RICEBRAN TECHNOLOGIES PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK Void After March 8, 2029
Exhibit 10.2
PRE-FUNDED WARRANT
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR
UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.
PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
Void After March 8, 2029
THIS CERTIFIES THAT, for value received,
Continental Grain Company, a Delaware corporation, or its permitted assigns (the “Holder”), is entitled to subscribe for and purchase at the Exercise Price
(defined below) from RiceBran Technologies, a California corporation (the “Company”), up to 1,003,344 shares of the common stock, no par value, of the
Company (the “Common Stock”), subject to adjustment as provided herein. This Warrant is being issued pursuant to the terms of the Securities Purchase
Agreement, dated March 8, 2019, by and among the Company, the original Holder and the other parties named therein (the “Purchase Agreement”). Capitalized
terms not otherwise defined herein shall have the respective meanings ascribed to such terms in the Purchase Agreement.
1. DEFINITIONS. As used herein, the following terms shall have the following respective meanings:
(a) “Exercise Period” shall mean the
period commencing March 8, 2019 and ending March 8, 2029, unless sooner terminated as provided below.
(b) “Exercise Price” shall mean $0.01 per
share, subject to adjustment pursuant to Section 5 below.
(c) “Exercise Shares” shall mean the
shares of Common Stock issued upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited to adjustment pursuant to Section 5 below.
(d) “Fundamental Transaction” shall mean
(i) that the Company shall, directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related transactions, (A) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Subject Entity, or (B) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its subsidiaries to a Subject Entity, or (C) make, or allow a Subject Entity to make, or
allow the Company to be subject to or have its shares of Common Stock be subject to such Subject Entity making, a purchase, tender or exchange offer that is accepted by the holders of at least either (1) 50% of the outstanding shares of Common
Stock, (2) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by such Subject Entity making or party to such purchase, tender or exchange offer were not outstanding; or (3) such number of shares of
Common Stock such that such Subject Entity making or party to such purchase, tender or exchange offer, becomes the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (D)
consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with a Subject Entity whereby such Subject Entity acquires, directly or
indirectly, either (1) at least 50% of the outstanding shares of Common Stock, (2) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by such Subject Entity making or party to such stock
purchase agreement or other business combination were not outstanding; or (3) such number of shares of Common Stock such that the Subject Entity becomes the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (E) reorganize, recapitalize or reclassify its shares of Common Stock, (ii) that the Company shall, directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related
transactions, allow any Subject Entity to become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (1) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock, (2) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of
Common Stock not held such Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by such Subject Entity were not outstanding, or (3) a percentage of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entity to effect a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their
Common Stock without approval of the stockholders of the Company or (iii) directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of
this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(e) “Group” means a “group” as that term
is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
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(f) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.
(g) “Subject Entity” means any Person,
Persons or Group or any affiliate or associate of any such Person, Persons or Group.
(h) “Successor Entity” means one or more Person or Persons (or, if so elected by the Holder, the Company or its parent entity) formed by, resulting from or surviving any Fundamental
Transaction or one or more Person or Persons (or, if so elected by the Holder, the Company or its parent entity) with which such Fundamental Transaction shall have been entered into.
2. EXERCISE OF WARRANT.
2.1 Method of Exercise. The rights
represented by this Warrant may be exercised by the Holder in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by
notice in writing to the Holder):
(a) An executed Notice of Exercise in
the form attached hereto;
(b) Payment of the Exercise Price either
(i) in cash or by check or wire transfer of immediately available funds, or (ii) pursuant to a Cashless Exercise, as described and permitted below; and
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, shares of Common Stock shall be issued for the Exercise Shares so
purchased, and shall be registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates.
The person in whose name any Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of issuance of the shares of Common Stock, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. The
Exercise Shares issuable upon any exercise of this Warrant shall be issued within two (2) Trading Days following such exercise.
2.2 Cashless Exercise. Notwithstanding any
provisions herein to the contrary, if, at any time during the Exercise Period, the Current Market Price (as defined below) of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), then, in
lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise and the
Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:
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X =
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Y (B-A)
B
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Where:
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X =
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the number of shares of Common Stock to be issued to the Holder.
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Y =
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the number of shares of Common Stock purchasable upon exercise of all of the Warrant or,
if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.
