Document:

oesx-ex43_264.htm

Exhibit 4.3

 

ORION ENERGY SYSTEMS, INC.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 230,000,000 shares, consisting of 200,000,000 shares of common stock, no par value per share, and 30,000,000 shares of preferred stock, par value $0.01 per share. As of May 31, 2019, 29,601,669 shares of our common stock were outstanding and no shares of our preferred stock were outstanding.

The description below summarizes the material terms of our common stock, preferred stock and provisions of our amended and restated articles of incorporation and amended and restated bylaws. This description is only a summary. For more detailed information, you should refer to our amended and restated articles of incorporation and bylaws filed as exhibits to our most recent Annual Report on Form 10-K.

Common Stock

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders and do not have cumulative voting rights. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive proportionately our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. Our outstanding shares of common stock are fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

We have entered into a rights agreement pursuant to which each outstanding share of our common stock has attached a right to purchase one share of our common stock. A right will also attach to each share of common stock that we subsequently issue prior to the expiration of the rights agreement. Under circumstances described below, the rights will entitle the holder of the rights to purchase additional shares of common stock. In this description of our capital stock, unless the context requires otherwise, all references to our common stock include the accompanying rights.

Currently, the rights are not exercisable and trade with the common stock. If the rights become exercisable, each right, unless held by a person or group that beneficially owns more than 20% of our outstanding common stock, will initially entitle the holder to purchase one share of our common stock at a purchase price of $7 per share, subject to adjustment. The rights will become exercisable only if a person or group has acquired, or announced an intention to acquire, 20% or more of our outstanding common stock. Under some circumstances, including the existence of a 20% acquiring party, each holder of a right, other than the acquiring party, will be entitled to purchase at the right’s then-current exercise price, shares of our common stock having a market value of two times the exercise price. If another corporation acquires us after a party acquires 20% or more of our common stock, each holder of a right will be entitled to receive the acquiring corporation’s common shares having a market value of two times the exercise price. The rights may be redeemed at a price of $0.001 per right until a party acquires 20% or more of our common stock and, after that time, may be exchanged for one share of our common stock per right until a party acquires 50% or more of our common stock. The rights expire on January 7, 2022, subject to extension. Under the rights agreement, our board of directors may reduce the thresholds applicable to the rights from 20% to not less than 10%. The rights do not have voting or dividend rights and, until they become exercisable, have no dilutive effect on our earnings.

The rights have certain anti-takeover effects, in that they could have the effect of delaying, deferring or preventing a change of control of our company by causing substantial dilution to a person or group that attempts to acquire a significant interest in our company on terms not approved by our board of directors.

 

Preferred Stock

 

 

Our board of directors is authorized to issue from time to time up to 30 million shares of preferred stock in one or more series without shareholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of common stock until our board of directors determines the specific rights associated with that preferred stock. The effects of issuing preferred stock could include one or more of the following:

 

	
 
	
•
	
 
	
decreasing the amount of earnings and assets available for distribution to holders of common stock;

 

	
 
	
•
	
 
	
restricting dividends on the common stock;

 

	
 
	
•
	
 
	
diluting the voting power of the common stock;

 

	
 
	
•
	
 
	
impairing the liquidation rights of the common stock; or

 

	
 
	
•
	
 
	
delaying, deferring or preventing changes in our control or management.

As of the May 31, 2019, there were no shares of preferred stock outstanding.

Wisconsin Anti-Takeover Law and Certain Articles of Incorporation and Bylaw Provisions

Wisconsin law and our amended and restated articles of incorporation and amended and restated bylaws that will be effective upon closing of this offering contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our shareholders might consider favorable. The following is a summary of these provisions.

Amended and Restated Articles of Incorporation and Amended and Restated Bylaws

Classified board of directors; removal of directors for cause. Our amended and restated articles of incorporation and amended and restated bylaws provide that our board of directors is divided into three classes, with the term of office of each class expiring at successive annual meetings of shareholders. At each annual meeting of shareholders, each director is elected for a term ending on the date of the third annual shareholders’ meeting following the annual shareholders’ meeting at which such director was elected and until his or her successor shall be elected and shall qualify, subject to prior death, resignation or removal from office.

