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Warrant Agreement
Additionally, pursuant to the terms of the SPA, the Company granted the Investor Warrants to purchase up to 21,800,000 shares of Common Stock for each share purchased for cash in this offering. The Warrants are exercisable beginning on the initial exercise date, which is the earlier of the date the Company obtains the approval of its stockholders to the issuance of the shares of Common Stock underlying the Warrants (the “Warrant Shares”) or the six-month anniversary of the date of issuance, at an exercise price of $0.3654 per share (“Exercise Price”). The Warrants will be exercisable for 42 months following the closing date.
If the Company has an effective registration statement registering the Warrant Shares, the Warrants may only be exercised for cash. Beginning six months after the issuance of the Warrants, in the event no effective registration statement registering, or no current prospectus is available for the resale of the Warrant Shares, the Investors may exercise the Warrants by means of a “
cashless exercise.” Subject to limited exceptions, a holder of Warrants will not have the right to exercise any portion of its Warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that upon 61 days’ prior notice to the Company, the holder may increase the Beneficial Ownership Limitation, provided that in no event shall the Beneficial Ownership Limitation exceed 9.99%.
