SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported) January 27, 2020

 

NANOVIRICIDES, INC.
(Exact Name of Registrant as Specified in Its Charter)

 

Nevada 001-36081 76-0674577
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
     

1 Controls Drive,

Shelton, Connecticut 06484

06484
(Address of Principal Executive Offices) (Zip Code)

 

(203) 937-6137
(Registrant's Telephone Number, Including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:   Trading Symbol(s)   Name of each exchange on which registered:
Common Stock   NNVC   NYSE-American

  

 

 

 

 

Item 1.01       Entry into a Material Definitive Agreement.

 

On January 24, 2020, NanoViricides, Inc. (the “Company”) entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with the investor parties (collectively, the “Investors”) to that certain Securities Purchase Agreement dated as of February 27, 2019 (the "Securities Purchase Agreement") to settle an action commenced by the Investors to, among other things, enjoin the Company’s previously disclosed underwritten public offering (the “Action”). The Company and each of the Investors agreed to enter into an Exchange Agreement with the Company to more fully implement the terms of a Binding Term Sheet attached to the Settlement Agreement.

 

As was previously disclosed, we had entered into the Securities Purchase Agreement pursuant to which we issued the Investors an aggregate of 347,222 shares of our common stock, par value $0.001 per share (the “Common Stock”) and warrants (the “Old Warrants”) to purchase an additional 347,222 shares of Common Stock). On January 27, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with each of the Investors. Pursuant to the terms and conditions of the Exchange Agreement, the Investors agreed to terminate certain restrictive covenants in the Securities Purchase Agreement, including a bar on all offerings of securities below the exercise price of the Old Warrants, and the Company agreed to exchange all of the Investors’ Old Warrants for an aggregate of (i) 677,224 shares of Common Stock and (ii) warrants to purchase 347,222 shares of Common Stock at an exercise price of $3.00 per share (the “New Warrants”). The New Warrants are, subject to the availability of authorized shares of Common Stock of which there are none today, immediately exercisable and expire on August 27, 2024. The Exchange Agreement contains customary representations, warranties and covenants made by us. The Exchange Agreement is required to close on or before January 29, 2020.

 

The exercise price of the New Warrants is subject to adjustment in the case of customary events such as stock dividends or other distributions on shares of common stock or any other equity or equity equivalent securities payable in shares of common stock, stock splits, stock combinations, reclassifications or similar events affecting our Common Stock, and also, subject to limitations, upon any distribution of assets, including cash, stock or other property to our stockholders and upon issuances of Common Stock below the exercise price of the New Warrants. The exercise of the New Warrants is subject to certain beneficial ownership and other limitations set forth in the New Warrants.

 

The foregoing is only a summary of the material terms of the documents related to the transactions set forth herein. The foregoing description of the Settlement Agreement, the Exchange Agreement and the Common Stock Purchase Warrant are qualified in their entirety by reference to those documents, which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K, which are incorporated herein by reference. 

 

Item 3.02       Unregistered Sales of Equity Securities.

 

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02. The issuance of the New Warrants by the Company under the Exchange Agreement and the shares of Common Stock issuable upon exercise of the New Warrants is exempt from registration pursuant to Section 3(a)(9) of the Securities Act of 1933.

 

Item 8.01       Other Events.

 

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 8.01.

  

 

Item 9.01.      Financial Statements and Exhibits.

 

(d)       Exhibits

 

Exhibit No.   Description
10.1   Form of Settlement Agreement and Mutual Release
10.2   Form of Exchange Agreement
10.3   Form of Common Stock Purchase Agreement

 

SIGNATURES

 

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.

 

  NANOVIRICIDES, INC.
     
Date: January 28, 2020 By: /s/ Anil Diwan
    Name: Anil Diwan
    Title: Chairman, President

 

Exhibit 10.1

 

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

 

This Settlement Agreement and Mutual Release (“AGREEMENT”) is entered into as of January 24, 2020 by and among Hudson Bay Master Fund Ltd., a company formed under the laws of the Cayman Islands, (“HUDSON BAY”); Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, a company formed under the laws of the Cayman Islands (“ALTO”), and Nanoviricides, Inc., a company incorporated under the laws of Nevada (“NANOVIRICIDES” or the "COMPANY"). In this AGREEMENT, HUDSON BAY AND ALTO are collectively referred to as the "PURCHASERS," and HUDSON BAY, ALTO and NANOVIRICIDES are collectively referred to as the “PARTIES” and individually as a “PARTY.”

 

RECITALS

 

A.            On February 27, 2019, the Parties entered into a Securities Purchase Agreement (the “SPA”) and Common Stock Purchase Warrant (the "Warrant") pursuant to which PURCHASERS provided $2.5 million in financing in a registered direct offering in exchange for 6,944,446 units, each comprised of one share of common stock (priced at $0.36 per share) and one five-year Warrant (exercisable at $0.61 per share). In connection with the deal, Purchasers bargained for the right to participate in any subsequent financings offered by the Company, and the Company agreed not to issue new common shares at a price below the exercise price of Purchasers’ Warrants for one year.

 

B.            The COMPANY subsequently executed a 20-for-1 reverse stock split. Section 3(a) of the Warrants required that the exercise price of the Warrants be adjusted to $12.20. Accordingly, pursuant to Section 4.12 of the SPA, thereafter the Company was prohibited from issuing Common Stock below $12.20 per share.