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A =
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the Exercise Price.
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B =
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the Current Market Price of one share of Common Stock.
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“Current Market Price” means on any
particular date:
(a) if the Common Stock is traded on The
Nasdaq Stock Market, the closing price of the Common Stock of the Company on such market on the day prior to the date the Warrant is surrendered for exercise;
(b) if the Common Stock is traded on any
registered national stock exchange but is not traded on The Nasdaq Stock Market, the closing price of the Common Stock of the Company on such exchange on the day prior to the date the Warrant is surrendered for exercise;
(c) if the Common Stock is traded
over-the-counter, but not on The Nasdaq Stock Market or another registered national stock exchange, the closing bid price of the Common Stock of the Company on the day prior to the date the Warrant is surrendered for exercise; and
(d) if there is no active public market
for the Common Stock, the value thereof, the fair value thereof determined by a nationally recognized investment bank selected by the Board of Directors of the Company and the Holder.
2.3 Partial Exercise. If this Warrant is
exercised in part only, the Company shall, upon surrender of this Warrant, execute and deliver, within five (5) Business Days of the date of exercise, a new Warrant evidencing the rights of the Holder, or such other person as shall be designated
in the Notice of Exercise, to purchase the balance of the Exercise Shares purchasable hereunder. In no event shall this Warrant be exercised for a fractional Exercise Share, and the Company shall not distribute a Warrant exercisable for a
fractional Exercise Share. Fractional Warrant shares shall be treated as provided in Section 6 hereof.
2.4 No Settlement for Cash. The Warrant
cannot be settled with the Company for cash and except (a) with respect to fractional shares as provided herein or (b) as compensation for Buy-In on failure to timely deliver Warrant Shares upon exercise in accordance with Section 2.8, the
Company shall have no obligation to pay cash upon any exercise of this Warrant.
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2.5 Exercise Limitation. The Company shall not effect the exercise of this Warrant and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, the
Holder (together with the Holder’s affiliates) would beneficially own in excess of 19.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such
Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be
issuable upon (a) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Holder and its affiliates and (b) exercise or conversion of the unexercised or unconverted portion of any other securities of the
Company beneficially owned by such Holder and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation
contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, filed with the SEC on the date thereof, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation and comply with any rules of the Nasdaq Stock Market. Notwithstanding any of the limitations set forth in this paragraph, this Warrant shall be fully exercisable in connection with a Liquidation Event (as defined
below); provided further that this sentence shall not be given effect to the extent it could conflict with the rules of The Nasdaq Stock Market or any similar rule of any stock exchange on which the Common Stock is listed at the relevant
time. For purposes herein, “Liquidation Event” shall mean the consummation of any
of the following transactions: (i) a merger or consolidation in which the Company is not the surviving entity (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation or continuation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in the stockholders of the Company), (ii) the sale of all or substantially all of the assets of the Company, (iii) the acquisition of all of the outstanding shares of
the Company by a single stockholder and its affiliates as a result of a tender offer or similar transaction or (iv) dissolution, liquidation or winding up of the Company. If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the
Company shall (A) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section
2.5, to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”) and (B) as soon as reasonably practicable, the Company shall return to the
Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic
mail to the Holder the number of shares of Common Stock then outstanding. In the event that the issuance of Warrant Shares to the Holder upon exercise of this Warrant results in the Holder (together with the Holder’s affiliates) being deemed
to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock, the number of shares so issued by which the Holder’s (together with the Holder’s affiliates) aggregate beneficial
ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null
and void and shall be cancelled ab initio, and the Holder shall not have the power
to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess
Shares and reinstate the portion of this Warrant and equivalent number of Warrant Shares in respect of the Excess Shares. No prior inability to exercise this Warrant pursuant to this Section 2.5 shall have any effect on the applicability of the
provisions of this Section 2.5 with respect to any subsequent determination of exercisability.
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2.6 Automatic Exercise. If, at any time
during the Exercise Period, the Company receives stockholder approval to issue more than the Maximum Percentage of shares of Common Stock to the Holder in connection with a “change of control" (as defined by Nasdaq Listing Rule 5635) resulting
from the issuance of shares of Common Stock to the Holder (such approval, the “Required Stockholder Approval”), then the Company shall provide notice to
Holder of such approval. If Holder does not fully exercise this Warrant within following ten (10) days’ after delivery of such notice by the Company to Holder, this Warrant shall automatically be deemed exercised by Holder on the following
Trading Day in accordance with Section 2.2 above.
