Contract
THIS AMENDED AND RESTATED WARRANT AGREEMENT, DATED AS OF DECEMBER 13, 2013, HEREBY AMENDS AND RESTATES IN ITS ENTIRETY WARRANT NO. W-2 ISSUED BY DVINEWAVE INC. TO MDB Capital Group, LLC ON MAY 16, 2013.
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS AGREEMENT NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
DVINEWAVE INC.
Amended and Restated Warrant To Purchase Common Stock
Warrant No.: ARW-2
Date of Original Issuance: May 16, 2013 (“Issuance Date”)
DvineWave Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, MDB Capital Group, LLC, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the then Applicable Per Share Exercise Price (as defined below), upon exercise of this Amended and Restated Warrant shares of Common Stock (including any warrants to purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the Applicable First Exercise Date (as defined below), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), a number of fully paid and non-assessable shares of Common Stock (the “Warrant Shares”) determined in accordance herewith by dividing the then remaining Aggregate Exercise Price (as defined below) by the Applicable Per Share Exercise Price. As set forth herein, the exercise price may be paid in cash or through a Cashless Exercise provision. Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 16. “Applicable First Exercise Date” shall mean six (6) months after the date of the Initial Public Offering (the “IPO Date”); except that this Warrant may be exercised before the IPO Date contingent upon the closing of any Fundamental Transaction and the holder may exercise its put right in the event of an Illiquid Exit Transaction.
The Holder acknowledges that this Warrant is issued pursuant to that certain engagement agreement dated January 23, 2013 between the Company and Holder for certain investment banking services (the “Engagement Agreement”), specifically to satisfy the Company’s obligation under Section 2(b) thereof to issue a warrant. In accordance with such Engagement Agreement, the Company acknowledges receipt of Holder’s payment of One Thousand Dollars ($1,000) made to the Company within three (3) Business Days of the Issuance Date. Without limiting Company’s obligation to pay the cash portion of compensation due to holder in connection with the transactions contemplated by the Securities Purchase Agreement (the “Bridge Financing Transaction”), Holder acknowledges that Company has satisfied all obligations to issue a warrant or other equity compensation to Holder under the terms of the Engagement Agreement in connection with the Bridge Financing Transaction.
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(c) Number of Shares. The total number of Warrant Shares subject to this Warrant will be calculated based on the initial Aggregate Exercise Price (or if divided by reason of a transfer or sale of the Warrant, the proportionate amount of such Aggregate Exercise Price) and the number shares for which this Warrant has been previously exercised and the Applicable Per Share Exercise Price(s) at the time of such previous exercise(s), divided by the then Applicable Per Share Exercise Price. Upon any exercise of this Warrant, the Aggregate Exercise Price remaining under this Warrant will be reduced by the amount of the Extended Exercise Price paid or, in the case of a Cashless Exercise deemed paid, (which for these purposes will be the number of shares for which this Warrant is so exercised, multiplied at the time of such exercise by the Applicable Per Share Exercise Price). For example, (i) if upon the Issuance Date the Aggregate Exercise Price is $550,000; if thereafter while the Base Initial Per Share Exercise Price is applicable and is $0.52 per share the Holder exercises for cash with respect to 100,000 Warrant Shares, the Holder would receive 100,000 shares of Common Stock, and the remaining Aggregate Exercise Price would be $487,600 (i.e., $550,000 less 120% x $52,000); (iii) if thereafter while the Base Adjusted Per Share Exercise Price is applicable and $1.00 per share, the Holder exercises in a Cashless Exercise in respect of 100,000 Warrant shares at a time when a Closing Sale Price (i.e., “B” in the Cashless Exercise Formula) applies and is $10.00 per share, the Holder would receive 88,000 shares (i.e., ((100,000 x $10.00) – (100,000 x 120% x $1.00)) / $10.00 = ($1,000,000 - $120,000) / $10.00 = $880,000 / $10.00 = 88,000 shares) and the Aggregate Exercise Price would be further reduced (by 100,000 x 120% x $1.00 = $120,000) to $367,600.
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Net Number = (A x B) - (A x C)
B
For purposes of the foregoing formula:
A= the total number of shares with respect to which this Warrant is then being exercised.