 

Our amended and restated articles of incorporation also provide that the affirmative vote of shareholders possessing at least 75% of the voting power of the then outstanding shares of our capital stock is required to amend, alter, change or repeal, or to adopt any provision inconsistent with, the relevant sections of the bylaws establishing the classified board. The board of directors (or its remaining members, even if less than a quorum) is also empowered to fill vacancies on the board of directors occurring for any reason for the remainder of the term of the class of directors in which the vacancy occurred, unless the vacancy was caused by the action of shareholders (in which event such vacancy will be filled by the shareholders and may not be filled by the directors).

Members of the board of directors may be removed only for cause at a meeting of the shareholders called for the purpose of removing the director, and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director and must state the alleged cause upon which the director’s removal would be based.

These provisions are likely to increase the time required for shareholders to change the composition of our board of directors. For example, in general, at least two annual meetings will be necessary for shareholders to effect a change in a majority of the members of our board of directors.

Advance notice provisions for shareholder proposals and shareholder nominations of directors. Our amended and restated bylaws provide that, for nominations to the board of directors or for other business to be properly brought by a shareholder before a meeting of shareholders, the shareholder must first have given timely notice of the proposal in writing to our secretary. For an annual meeting, a shareholder’s notice generally must be delivered on or before December 31 of the year immediately preceding the annual meeting, unless the date of the annual meeting is 

 

 

on or after May 1 in any year, in which case notice must be received not later than the close of business on the day which is determined by adding to December 31 of the year immediately preceding such annual meeting the number of days starting with May 1 and ending on the date of the annual meeting in such year. Detailed requirements as to the form of the notice and information required in the notice are specified in the amended and restated bylaws. If it is determined that business was not properly brought before a meeting in accordance with our amended and restated bylaws, such business will not be conducted at the meeting.

Wisconsin Business Corporation Law

Sections 180.1140 to 180.1144 of the Wisconsin Business Corporation Law, or the WBCL, restrict a broad range of business combinations between a Wisconsin corporation and an “interested stockholder” for a period of three years unless specified conditions are met. The WBCL defines a “business combination” as including certain mergers or share exchanges, sales of assets, issuances of stock or rights to purchase stock and other related party transactions. An “interested stockholder” is a person who beneficially owns, directly or indirectly, 10% of the outstanding voting stock of a corporation or who is an affiliate or associate of the corporation and beneficially owned 10% of the voting stock within the last three years. During the initial three-year period after a person becomes an interested stockholder in a Wisconsin corporation, with some exceptions, the WBCL prohibits a business combination with the interested stockholder unless the corporation’s board of directors approved the business combination or the acquisition of the stock by the interested stockholder prior to the acquisition date. Following this three-year period, the WBCL also prohibits a business combination with an interested stockholder unless:

 

	
 
	
•
	
 
	
the board of directors approved the acquisition of the stock prior to the acquisition date;

 

	
 
	
•
	
 
	
the business combination is approved by a majority of the outstanding voting stock not owned by the interested stockholder;

 

	
 
	
•
	
 
	
the consideration to be received by shareholders meets certain requirements of the statute with respect to form and amount; or

 

	
 
	
•
	
 
	
the business combination is of a type specifically excluded from the coverage of the statute.

 

Sections 180.1130 to 180.1133 of the WBCL govern certain mergers or share exchanges between public Wisconsin corporations and significant shareholders, and sales of all or substantially all of the assets of public Wisconsin corporations to significant shareholders. These transactions must be approved by 80% of all shareholders and two-thirds of shareholders other than the significant shareholder, unless the shareholders receive a statutory “fair price.” Section 180.1130 of the WBCL generally defines a “significant shareholder” as the beneficial owner of 10% or more of the voting power of the outstanding voting shares, or an affiliate of the corporation who beneficially owned 10% or more of the voting power of the then outstanding shares within the last two years.

Section 180.1150 of the WBCL provides that in particular circumstances the voting power of shares of a public Wisconsin corporation held by any person in excess of 20% of the voting power is limited to 10% of the voting power these excess shares would otherwise have. Full voting power may be restored if a majority of the voting power of shares represented at a meeting, including those held by the party seeking restoration, are voted in favor of the restoration. This voting restriction does not apply to shares acquired directly from the corporation.

Section 180.1134 of the WBCL requires shareholder approval for some transactions in the context of a tender offer or similar action for more than 5% of any class of a Wisconsin corporation’s stock. Shareholder approval is required for the acquisition of more than 5% of the corporation’s stock at a price above market value from any person who holds more than 3% of the voting shares and has held the shares for less than two years, unless the corporation makes an equal offer to acquire all shares. Shareholder approval is also required for the sale or option of assets that amount to at least 10% of the market value of the corporation, but this requirement does not apply if the corporation has at least three independent directors and a majority of the independent directors vote not to have this provision apply to the corporation.