2.7 Rescission Rights. If the Company fails
to issue the Warrant Shares within two (2) Trading Days following such exercise pursuant to Section 2.1 (other than pursuant to the limitation set forth in Section 2.5), then the Holder will have the right to rescind such exercise, in addition to
any other remedies available to the Holder hereunder, at law or in equity.
2.8 Compensation for Buy-In on Failure to Timely
Deliver Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to issue the Warrant Shares within two (2) Trading Days following such exercise pursuant to Section 2.1 (other than pursuant to
the limitation set forth in Section 2.5), and if after such date the Holder purchases or is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (a) pay in cash to the Holder the amount, if any, by which (i) the Holder’s total purchase price (including brokerage fees and commissions, if any) for the shares so purchased exceeds (ii) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase was executed, and (b) at the option of the Holder,
either reinstate the portion of this Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Warrant Shares that would
have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
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3. COVENANTS OF THE COMPANY.
3.1 Covenants as to Exercise Shares. The
Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period have authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of
this Warrant (an “Authorized Share Failure”), the Company will take all such actions as may be necessary to increase its authorized but unissued shares of
Common Stock (or other securities as provided herein) to such number of shares as shall be sufficient for such purposes. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than one hundred and twenty (120) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. Notwithstanding the foregoing, if any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding shares of Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and
submitting for filing with the SEC an Information Statement on Schedule 14C.
3.2 No Impairment. Except and to the extent
as waived or consented to by the Holder or otherwise in accordance with Section 11 hereof, the Company will not, by amendment of its Articles of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in
the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.
3.3 Notices of Record Date. In the event of
any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date thereof, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or
distribution.
3.4 Distributions. If the Company shall
declare or make any dividend or other distribution of its assets (or rights to acquire its assets) (the “Distributed Property”) to holders of shares of
Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be
entitled, upon exercise of this Warrant for the purchase of any or all of the Exercise Shares, to receive the amount of Distributed Property which would have been payable to the Holder had such Holder been the holder of such Exercise Shares on
the record date for the determination of the stockholders entitled to receive such Distributed Property. The Company will at all times set aside in escrow and keep available for distribution to such Holder upon exercise of this Warrant a portion
of the Distributed Property to satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence.
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3.5 Fundamental Transactions. The Company
shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3.5, including agreements to
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, including, without limitation, which is exercisable for a
corresponding number of shares of capital stock 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 adjustments to the 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). Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of the applicable Fundamental Transaction, the provisions of this
Warrant 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 with the same effect as if such
Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Section 3.4, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of common stock (or its equivalent) of the Successor Entity (including its parent entity) and/or other securities, cash, assets
or other property which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but
prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3.4, which shall continue to be receivable thereafter)) issuable upon
the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) (collectively, the “Corporate Event Consideration”) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). The provision made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events.
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3.6 Required Stockholder Approval. From and after the date hereof through the earlier of (a) the expiration of the Exercise Period and (b) receipt of the Required Stockholder Approval, the Company shall seek from its
stockholders the Required Stockholder Approval at each annual meeting of such stockholders. In connection with such meeting, the Company shall (x) provide that the proxy statement for each such annual meeting includes a proposal to vote on the Required Stockholder Approval and a recommendation by the Company’s board of directors to
the stockholders that the stockholders approve such proposal and (y) use its reasonable best efforts to solicit its stockholders’ approval of such proposal. Notwithstanding the foregoing, if any such time the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding shares of Common Stock for the Required Stockholder Approval, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an
Information Statement on Schedule 14C.