 

C.             On January 9, 2020, the COMPANY provided a Subsequent Financing Notice pursuant to Section 4.11(b) of the SPA. In response, HUDSON BAY sought detail about the pricing of the COMPANY's contemplated offering. The COMPANY did not respond to HUDSON BAY'S request.

 

D.            On January 21, 2020, the COMPANY announced an offering of 2.5 million shares of the Company's common stock at a price of $3.00 per share, as well as the grant to the underwriters of an option to purchase up to 375,000 additional shares of common stock to cover over-allotments at the public offering price. The COMPANY did not provide a second Subsequent Financing Notice as provided for in Section 4.11(f) of the SPA.

 

E.            Section 4.11 of the SPA provides Purchasers “the right to participate in up to an amount of the Subsequent Financing equal to 50% of the Subsequent Financing…on the same terms, conditions and price provided for in the Subsequent Financing.” Section 4.12 of the SPA prohibits the Company from issuing Common Stock “ at an effective price below the then Exercise Price of the Warrant.”

 

F.            The Subsequent Financing announced by the Company is priced at $3, below the exercise price of Purchasers’ Warrants, in breach of Section 4.12.

 

 

 

G.            PURCHASERS filed a Complaint against the COMPANY on January 23, 2020 in the Supreme Court in the State of New York, County of New York (the “Court”) alleging violations of the SPA; the action is captioned Hudson Bay Master Fund Ltd. et al v. Nanoviricides, Inc., Index No.650515/2020 (the “Action”).

 

H             PURCHASERS moved for an order to show cause as to why an order should not be made and entered preliminarily enjoining and restraining the COMPANY. from (i) at any time prior to March 1, 2020, consummating any common stock offering without first providing Purchasers with a Second Subsequent Financing Notice with the requisite pricing and other information and fulfilling any elections responsive thereto from the Purchasers pursuant to the Securities Purchase Agreement, and (ii) for so long as any Warrants remain outstanding, consummating any common stock offering at a price below the $12.20 per share exercise price of Purchasers’ Warrants pursuant to the Securities Purchase Agreement without Purchasers’ express written consent.;

 

I.              Following a hearing on the Order to Show Cause, the Court stated that ti would enter a temporary restraining order ("TRO") enjoining the Transaction on the posting of a bond by PURCHASERS. In connection therewith, to prevent the immediate entry of the TRO, the COMPANY agreed to adjourn their closing until 2:00 p.m. to permit the PARTIES to consensually resolve their dispute before the Court entered a TRO..

 

J.             The PARTIES now desire to document that settlement and fully and finally settle and terminate all differences, disputes, and disagreements between them, without further dispute or litigation, in accordance with the terms and conditions set forth in this AGREEMENT.

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and understandings contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the PARTIES agree as follows:

 

1.             Terms and Dismissal of the Action

 

1.1          Term Sheet

 

1.1.1        The PARTIES have agreed the Binding Term Sheet, attached hereto as Exhibit I, which is fully incorporated by reference.

 

1.2           Settlement Payment.

 

1.2.1        COMPANY has agreed to bay HUDSON BAY'S attorneys' fees and expenses, expected to be about $150,000 and Alto's attorneys' fees and expenses, expected to be about $6,000. COMPANY has also agreed to pay PURCHASERS any other amounts due pursuant to the Binding Term Sheet (the “Settlement Payment”) within five business days after execution of this AGREEMENT by all PARTIES, provided that, so long as this AGREEMENT is finalized and signed by all PARTIES.

 

1.2.2        The Settlement Payment will be made via wire transfer. The wire transfer information is as follows:

 

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For Hudson Bay:

  

 

For Alto:

 

 

1.3 Dismissal of the Action

 

1.3.1       Within two business days after full compliance with the Binding Term Sheet, counsel of record in the Action for PURCHASERS will e-file with the Court a Stipulation of Dismissal.

 

2. Mutual General Release and Covenants Not to Sue

 

2.1 Definitions.

 

2.1.1       “CLAIMS” means any and all accounts, actions, causes of action, claims, compensation, contracts, costs, damages, debts, delay damages, demands, expenses, fees, indebtedness, judgments, liabilities, liens, losses, obligations, rights of contribution, rights of indemnity and suits of every nature whatsoever, in law, admiralty or equity, whether known, unknown, fixed or contingent, that the releasing parties ever had, now have or hereafter may acquire against the released parties, for, upon, or by reason of any act, omission, matter, cause or thing whatsoever, from the beginning of the world to the date of this AGREEMENT, arising out of, based on or relating in any way to the claims asserted in the Action, including but not limited to the prosecution or defense of the Action, provided, however, “CLAIMS” does not include CLAIMS to enforce this AGREEMENT.

 

2.1.2       "PURCHASERS GROUP" means HUDSON BAY, ALTO and each of their respective parents, subsidiaries, affiliates, members and parents of members, predecessors, successors, assigns and beneficiaries, and their current and former officers, directors, employees, representatives, agents, independent contractors, attorneys, equity holders, interest holders and all persons acting by, through or in concert with them

 

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2.1.3        COMPANY GROUP” means NANOVIRICIDES and its parents, subsidiaries, affiliates, members and parents of members, predecessors, successors, assigns and beneficiaries, and their current and former officers, directors, employees, representatives, agents, independent contractors, attorneys, equity holders, interest holders and all persons acting by, through or in concert with them.

 

2.2           Release of COMPANY GROUP by PURCHASERS GROUP.

 

2.2.1        PURCHASERS, on behalf of themselves and, to the fullest extent permitted by law, the PURCHASERS GROUP, hereby releases, acquits, and forever discharges the COMPANY GROUP from any and all CLAIMS the PURCHASERS GROUP ever had, now have or hereafter may acquire against the COMPANY GROUP, or any of them.

