 
 

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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT

 
 

 
 
 
 
 
 
 
 
 
 

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