B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day, or (iv) if the Common Stock is not listed on any Eligible Market and “B” is determined in connection with an Illiquid Exit Transaction, the fair market value of the Common Stock as determined by the Appraiser in its sole discretion.
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C= the Applicable Per Share Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
(h) Registration Rights. The Holder will have the piggy-back and demand registration rights set forth in a separate registration rights agreement to be executed and delivered by the Company on the date of initial issuance of this Warrant.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Applicable Per Share Exercise Price and, indirectly, the number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
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3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if at any time the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) 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 while this Warrant remains outstanding, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
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6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, so long as this Warrant is outstanding, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
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8. NOTICES. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, so long as this Warrant is outstanding, the Company will give written notice to the Holder (i) promptly, but in any event within five (5) days, after each adjustment of the Base Initial Per Share Exercise Price or Base Adjusted Per Share Exercise Price, as may be applicable (or in the unexpected event that the Base Aggregate Exercise Price is adjusted or the number of Warrant Shares is adjusted (other than as a result of adjustment of the Base Initial Per Share Exercise Price or the Base Adjusted Per Share Exercise Price)), setting forth in reasonable detail, and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect any dividend or distribution in the form of any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that if the Company is a Reporting Company such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction. If the Company is a Reporting Company, to the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall no later than simultaneously file such notice with the SEC (as defined in the Securities Purchase Agreement) pursuant to a Current Report on Form 8-K.
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Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, if delivered personally; (ii) when sent, if sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e-mail server that such e-mail could not be delivered to such recipient) and (iv) if sent by overnight courier service, one (1) Trading Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. If notice is given by facsimile or email, a copy of such notice shall be dispatched no later than the next business day by first class mail, postage prepaid. The addresses, facsimile numbers and e-mail addresses for such communications shall be:
If to the Company: |
DvineWave Inc. |
000 Xxxxxxx Xx. |
Xxx Xxxxx, XX 00000 |
E-mail: xxxxxxxx@xxxxxxxxx.xxx |
Attention: Xxxxxxx Xxxxxxx, President |
With a copy (for informational purposes only) to: |
K&L Gates LLP |
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx |
Xxxxxxxxx, XX 00000 |
Fax Number: 000.000.0000 |
E-mail: xxxx.xxxxx@xxxxxxx.xxx |
Attention: Xxxx X. Xxxxx, Esq. |
If to a Holder, to its address, facsimile number or e-mail address set forth herein or on the books and records of the Company.
Or, in each of the above instances, to such other address, facsimile number or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party at least five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date and recipient facsimile number or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iv) above, respectively. A copy of the e-mail transmission containing the time, date and recipient e-mail address shall be rebuttable evidence of receipt by e-mail in accordance with clause (iii) above.
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9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder. Holder shall be entitled, at its option, to the benefit of any amendment of any other similar warrant. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
10. SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
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13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Base Initial Per Share Exercise Price or the Base Adjusted Per Share Exercise Price (as applicable) or the Applicable Exercise Price, the Closing Sale Price or the Bid Price, or other fair market value (other than the Appraised Value in connection with Holder’s exercise of its put rights under Section 4(c) in connection with an Illiquid Exit Transaction, which shall be determined by the Appraiser) if applicable or the Aggregate Exercise Price or the number of Warrant Shares for which this Warrant is exercisable or the number of Warrant Shares to be issued upon a Cashless Exercise, the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or if later within two (2) Business Days after receipt of formal notice from the other party that there is a disagreement and that such party is invoking dispute resolution under this Section 13 (the “Dispute Resolution Notice”) or (ii) if no notice gave rise to such dispute but either Company or Holder learns that there is a disagreement, within two (2) Business Days after receipt of a Dispute Resolution Notice. After dispatch and receipt of any Dispute Resolution Notice, Holder and the Company will meet and confer (in person or, at the election of either party, by telephone) to attempt in good faith to resolve the disagreement. If the Holder and the Company are unable to agree upon such determination or calculation (as the case may be) within three (3) Business Days (the Business Day following the end of such three (3) Business Day period is the “Submission Deadline”) of the later of (x) the receipt of the Dispute Resolution or (y) three (3) Business Days after the request for or receipt of (whichever occurs first) each other’s disputed determination or arithmetic calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, on or about the Submission Deadline submit (a) the disputed determination or calculation of Closing Sale Price or the Bid Price or other applicable fair market value (as the case may