 

2.3           Covenant Not to Sue.

 

2.3.1        PURCHASERS covenants not to assert, directly or indirectly, against the COMPANY GROUP any CLAIMS.

 

2.3.2        PURCHASER may seek a temporary restraining order or preliminary or permanent injunction against any violation of this Section 2.3. The PARTIES agree that monetary damages would be inadequate to remedy any violation of this Section 2.3.

 

2.4           Release of PURCHASERS GROUP by COMPANY GROUP.

 

2.4.1        COMPANY, on behalf of themselves and, to the fullest extent permitted by law, the COMPANY GROUP, hereby releases, acquits and forever discharges the PURCHASERS GROUP from any and all CLAIMS the COMPANY GROUP ever had, now have or hereafter may acquire against the PURCHASERS GROUP, or any of them.

 

2.5           Covenant Not to Sue.

 

2.5.1        COMPANY covenants not to assert, directly or indirectly, against the PURCHASERS GROUP any CLAIMS.

 

2.5.2         PURCHASERS and PURCHASERS GROUP may seek a temporary restraining order or preliminary or permanent injunction against any violation of this Section 2.5. The PARTIES agree that monetary damages would be inadequate to remedy any violation of this Section 2.5.

 

2.6           MISTAKE/RELEASE OF UNKNOWN CLAIMS.

 

2.6.1        In entering into this Agreement, each PARTY assumes the risk of any mistake of fact or law. If the PARTIES, or any of them, should later discover that any fact they relied upon in entering this AGREEMENT is not true, or that their understanding of the facts or law was incorrect, the PARTIES shall not be entitled to seek rescission of this AGREEMENT or revival of any CLAIMS by reason of such discovery. This AGREEMENT is intended to be final and binding upon each PARTY regardless of any mistake of fact or law.

 

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2.6.2         Each PARTY expressly waives the benefits of any statutory provision or common law rule that provides, in sum or substance, that a release does not extend to claims that the party does not know or suspect to exist in its favor at the time of executing the release, which if known by it, would have materially affected its settlement. In particular but without limitation, each Party expressly waives the provisions of California Civil Code section 1542, as well as any other similar state or federal law, which statute reads:

 

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

 

3.             Other Provisions

 

3.1           No Admission of Liability

 

This AGREEMENT and its provisions shall not be deemed an admission as to the existence or extent of liability concerning any CLAIMS. Any such liability is expressly denied.

 

3.3           Binding Effect

 

This AGREEMENT shall be binding upon and shall inure to the benefit of the PARTIES, their legal representatives, successors, assigns, directors, officers, insureds, shareholders, members, partners, agents, and employees.

 

3.4           Governing Law

 

This AGREEMENT shall be construed in accordance with and governed by the laws of the State of New York without regard to conflict of law principles that might otherwise cause the law of a different jurisdiction to apply.

 

3.5           Jurisdiction

 

All disputes arising out of or relating to this AGREEMENT shall be exclusively resolved in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party 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 with this AGREEMENT and agrees not to assert in any action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that any such action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to service of process being served in any such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of deliver) or by email to such party at the address of their counsel below.

 

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3.6           Prevailing Party

 

If any party shall commence an action or proceeding to enforce the provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the non-prevailing party for its reasonable attorney's fees and other costs and expenses incurred in connection with the investigation, preparation and prosecution or defense of such action or proceeding.

 

3.7           No Reliance on Parol Evidence or Other Representations

 

Except as expressly stated in this AGREEMENT, no PARTY has made any statement or representation to any other PARTY regarding any fact, which statement or representation is relied upon by any other PARTY in entering into this AGREEMENT. The PARTIES and their counsel have made such investigation of the facts pertaining to the settlement contained herein as they deem necessary.

 

3.8           Integration Clause

 

This AGREEMENT (and Exhibits 1) constitute a single, integrated written contract expressing the entire agreement of the PARTIES hereto relative to the subject matter hereof. No covenant, agreement, representation or warranty of any kind whatsoever has been made by any PARTY hereto, except as specifically set forth in this AGREEMENT. All prior discussions and negotiations whether written or oral have been and are merged and integrated into, and are superseded by, this AGREEMENT.

 

3.9           No Oral Amendments

 

This AGREEMENT may be altered or amended only by a writing signed by all of the PARTIES.

 

3.10        Counterparts

 

This AGREEMENT may be executed in several counterparts, each of which shall be deemed an original and all of which when taken together shall constitute the whole of the AGREEMENT as between the PARTIES. Signatures transmitted by e-mail shall be deemed original signatures for purposes of this AGREEMENT. True and correct copies of the fully executed AGREEMENT will be effective to enforce the terms and provisions set forth herein against any of the PARTIES.

 

3.11         Attorneys’ Fees, Costs and Expenses

 

Each PARTY agrees that it shall bear its own attorneys’ fees, costs and expenses incurred in connection with the DISPUTE and this AGREEMENT, except as set forth above and the Binding Term Sheet, Exhibit 1 hereto.

 

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3.12         Representation by Counsel

  

Each PARTY acknowledges and agrees that it has been represented by counsel of its choice and has had a reasonable opportunity to discuss this AGREEMENT with its counsel.

 

3.12         Severability

 

If any provision of this AGREEMENT or the application therein is held invalid, the invalidity shall not affect other provisions or applications of this AGREEMENT that can be given effect without the invalid provisions or applications; and to this end the provisions of this AGREEMENT are declared and understood to be severable.