 

 

Limitations of Directors’ Liability and Indemnification

Our amended and restated bylaws provide that, to the fullest extent permitted or required by Wisconsin law, we will indemnify all of our directors and officers, any trustee of any of our employee benefit plans, and person who is serving at our request as a director, officer, employee or agent of another entity, against certain liabilities and losses incurred in connection with these positions or services. We will indemnify these parties to the extent the parties are successful in the defense of a proceeding and in proceedings in which the party is not successful in defense of the proceeding unless, in the latter case only, it is determined that the party breached or failed to perform his or her duties to us and this breach or failure constituted:

 

	
 
	
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a willful failure to deal fairly with us or our shareholders in connection with a matter in which the director or officer has a material conflict of interest;

 

	
 
	
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a violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was unlawful;

 

	
 
	
•
	
 
	
a transaction from which the director or officer derived an improper personal profit; or

 

	
 
	
•
	
 
	
willful misconduct.

Our amended and restated bylaws provide that we are required to indemnify our directors and executive officers and may indemnify our employees and other agents to the fullest extent required or permitted by Wisconsin law. Additionally, our amended and restated bylaws require us under certain circumstances to advance reasonable expenses incurred by a director or officer who is a party to a proceeding for which indemnification may be available.

Wisconsin law further provides that it is the public policy of the State of Wisconsin to require or permit indemnification, allowance of expenses and insurance to the extent required or permitted under Wisconsin law for any liability incurred in connection with a proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities.

 

Under Wisconsin law, a director is not personally liable for breach of any duty resulting solely from his or her status as a director, unless it is proved that the director’s conduct constituted conduct described in the bullet points above. In addition, we maintain directors’ and officers’ liability insurance that will insure against certain liabilities, subject to applicable restrictions.

NASDAQ Capital Market Listing

Our common stock is listed on the NASDAQ Capital Market under the symbol “OESX.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is EQ Shareowner Services.oesx-ex102_507.htm

Exhibit 10.2

 

 

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

AMENDMENT NUMBER ONE TO BUSINESS FINANCING AGREEMENT 

This AMENDMENT NUMBER ONE TO BUSINESS FINANCING AGREEMENT (this “Amendment”), dated as of June 3rd, 2019, is entered into by and between  Western Alliance Bank, an Arizona corporation Lender”), one the one hand, and, ORION ENERGY SYSTEMS, INC., a Wisconsin corporation (“Parent”), the Subsidiaries of Parent listed on Schedule 1 attached to the Agreement defined below, and such other direct or indirect Subsidiaries of Parent that may hereafter become parties hereto (collectively with Parent, “Borrowers” and each a “Borrower”), on the other hand, with reference to the following facts:

	
A.
	
Borrowers and Lender previously entered into that certain Business Financing Agreement, dated as of October 26, 2018 (the “Agreement”).

	
B.
	
Borrowers and Lender desire to amend the Agreement in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby agree as follows:

1.Defined Terms.  All initially capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Agreement.

2.Amendment to Section 1.12.  Section 1.12 of the Agreement is hereby amended in its entirety as follows:

	
 
	
1.12
	
Overadvances.  Upon any occurrence of an Overadvance, Borrowers shall immediately pay down the Advances such that, after giving effect to such payments, no Overadvance exists; provided that if any Overadvance occurs due to the termination of the Inventory Sublimit Availability Period, then Borrowers shall pay down all Advances supported by the Inventory Sublimit on a monthly basis, commencing with the first day of the month following the termination of the Inventory Sublimit Availability Period in an amount equal to the lesser of $1,000,000 or the unpaid balance of Advances supported by the Inventory Sublimit.
	
 

3.Amendments to Section 12.1.

(a)The following definitions set forth in Section 12.1 of the Agreement are hereby amended in their entirety as follows:

“Inventory Sublimit” means $3,000,000.

“Inventory Sublimit Availability Period” means the period commencing on the Amendment Number One Effective Date and terminating, if ever, when Adjusted EBITDA for any fiscal quarter of Borrower is less than 75% of plan.

 

 

(b)Clause (m) of the definition of “Eligible Receivable” set forth in Section 12.1 of the Agreement is hereby amended in its entirety as follows:

	
 
	
(m)
	
The Receivable is not that portion of Receivables due from an Account Debtor which is in excess of the Maximum Concentration Percentage of Borrowers’ aggregate dollar amount of all outstanding Receivables.
	