be) to an independent, reputable investment bank of national standing selected by the Holder and reasonably acceptable to the Company (if Holder has provided contact information to engage such a bank, or if Holder has not provided such information, an investment bank selected by the Company that is reasonably acceptable to Holder) or (b) any other disputed determination or calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and request that the investment bank or accountant notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error. In the event the disputed calculation or determination is determined to be within three percent (3%) of the Company’s determination, the Holder shall reimburse the Company for the fees of such investment bank or accountant in connection with their work on the disagreement, and if Holder does not reimburse the Company within five (5) Business Days (or if earlier, before the next cash payment from the Company to the Holder is due under this Warrant), the Company may, at the Company’s election, but shall not be required to offset such fees against any amounts owed by the Holder to the Company from time to time, or may, at the Company’s election, but shall not be required to, reduce Aggregate Exercise Price hereunder as if the Holder had effected a Cashless Exercise hereunder for a number of shares sufficient to repay such amount owed in the form of cancellation of the shares issued upon such deemed Cashless Exercise at a value per such share equal to the value determined as “B” under Section 1(e) hereof as of the date of the last day of such five (5) Business Day Period.
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14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the Registration Rights Agreement and any other agreements between the Company and one or more of the Holders, at law or in equity (including a decree of specific performance and/or other injunctive relief); provided, the Holder or any Person claiming through or by right of the Holder shall not be entitled to any duplication or multiplication of damages (such as but not limited to a recovery or mitigation of damages in the form of exercise of Buy-In Rights followed by pursuit by Holder of damages that would be duplicative of such recovery or mitigation); provided further that the Company shall not be liable for incidental or consequential damages for any failure by the Company to comply with the terms of this Warrant even if the Company has been advised of the possibility thereof. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations to issue Warrant Shares on exercise hereof will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.
15. TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, subject to applicable law and any other agreements between the Company and the Holder or any previous holder of a warrant that transferred directly or indirectly this Warrant to the Holder.
16. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a) “Bid Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(b) “Bloomberg” means Bloomberg, L.P.
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(c) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(d) “Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(e) “Common Stock” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(f) “Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(g) “Eligible Market” means The New York Stock Exchange, the NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.
(h) “Expiration Date” means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.
(i) “Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company already held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) (I) reorganize, recapitalize or reclassify the Common Stock, (II) effect or consummate a stock combination, reverse stock split (other than a stock split or reverse stock split effected in connection with an underwritten initial public offering in consultation with the underwriter for such public offering (the “Authorized Reverse Split”)) or other similar transaction involving the Common Stock or (III) make any public announcement or disclosure with respect to any stock combination, reverse stock split (other than solely with respect to the Authorized Reverse Split) or other similar transaction involving the Common Stock (including, without limitation, any public announcement or disclosure of (x) any potential, possible or actual stock combination, reverse stock split (other than the Authorized Reverse Split) or other similar transaction involving the Common Stock or (y) board or stockholder approval thereof, or the intention of the Company to seek board or stockholder approval of any stock combination, reverse stock split (other than the Authorized Reverse Split) or other similar transaction involving the Common Stock), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company.
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(j) An “Illiquid Exit Transaction” means a Fundamental Transaction of any of the following types if the consideration received by the Company or the holders of the Company’s Common Stock, as may be applicable, in connection with such Fundamental Transaction is neither substantially or entirely (i) cash or an obligation to pay cash or (ii) Liquid Public Stock: (A) a Fundamental Transaction contemplated in Section 16(i)(i)(1) where the Company is not the surviving Person in such Fundamental Transaction or, as may be applicable in the event of a transaction involving a subsidiary of the Company, the Company is not the Parent Entity after the consummation of such Fundamental Transaction; (B) a Fundamental Transaction contemplated in Section 16(i)(i)(2); (C) a Fundamental Transaction contemplated by Section 16(i)(i)(3) after which the Common Stock of the Company would not be listed on the Principal Market or on any Eligible Market or in the event that the Company or, as applicable, the Successor Entity would not undertake an obligation for the benefit of Holder to maintain such listing until at least five (5) years after the date of such Fundamental Transaction; (D) a Fundamental Transaction contemplated by Section 16(i)(i)(4); or (E) a Fundamental Transaction contemplated by Section 16(ii) after which the Common Stock of the Company would not be listed on the Principal Market or on any Eligible Market or in the event that the Company or, as applicable, the Successor Entity would not undertake an obligation for the benefit of Holder to maintain such listing until at least five (5) years after the date of such Fundamental Transaction.