 

3.13         Drafting – No Presumptions

 

The language of this AGREEMENT shall be construed as a whole, according to its fair meaning and intendment, and not strictly for or against any PARTY, regardless of who drafted or was principally responsible for drafting the AGREEMENT or any specific term or condition hereof. This AGREEMENT shall be deemed to have been drafted by all PARTIES, and no PARTY shall urge otherwise.

 

3.14         Authority to Execute this AGREEMENT

 

Each PARTY further represents and warrants that it has the authority and capacity to execute this AGREEMENT, does so knowingly and voluntarily, and does so in the absence of any mistake, duress or coercion.

 

IN WITNESS WHEREOF, the PARTIES hereto have executed this AGREEMENT as of January 24, 2020, as follows.

 

 

Dated: January__, 2020.   HUDSON BAY MASTER FUND LTD
     
     
    Name:                  
    Title:  
     
Dated: January __, 2020.   ALTO OPPORTUNITY MASTER FUND, SPC-SEGREGATED MASTER PORTFOLIO B
     
     
     
    Name:  
    Title:  
     
Dated: January __, 2020.   NANOVIRICIDES, INC
     
     
     
    Name:  
    Title:  

 

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Exhibit I  

 

BINDING TERM SHEET

 

Issuer:   NanoViricides, Inc. (the "Company")
     
Investors:   Hudson Bay Master Fund Ltd. and Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B (the "Investors")
     
Existing Warrants:   Warrants (the "Existing Warrants") to purchase 347,222 shares of the Company’s common stock, par value $0.001 per share (the "Common Stock"), issued by the Company to the Investors in a private placement pursuant to that certain Securities Purchase Agreement, dated February 27, 2019 by and among the Company, the Investors and  any other parties listed on the signature pages attached thereto (the "Existing SPA").
     
Exchange:   The Company shall exchange the Existing Warrants for: (i) 677,224 shares of Common Stock ("New Common Shares") and (ii) new warrants (the "New Warrants" and together with the New Common Shares, the "New Securities") to purchase 347,222 shares of Common Stock with terms substantially identical to the terms of the Existing Warrants, except for (x) an Exercise Price of $3.00 per share (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction relating to the Common Stock occurring after January 24, 2020) (the "New Exercise Price"), (y) the addition of full ratchet economic anti-dilution protection with respect to the New Exercise Price in the form attached hereto as Annex A for any issuance or deemed issuance of Common Stock by the Company or any of its subsidiaries below the New Exercise Price then in effect and (z) the New Warrant will become exercisable in whole or in part to the extent the Company increases its authorized shares of Common Stock.  The foregoing consideration shall be allocated between the Investors pro rata based on their ownership of the Existing Warrants.
     
Reservation of Shares:   As soon as the Company increases its authorized Common Stock, the Company shall reserve no less than 130% of the number of shares of Common Stock issuable upon exercise of the New Warrants for issuances pursuant to the New Warrants (or such lesser number of shares that then becomes authorized).
     
New Securities:   The New Securities will be free and clear of any liens, preemptive rights or other encumbrances, duly authorized, duly and validly issued, fully paid and non-assessable. The New Securities will be exempt from registration under the Securities Act of 1933, as amended (the "1933 Act") by virtue of the exemption afforded by Section 3(a)(9) of the 1933 Act.  The New Securities will not bear any restrictive legend and will be freely tradable by the Investors without any restriction or limitation under applicable securities laws.  Company counsel, at the he Company's sole expense, shall provide any necessary legal opinions to affect the foregoing. The New Securities shall be delivered to the Investors on or before Wednesday January 29, 2020.
     
Waiver:   In consideration for the transactions set forth in this binding term sheet, the Investors hereby waive any objection raised with respect to the Company’s proposed offering of 2,500,000 shares of Common Stock at $3.00 per share pursuant to the Company’s shelf registration statement on Form S-3, as amended (File No. 333-2355306), which became effective on January 9, 2020.

 

 

 

     
Final Documents:   The Company and the Investors shall in good faith negotiate final documents to implement the foregoing in more detail. The final documentation will contain additional and supplementary provisions, including customary representations, warranties, covenants, agreements, payments and remedies.  If the Company fails to sign final documents on or before 8:00 a.m., New York City time, on January 28, 2020 absent breach of this term sheet by the applicable Investor, the Company shall promptly, but in any event within two (2) business days, pay to each non-breaching Investor cash in the amount of $2,750,000 by wire transfer of immediately available funds in accordance with wire instructions provided by such Investor to the Company in writing, and the Company shall immediately adjust the Existing Warrant strike price to $3.00 per share.
     
Fees and Expenses:   The Company shall reimburse each Investor for all of its legal fees and other expenses in connection with the litigation and in connection with the preparation and negotiation of the final documents necessary to implement this binding term sheet.
     
Disclosure:   The Company shall file a current report on Form 8-K on or before 8:30 a.m., New York City time, on January 28, 2020, describing the terms of the transactions contemplated by the Settlement Agreement and Mutual Release and this binding term sheet, all in the form required by the Securities Exchange Act of 1934, as amended, and attaching the form of the Settlement Agreement and Mutual Release and this binding term sheet (and all schedules and exhibits thereto not otherwise attached), as exhibits to such filing (including all attachments, the "8-K Filing").  As of immediately following the filing of the 8-K Filing with the SEC, the Investors shall not be in possession of any material, nonpublic information received from the Company, any of its subsidiaries or any of their respective officers, directors, employees, affiliates or agents, that is not disclosed in the 8-K Filing or in prior filings with the SEC.  In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its subsidiaries or any of their respective officers, directors, employees, affiliates or agents, on the one hand, and the Investors or any of their respective affiliates, on the other hand, shall terminate and be of no further force or effect.  The Company understands and confirms that the Investors will rely on the foregoing in effecting transactions in securities of the Company.  The Company shall not, and shall cause its subsidiaries and its and each of their respective officers, directors, employees, affiliates and agents, not to, provide any of the Investors with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Investor.  