4. REPRESENTATIONS OF HOLDER.
4.1 Acquisition of Warrant for Personal Account.
The Holder represents and warrants that it is acquiring the Warrant and the Exercise Shares solely for its account for investment and not with a present view toward the public or distribution of said Warrant or Exercise Shares or any part thereof
and has no intention of selling or distributing said Warrant or Exercise Shares or any arrangement or understanding with any other persons regarding the sale or distribution of said Warrant or, except in accordance with the provisions of the
Purchase Agreement, the Exercise Shares, and except as would not result in a violation of the Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the Securities Act and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) the Exercise Shares except in accordance with the provisions of the Purchase Agreement or pursuant to and in accordance with the Securities Act. By making the representations herein, the Holder does not
agree to hold any of the Warrant or any of the Exercise Shares for any minimum or other specific term and reserves the right to assign, transfer or otherwise dispose of any of such Securities at any time in accordance with or pursuant to a
registration statement or a valid exemption under the Securities Act.
4.2 Securities Are Not Registered.
(a) The Holder understands that the
offer and sale of the Warrant or the Exercise Shares have not been registered under the Securities Act on the basis that no distribution or public offering of the securities is to be effected. The Holder realizes that the basis for the exemption
may not be present if the Holder’s representations in this Section 4 are untrue.
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(b) The Holder recognizes that the
Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Holder recognizes that the Company has no obligation to register
the Warrant, except as provided in the Purchase Agreement.
(c) The Holder is aware that neither the
Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among other things, the availability of certain current public information about the Company and the
resale following the required holding period under Rule 144. Holder is aware that any such sale made in reliance on Rule 144, if Rule 144 is available, may be made only in accordance with the terms of Rule 144.
4.3 Disposition of Warrant and Exercise Shares.
(a) The Holder further agrees not to
make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until:
(i) The Company shall have received a
letter secured by the Holder from the SEC stating that no action will be recommended to the SEC with respect to the proposed disposition;
(ii) There is then in effect a
registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or
(iii) The Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities
laws; provided, that no notice, detailed statement of the circumstances surrounding the proposed disposition or opinion shall be required for any disposition made or to be made in accordance with the provisions of Rule 144.
(b) The Holder understands and agrees
that all certificates evidencing the Exercise Shares to be issued to the Holder may bear a legend in substantially the following form; provided, that such legend shall be removed (or such Exercise Shares shall be issued without such legend upon
exercise of this Warrant) as required pursuant to the Purchase Agreement:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.
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5. ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like, the number and class of shares available under the Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of the Warrant, on exercise for the
same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment. The form of this Warrant need not be changed because of any adjustment in the number, class, and kind of shares subject to this Warrant. The Company
shall promptly notify the Holder in writing of any adjustment in the Exercise Price and/or the total number, class, and kind of shares issuable upon exercise of this Warrant, which notice shall specify the Exercise Price and number, class and
kind of shares under this Warrant after giving effect to such adjustment.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this
Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the Exercise Price by such fraction.
7. [RESERVED].
8. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.
9. TRANSFER OF WARRANT. Subject to applicable laws and compliance with Section 4.3 hereof, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of
this Warrant and the form of assignment attached hereto to any transferee designated by Holder. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.
10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in
the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed and in lieu thereof.
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11. MODIFICATIONS AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the Company and the Holder.
12. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed email or
facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day after
deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature page and to the Holder at the
address on the Company records, or at such other address as the Company or Holder may designate by 10 days’ advance written notice to the other party hereto.
13. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
14. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws of the State of New York without without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.
The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company hereby
irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company in accordance with Section 12 above and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the
Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the
other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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15. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this Warrant.
16. SEVERABILITY. The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, or affect any
other provision of this Warrant, which shall remain in full force and effect.
17. ENTIRE AGREEMENT. This Warrant and the Purchase Agreement (including the schedules and exhibits) constitute the entire agreement between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject matter.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first
above indicated.
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By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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Chief Executive Officer
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NOTICE OF EXERCISE
(1) The undersigned hereby elects
to purchase ________ Exercise Shares of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form
of (check applicable box):
☐ in lawful money of the United States; or
☐ if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the cashless exercise
procedure set forth in Section 2.2, to exercise this Warrant with respect to such number of Warrant Shares.
(3) Please issue said Exercise
Shares in the name of the undersigned or in such other name as is specified below:
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The Exercise Shares shall be delivered to the following DWAC Account Number:
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Name of Investing Entity:
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Signature of Authorized Signatory of Investing Entity:
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Name of Authorized Signatory:
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Title of Authorized Signatory:
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Date:
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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(Please Print)
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Email:
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Facsimile:
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Dated:
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Holder’s Signature:
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Holder’s Address:
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