 

(c)The following new defined terms are hereby added to Section 12.1 of the Agreement in alphabetical order:

“Adjusted EBITDA” means consolidated net profit before tax plus interest expense, depreciation expense and amortization expense, plus stock-based compensation expense.

“Amendment Number One” means that certain Amendment Number One to Business Financing Agreement, dated as of June 3rd, 2019, among Borrowers and Lender, amending this Agreement.

“Amendment Number One Effective Date” means the date when all of the conditions set forth in Section 4 of the Amendment Number One have been fulfilled to the satisfaction of Lender.

“Maximum Concentration Percentage” means the percentage indicated in the table below opposite the applicable Account Debtor:

		
	
Account Debtor
	
Maximum Concentration Percentage

	
[***]
	
50%

	
[***]
	
50%

	
[***]
	
75%

	
All others
	
35%

4.Conditions Precedent to Effectiveness of Amendment.  The effectiveness of this Amendment is subject to and contingent upon the fulfillment of each and every one of the following conditions to the satisfaction of Lender:

(a)Lender shall have received this Amendment, duly executed by Borrowers;

(b)Lender shall have received an amendment fee in the amount of $2,000, which fee shall be fully-earned and non-refundable, part of the Obligations, and secured by the Collateral;

(c)No Event of Default or Default shall have occurred and be continuing; and

(d)All of the representations and warranties set forth herein and in the Agreement shall be true, complete and accurate in all respects as of the date hereof (except for representations and warranties which are expressly stated to be true and correct as of the date of the Agreement).

5.Representations and Warranties.  In order to induce Lender to enter into this Amendment, each Borrower hereby represents and warrants to Lender that:

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(a)No Event of Default or Default is continuing;

(b)All of the representations and warranties set forth in the Agreement and in the Agreement are true, complete and accurate in all respects (except for representations and warranties which are expressly stated to be true and correct as of the date of the Agreement); and

(c)This Amendment has been duly executed and delivered by Borrowers, and the Agreement continues to constitute the legal, valid and binding agreements and obligations of Borrowers, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, and similar laws and equitable principles affecting the enforcement of creditors’ rights generally.

6.Counterparts; Electronic Execution.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Amendment.  Delivery of an executed counterpart of this Amendment electronically (including by e-mail delivery of a “.pdf” format data file) shall be equally as effective as delivery of a manually executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment electronically also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

7.Integration.  The Agreement as amended by this Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and thereof, and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof and thereof.

8.No Waiver.  The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default, whether or not known to Lender and whether or not existing on the date of this Amendment.

9.Release.

(a)Each Borrower hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Borrower has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.  Each Borrower hereto certifies that it has read the following provisions of California Civil Code Section 1542:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

(b)Each Borrower understands and acknowledges that the significance and consequence of this waiver of California Civil Code Section 1542 is that even if it should eventually suffer additional damages arising out of the facts referred to above, it will not be able to make any claim for those damages. Furthermore, each Borrower acknowledges that it intends these consequences even as to claims for damages that may exist as of the date of this release but which it does not know exist, and 

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which, if known, would materially affect its decision to execute this Agreement, regardless of whether its lack of knowledge is the result of ignorance, oversight, error, negligence, or any other cause.

10.Reaffirmation of the Agreement.  The Agreement as amended hereby and the Loan Documents remain in full force and effect.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the date first hereinabove written.

		
	
BORROWERS:
	
ORION ENERGY SYSTEMS, INC.,
a Wisconsin corporation

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
 
	
CLEAN ENERGY SOLUTIONS, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
 
	
GREAT LAKES ENERGY TECHNOLOGIES, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
 
	
ORION SHARED SERVICES, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
 
	
ORION AVIATION, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
 
	
ORION TECHNOLOGY VENTURES, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

Amendment Number One to Business Financing Agreement

 

 

		
	
 
	
ORION ASSET MANAGEMENT, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
 
	
ORION OPERATIONS, LLC,
a Wisconsin limited liability company

 

 

By: /s/ William T. Hull

Name: William T. Hull

Title: Chief Financial Officer

 

	
LENDER:
	
WESTERN ALLIANCE BANK,
an Arizona corporation

 

 

By: /s/ Lisa Chang

Name: Lisa Chang

Title: Vice President

 

 

Amendment Number One to Business Financing Agreement

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