 

2

 

 

Annex 

 

(a)            Adjustment of Exercise Price upon Issuance of Common Stock. . If and whenever on or after January 24, 2020, the Company publicly announces or the Company issues or sells, enters into a definitive, binding agreement pursuant to which the Company is required to issue or sell, or, in accordance with clauses (i) or (ii) of this Section [ ], is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share (the "New Issuance Price") less than a price (the "Applicable Price") equal to the Exercise Price in effect immediately prior to such public announcement, issue or sale or deemed issuance or sale or entry into such a definitive binding agreement (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Exercise Price under this Section [ ], the following shall be applicable:

 

(i)            Issuance of Options If the Company in any manner grants or sells or enters into a definitive, binding agreement pursuant to which is required to grant or sell, or the Company publicly announces the issuance or sale of, any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section [ ](i), the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise of such Convertible Securities.

 

(ii)            Issuance of Convertible Securities. If the Company in any manner issues or sells, or enters into a definitive, binding agreement pursuant to which is required to grant or sell or the Company publicly announces the issuance or sale of, any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section [ ](ii), the "lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange or exercise thereof" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions of this Section [ ], no further adjustment of the Exercise Price shall be made by reason of such issue or sale.

 

4

 

 

(iii)            Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for shares of Common Stock increases or decreases at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section [ ](iii), if the terms of any Option or Convertible Security that was outstanding as of January 24, 2020 are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section [ ] shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

(iv)            Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”, and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section [ ](i) or [ ](ii) above and (z) the lowest VWAP of the Common Stock on any Trading Day during the five Trading Day period (or, if this Warrant is exercised, in whole or in part, prior to the end of such five (5) Trading Day Period, with respect to any given portion of this Warrant so exercised, such shorter period ending on the applicable Exercise Date thereof) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such four Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(v)            Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

(vi)            No Readjustments. For the avoidance of doubt, in the event the Exercise Price has been adjusted pursuant to this Section [ ] and the Dilutive Issuance that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled after the facts for any reason whatsoever, in no event shall the Exercise Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.

 

5

 

 

Defined terms:

 

Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section [ ]) of shares of Common Stock that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).

 

"Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

 

"Excluded Securities" means any shares of Common Stock issued or issuable: (i) in connection with any Approved Stock Plan; (ii) pursuant to the terms of the Warrants; provided that the terms of such Warrants are not amended, modified or changed on or after January 24, 2020; and (iii) upon exchange, conversion or exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding January 24, 2020, provided that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the January 24, 2020.

 

"Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

A

 

6

Exhibit 10.2

 

EXCHANGE AGREEMENT

 

EXCHANGE AGREEMENT (the "Agreement"), dated as of January 27, 2020 by and between NanoViricides, Inc., a Nevada corporation (the "Company"), the investor listed on the signature page attached hereto under the heading "Holder" (the "Holder" and together with the Company, the "Parties"). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement or the Existing Warrants (each as defined below), as applicable.

 

WHEREAS:

 

A.    Pursuant to a Securities Purchase Agreement dated as of February 27, 2019 by and among the Company, the Holder and a certain other buyer party thereto (the "Securities Purchase Agreement"), the Company sold to the Holder and such other buyers: (i) shares (the "Common Shares") of the Company’s common stock, par value $0.001 per share (the "Common Stock") pursuant to the Company’s registration statement on Form S-3, as amended (File No. 333-216345), which became effective on April 25, 2017 and (ii) warrants to purchase 173,611 shares of Common Stock in the form attached as Exhibit A to the Securities Purchase Agreement (the "Existing Warrants").

 

B.     The Company offered and sold 2,500,000 shares of Common Stock for $3.00 per share pursuant to the Company’s registration statement on Form S-1, as amended (File No. 333-235306), which became effective on January 9, 2020 (the "Underwritten Offering").

 

C.     The Parties entered into a Settlement Agreement and Mutual Release on January 24, 2020 with respect to the Underwritten Offering (the "Settlement Agreement"), which includes a binding terms sheet as Exhibit I attached thereto, which contemplates the entry into this Agreement to fully implement the agreements described in such binding term sheet.

 

D.    Subject to the terms and conditions set forth in this Agreement and in reliance on Section 3(a)(9) of the Securities Act, the Company desires to exchange with the Holder, and the Holder desires to exchange with the Company, all of the Holder's Existing Warrants for (i) the number of shares of Common Stock set forth on the Holder's signature page attached hereto (the "New Common Shares") and (ii) warrants in the form attached as Exhibit A to this Agreement to purchase a number of shares of Common Stock set forth on the Holder's signature page attached hereto (the "New Warrants").

 

 

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises and the mutual agreements, representations and warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

 

(1)            Exchange.