(k) The “Initial Public Offering” is defined as the consummation of a firm commitment underwritten initial public offering of the Company’s Common Stock that raises at least $10,000,000 in gross proceeds.
(l) “Liquid Public Stock” with respect to any Fundamental Transaction means consideration for such Fundamental Transaction in the form of common stock or another class or series of capital stock of that is registered and freely tradable and listed or quoted on any Eligible Market.
(m) “Notes” means those certain convertible secured promissory notes of the Company offered in a private placement and issued under the terms of the Securities Purchase Agreements entered into by various investors with the Company, all of like tenor, initially dated on or about May 16, 2013.
(n) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(o) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
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(p) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(q) “Principal Market” means the a national securities exchange in the United States or a recognized United States trading medium which provides daily reports of the prices at which securities are offered and traded.
(r) “Registration Rights Agreement” means the registration rights agreement of even date herewith to which the initial Holder of this Warrant and the Company are party.
(s) “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, together with the regulations promulgated thereunder.
(t) “Securities Purchase Agreement” means that certain agreement to purchase convertible secured notes of the Company, which agreement is between the investors in the offering of the Notes on the one hand and the Company on the other hand, entered into on or about May 16, 2013.
(u) “Successor Entity” means the Person (or, if so elected by the Holder or otherwise applicable, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder or otherwise applicable, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(v) “Trading Day” means, as applicable, (x) with respect to all price determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(w) “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).
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17. MARKET STAND-OFF. In connection with the initial public offering of the Company’s securities, if any, and upon request of the managing or lead underwriter made to the Company in connection with such offering, Holder will agree with the Company and the underwriter not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however or whenever acquired (other than those included in the registration, if any) without the prior written consent of the managing or lead underwriter of such offering, for a period of time (not to exceed three hundred sixty five (365) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting requirements binding on such Holder that are substantially consistent with this Section 17 as may be requested by the underwriters at the time of such offering; provided, however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16) day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section 17 shall continue to apply until the end of the third (3rd) trading day following the expiration of the fifteen (15) day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond four hundred and one (401) days after the effective date of the registration statement. In order to enforce the restriction set forth above or any other restriction agreed by Holder, including without limitation any restriction requested by the underwriters of any initial public offering of the securities of the Company agreed by such Holder, the Company may impose stop-transfer instructions with respect to any security acquired under or subject to this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section 17.
[Signature page follows]
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DVINEWAVE INC. | |
By: | /s/ Xxxxxxx Xxxxxxx |
Name: Xxxxxxx Xxxxxxx | |
Title: Chief Executive Officer |
Acknowledged and Agreed:
MDB CAPITAL GROUP LLC
By: | /s/ Xxxxxxx XxXxxxxxxxxxxx | |
Name: | Xxxxxxx XxXxxxxxxxxxxx | |
Title: | Authorized Principal |
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
DVINEWAVE INC.
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of DvineWave Inc., a Delaware corporation (the “Company”), evidenced by the Warrant to purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
____________ | a “Cash Exercise” with respect to _________________ Warrant Shares; and/or |
____________ | a “Cashless Exercise” with respect to _______________ Warrant Shares. |
In the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
_______________________
_______________________
_______________________
_______________________
Date: _______________ __, ______ | |
Name of Registered Holder | |
By: ________________________________ | |
Name: | |
Title: |
EXHIBIT B
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________, 20__, from the Company and acknowledged and agreed to by _______________.
DVINEWAVE INC. | |
By: | |
Name: | |
Title: |