Document:

f8k042610ex10iii_windtamer.htm

     

    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.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

       

    

        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.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

        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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

        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.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

       

    

        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]

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

     

    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]

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
       

      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.

    
       

       

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

       

       

       

      EXHIBIT
A

    

    FORM
OF WARRANT

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

     

     

     

    EXHIBIT
B

    REGISTRATION
RIGHTS AGREEMENTf8k042610ex10iv_windtamer.htm

     

    Exhibit
10.4

     

    ASSIGNMENT
OF SHARES

    

    This
Assignment of Shares (this “Agreement”) is made effective
as of April 26, 2010 (the “Effective Date”), by Gerald
Brock (“Assignor”) in
favor of WindTamer Corporation, a corporation organized under the laws of the
State of New York (the “Corporation”).

     

    WHEREAS, Assignor is the
founding shareholder of the Corporation, its largest shareholder, and currently
owns 49,050,000 shares of the common
stock, par value $0.0001 per share, of the Corporation (the “Common Stock”);
and

    

    WHEREAS, Assignor has agreed
to contribute 29,050,000 shares of the Common Stock owned by him to the capital
of the Corporation.

    

    NOW, THEREFORE, in
consideration of the foregoing recitals and the other terms and conditions
hereof:

    

    1.           Assignor
hereby irrevocably assigns and transfers to Corporation twenty nine million and
fifty thousand (29,050,000) shares of Common Stock
of the Corporation (collectively, the “Assigned Shares”), standing in
his name on the books of the Corporation, each of which certificates Assignor is
delivering to the Corporation herewith duly executed in blank, and the
Corporation hereby accepts and agrees to such assignment and
transfer.

     

    2.           This
Agreement and the assignment and transfer of the Assigned Shares is effective as
of the Effective Date, and Assignor hereby irrevocably authorizes American Stock
Transfer & Trust Company, LLC, as transfer agent for the Corporation, to
transfer the Assigned Shares on the books and records of the Corporation with
full power of substitution in the premises.

     

    3.           Assignor
represents and warrants to the Company that, as of the Effective
Date:

     

    i.           he
is the sole, legal and beneficial owner of the Assigned Shares;

    

    ii.          neither
he nor the Assigned Shares are subject to a pending, or, to his knowledge,
threatened, claim, proceeding or action; and

    

    iii.         he
has, and will convey to the Company hereunder, good and marketable title to the
Assigned Shares, free and clear of any claims, liens, pledges, security
interests or encumbrances, of any kind.

    

    4.           Assignor
and Corporation each agree that the assignment and transfer of the Assigned
Shares shall be treated as a contribution to the capital of the Corporation for
all purposes.

    

    5.           This
Agreement (i) sets forth the entire agreement between the parties hereto and
supersedes all prior agreements, written or oral, concerning the subject matter
herein, and there are no oral understandings, statements or stipulations bearing
upon the effect of this Agreement which have not been incorporated herein; (ii)
may be modified or amended only by a written instrument signed by all of the
parties; (iii) shall bind and inure to the benefit of the parties and their
respective heirs, successors and assigns; and (iv) may not be assigned by any
party.  Any attempted assignment of this Agreement shall be null and
void.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    6.           This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York without reference to conflicts of law
principles.  With respect to any matters that may be heard before a
court of competent jurisdiction, the parties consent to the jurisdiction and
venue of the state and federal courts located in Monroe County, New
York.

    

    7.           This
Agreement may be executed simultaneously in one or more counterparts, each one
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.  All such counterparts may be delivered
by facsimile or other electronic means and each such electronically delivered
counterpart shall be deemed an original and shall be binding upon the parties
for all purposes herein.

    

    IN WITNESS WHEREOF, the
undersigned have executed this Assignment of Shares to be effective as of the
Effective Date.

     

    
 

    
      
        	 	ASSIGNOR	 
	 	 	 	 
	
                 

              	
                 

              	/s/
      Gerald Brock	 
	 	 	Gerald
      Brock	 
	 	 	 	 
	 	 	 	 
	 	Agreed and accepted
      by:	 
	 	 	
                 

              	 
	 	WINDTAMER
      CORPORATION	 
	 	 	 	 
	 	By:	/s/
      William Schmitz	 
	 	 	William
      Schmitz	 
	 	 	Chief
      Executive Officer	 

      

     

     

     2

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