 

a. On the Closing Date (as defined below), subject to the terms and conditions of this Agreement, the Holder shall, and the Company shall, pursuant to Section 3(a)(9) of the Securities Act, exchange the Holder's Existing Warrants for (i) the number of New Common Shares set forth on the Holder's signature page attached hereto and (ii) New Warrants to purchase the number of shares of Common Stock set forth on the Holder's signature page attached hereto. The date and time of the closing (the "Closing") of the transactions specified in this Section 1 (the "Closing Date") shall be 10:00 a.m., New York City Time, on January 29, 2020 (or such other date and time as is mutually agreed to by the Company and the Holder in writing) provided that the conditions to Closing set forth in Sections 4 and 5 hereof are satisfied. The Closing shall occur at the offices of ________________ or at such other time and place as the Company and the Holder mutually agree (the "Closing" and such date, the "Closing Date"). The Closing may also be undertaken remotely by electronic transfer of Closing documentation At the Closing, the following transactions shall occur (such transaction the "Exchange"):

 

i)           On the Closing Date, in exchange for the Existing Warrants, the Company shall (x) credit to the balance account of the Holder with The Depository Trust Company through its Deposit / Withdrawal at Custodian system (with such DWAC Instructions as specified on the Holder's signature page attached hereto or as otherwise specified in writing by the Holder to the Company prior to the Closing), the number of New Common Shares as set forth on the Holder's signature page attached hereto, and (y) deliver the New Warrants to purchase the number of shares of Common Stock as set forth on the Holder's signature page attached hereto to the Holder or its designee in accordance with the Holder's delivery instructions set forth on the Holder's signature page attached hereto. Upon receipt of the New Common Shares and the New Warrants, all of the Holder's rights under the Existing Warrants and, except as set forth in Section 6, the Securities Purchase Agreement shall be extinguished. The Holder shall tender to the Company the Existing Warrants as soon as practicable following the Closing Date for cancellation.

 

ii)           On the Closing Date, the Holder shall be deemed for all corporate purposes to have become the holder of record of the New Common Shares and the New Warrants, irrespective of the date such New Warrants are delivered to the Holder in accordance herewith.

 

(2)            Holder Representations, Warranties and Covenants. The Holder hereby represents and warrants to the Company:

 

a.                   Organization; Authorization; Enforcement. The Holder is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with full right, corporate or partnership power and authority to enter into and consummate the transactions contemplated by this Agreement and otherwise carry out its obligations hereunder. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

 

- 2 -

 

 

b.                  No Conflicts. The execution, delivery and performance by the Holder of this Agreement and the consummation by the Holder of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Holder or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Holder, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations hereunder.

 

c.                   Title. The Holder is the beneficial owner and sole legal owner of, and has good and valid title to, the Existing Warrants, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto other than encumbrances by one or more brokers of the Holder, which shall terminate upon the Closing, and encumbrances under federal or state securities laws ("Claims"). Except as set forth herein, the Holder has not, in whole or in part, (i) assigned, transferred, hypothecated, pledged or otherwise disposed of the Existing Warrants or its rights in the Existing Warrants, or (ii) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to the Existing Warrants. Good and valid title to the Existing Warrants, free and clear of any Claims, will pass to the Company upon consummation of the transaction contemplated hereby.

 

d.                  Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Holder has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that the Holder was first contacted regarding the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case the Holder is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of its assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of its assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the New Common Shares and the New Warrants covered by this Agreement. Other than to the Holder's representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the Holder has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating, reserving or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

- 3 -

 

 

(3)            Company Representations, Warranties and Covenants. The Company hereby represents, warrants and covenants, as applicable, to the Holder that:

 

a.                   Organization and Qualification. The Company is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own their properties and to carry on their business as now being conducted. The Company is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" shall have the meaning ascribed to such term in the Securities Purchase Agreements, except that it shall also include any material adverse effect on the authority or ability of the Company to perform its obligations under this Agreement and the New Warrants (collectively, the "Exchange Transaction Documents").

 

b.                  Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Exchange Transaction Document and to issue the New Common Shares and the New Warrants in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Exchange Transaction Document by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the New Common Shares and the New Warrants, have been duly authorized by the Company's Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. Each Exchange Transaction Document has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

 

c.                   Issuance of Securities. The issuances of the New Common Shares and the New Warrants are duly authorized and, upon issuance in accordance with the terms of this Agreement, shall be validly issued and free from all taxes, liens and charges with respect to the issue thereof. To the extent the Company increases its authorized shares of Common Stock at any time after the date hereof, it shall reserve for issuance upon exercise of the New Warrants no less than the maximum number shares of Common Stock issuable upon exercise of the New Warrants (the "New Warrant Shares") (or such lesser number of shares that is then authorized) and any such increase of authorized shares of Common Stock shall be allocated pro rata among the Holder and the Other Holder(s) based on the number of shares of Common Stock underlying the New Warrant issued to the Holder and the New Warrant (as defined in the Other Agreement(s)) issued to the Other Holder(s)), without giving effect to any limitation on exercise set forth therein. The New Common Shares and, upon exercise of the New Warrants in accordance with the terms thereof, the New Warrant Shares will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The offer and issuance by the Company of New Common Shares and the New Warrants in conformity with this Agreement constitute transactions exempt from registration under the Securities Act pursuant to Section 3(a)(9) of the Securities Act. The Company acknowledges and agrees that in accordance with Rule 144 under the Securities Act, the holding period of (i) the New Common Shares and the New Warrants may be tacked onto the holding period of the Existing Warrants and (ii) the New Warrant Shares may be tacked onto the holding period of the New Warrants if and only if the New Warrants are exercised on a cashless basis. The Company agrees not to take any position contrary to this Section 3(c). The Company shall take all actions, including, without limitation, the issuance by its legal counsel of any necessary legal opinions, necessary to issue the New Common Shares, the New Warrants and, if the New Warrants are exercised on a cashless basis, the New Warrant Shares that are freely tradable on the Trading Market without restriction and not containing any restrictive legend without the need for any action by the Holder.

 

-4 -

 

 

d.          Blue Sky. The Company shall make all filings and reports relating the Exchange required under applicable securities or "Blue Sky" laws of the states of the United States following the date hereof, if any.

 

e.          No Conflicts. The execution, delivery and performance of this Agreement and the other Exchange Transaction Document by the Company and the consummation by the Company of the transactions contemplated hereby and thereby including, without limitation, the issuance of the New Common Shares and the New Warrants and reservation for issuance and issuance of the New Warrant Shares upon increase of the Company's authorized shares of Common Stock) will not (i) result in a violation of the Articles of Incorporation or Bylaws of the Company, any memorandum of association, certificate of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the articles of association or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Trading Market and applicable laws of the State of Nevada and any other state laws) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.

 

f.                  Consents. The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement in accordance with the terms hereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the consent, registration, application or filings pursuant to the preceding sentence.

 

-5 -

 

 

g.                  Absence of Litigation. There are no legal or governmental investigations, actions, suits or proceedings pending or, to the Company's knowledge, threatened against or affecting the Company, its Subsidiaries or any of its properties or to which the Company or its Subsidiaries is or may be a party or to which any property of the Company is or may be the subject that, if determined adversely to the Company, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

h.                  Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable the Company's issuance of the New Common Shares, the New Warrants and the New Warrant Shares and the Holder's ownership of such securities from the provisions of any control share acquisition, interested stockholder, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation of the Company or the laws of the state of its incorporation which is or could become applicable to the Holder as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the New Common Shares, the New Warrants and the New Warrant Shares and the Holder's ownership of such securities. The Company does not have any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

 

i.                    Company Representations and Warranties. The Company specifically acknowledges that the Holder would not enter into this Agreement or any related documents in the absence of the Company's representations, warranties and acknowledgments set out in this Agreement, and that this Agreement, including such representations, warranties and acknowledgments, are a fundamental inducement to the Holder, and a substantial portion of the consideration provided by the Company in this transaction, and that the Holder would not enter into this transaction but for this inducement. The Company understands that, unless the Company notifies the Holder in writing to the contrary before the Closing, each of the Company's representations and warranties contained in this Agreement will be deemed to have been reaffirmed and confirmed as of the Closing Date.

 

j.                    Disclosure of Transactions and Other Material Information. The Company shall file a current report on Form 8-K on or before 8:30 a.m., New York City time, on January 28, 2020, describing the terms of the transactions contemplated by the Settlement Agreement and this Agreement, all in the form required by the Exchange Act and attaching the form of the Settlement Agreement, the form of this Agreement, the form of the New Warrants (and all schedules and exhibits thereto not otherwise attached), as exhibits to such filing (including all attachments, the "8-K Filing"). As of immediately following the filing of the 8-K Filing with the Commission, the Holder shall not be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, that is not disclosed in the 8-K Filing or in prior filings with the Commission. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, on the one hand, and the Holder or any of its affiliates, on the other hand, shall terminate and be of no further force or effect. The Company understands and confirms that the Holder will rely on the foregoing in effecting transactions in securities of the Company. The Company shall not, and shall cause its officers, directors, employees, affiliates and agents, not to, provide the Holder with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of the Holder. To the extent that the Company, its Subsidiaries or any of its or their respective officers, directors, employees, affiliates or agents delivers any material, non-public information to the Holder without the Holder's prior written consent, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents not to trade on the basis of, such material, non-public information.

 

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k.                  Shell Company Status. The Company is not, and since June 1, 2005 has not been, an issuer identified in, or subject to, Rule 144(i). More than one (1) year has elapsed from the date that the Company filed its "Form 10 information" with the Commission reflecting its status as an entity that is no longer described in Rule 144(i)(1)(i).

 

l.                   Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by this Agreement and the Other Agreements (as defined in Section 7(h)), the Company confirms that neither it nor any other Person acting on its behalf has provided the Holder or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Holder will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Holder regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including but not limited to the disclosure set forth in the SEC Reports, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. As used herein, "SEC Reports" means all reports, schedules, forms, statements and other documents required to be filed by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein.

 

m.                  Fees and Expenses. The Company shall reimburse the Holder for its legal fees and expenses in connection with the preparation and negotiation of this Agreement and transactions contemplated thereby, by paying any such amount, which shall not exceed $_________ provided that the Closing occurs on or prior to January 29, 2020 and_absent any breach by the Company of any agreement between the Company and the Holder, to _________ (the "Holder Counsel Expense") within four (4) Business Days of receiving the invoice of _________by wire transfer of immediately available funds in accordance with the written instructions of _________. The Holder Counsel Expense shall be paid by the Company whether or not the transactions contemplated by this Agreement are consummated. Except as otherwise set forth above, each party to this Agreement shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

 

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(4) Conditions to Company's Obligations Hereunder.

 

The obligations of the Company to the Holder hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing the Holder with prior written notice thereof:

 

a.            The Holder shall have executed this Agreement and delivered the same to the Company; and

 

b.           The representations and warranties of the Holder shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Holder shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Holder at or prior to the Closing Date.

 

(5) Conditions to Holder's Obligations Hereunder.

 

The obligations of the Holder hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Holder's sole benefit and may be waived by the Holder in respect of itself at any time in its sole discretion by providing the Company with prior written notice thereof:

 

a.            The Company shall have executed this Agreement and delivered the same to the Holder;

 

b.            The Company shall have delivered an instruction letter to the Company's transfer agent instructing the transfer agent to deliver the New Common Shares to the Holder by crediting such New Common Shares to the Holder's balance account with The Depository Trust Company through its Deposit / Withdrawal at Custodian system in accordance with the provisions of Section 1(b) hereof, counsel for the Company shall have delivered any legal opinion to the Company's transfer agent requested by the transfer agent in connection with such delivery and the Company's transfer agent shall have delivered such New Common Shares to such balance account;

 

c.            The Company shall have duly executed and delivered to the Holder the New Warrants (allocated in such amounts as the Holder shall request) being acquired by the Holder at the Closing pursuant to this Agreement, as set forth on the Holder's signature page attached hereto;

 

d.            The Company shall have obtained the listing of the New Common Shares and the New Warrant Shares on each Trading Market on which the Common Stock is then listed for trading;

 

e.            The representations and warranties of the Company under this Agreement shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date;

 

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f.             The Common Stock (I) shall be designated for quotation or listed on the Trading Market and (II) shall not have been suspended, as of the Closing Date, by the Commission or the Trading Market from trading on the Trading Market as of the Closing Date, in writing by the Commission or the Trading Market; and

 

g.            The Company shall have delivered to the Holder such other documents relating to the transactions contemplated by this Agreement as the Holder or its counsel may reasonably request.

 

(6)           Securities Purchase Agreement. The Company and the Holder agree that the following sections of the Securities Purchase Agreement shall survive and be amended as follows:

 

a.            Section 4.1 of the Securities Purchase Agreement (Removal of Legends), which shall apply to the New Warrant Shares if and only if the New Warrants are being exercised by paying the Exercise Price (as defined in the New Warrants) in cash;

 

b.            Section 4.2 of the Securities Purchase Agreement (Furnishing of Information);

 

c.            Section 4.3 of the Securities Purchase Agreement (Integration);

 

d.            Section 4.5 of the Securities Purchase Agreement (Shareholder Rights Plan);

 

e.            Section 4.8 of the Securities Purchase Agreement (Indemnification of Purchasers);

 

f.             Section 4.11 of the Securities Purchase Agreement (Participation in Future Financing). Notwithstanding anything to the contrary, the Holder acknowledges that the rights set forth in Section 4.11 of the Securities Purchase Agreement expire on March 1, 2020;

 

g.            Section 4.15 of the Securities Purchase Agreement (Capital Changes); and

 

h.            Section 4.16 of the Securities Purchase Agreement (Exercise Procedures).

 

From and after the Closing Date, any reference in the foregoing sections of the Securities Purchase Agreement to (i) "Purchaser" shall include the Holder, (ii) the "Warrants", shall include the New Warrants, (iii) the "Warrant Shares", shall include the New Warrant Shares, (iv) the "Shares", shall include the "New Common Shares", (v) the "Securities", shall include the New Common Shares, the New Warrants and the New Warrant Shares, (vi) "this Agreement" shall include this Agreement and (vii) the "Transaction Documents" shall include the Exchange Transaction Documents.

 

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Except as expressly set forth in this Section 6 and all related definitions set forth in the aforementioned section of the Securities Purchase Agreement or otherwise referenced in this Agreement, the Securities Purchase Agreement is hereby terminated as of the Closing Date and will be of no further force or effect, and all provisions of, rights granted, covenants, and obligations of the Parties made in the Securities Purchase Agreement are hereby waived, released and superseded in their entirety and shall have no further force and effect.

 

(7) Termination.

 

In the event that the Closing shall not have occurred on or before the fifth (5th) Business Day from the date hereof due to the Company's or the Holder's failure to satisfy the conditions set forth in Sections 4 and 5 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date by delivering a written notice to that effect to the other party to this Agreement and without liability of such party to the other party. Without limiting the generality of the foregoing, if the Closing does not occur on or prior to January 29, 2020 due to the Company's failure to satisfy the conditions set forth in Sections 5 (and the Holder does not elect to waive such unsatisfied condition(s)), (i) the Company shall promptly, but in any event within two (2) Business Days of the delivery by the Holder of a written termination notice to the Company, pay to the Holder an amount in cash equal to $2,750,000 by wire transfer of immediately available funds in accordance with the Holder's wire instructions set forth in such termination notice and (ii) the Exercise Price (as defined in the Existing Warrants) shall automatically and without any action by the Company or the Holder be deemed amended to equal $3.00 per share (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction relating to the Common Stock occurring after the date hereof).

 

(8) Miscellaneous.

 

a.             Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 8:00 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 8:00 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

 

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b.            Survival; Successors and Assigns. All warranties and representations (as of the date such warranties and representations were made) made herein or in any certificate or other instrument delivered by it or on its behalf under this Agreement shall be considered to have been relied upon by the parties hereto and shall survive the issuance of the New Common Shares and the New Warrants. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties; provided however that no party may assign this Agreement or the obligations and rights of such party hereunder without the prior written consent of the other parties hereto.

 

c.            Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

d.            Severability. If any provision of this Agreement 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 Agreement so long as this Agreement 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).

 

e.            Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Exchange Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Exchange Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party 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 (including with respect to the enforcement of any of the Exchange Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement 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 other manner permitted by law. If any party shall commence an action or proceeding to enforce any provisions of the Exchange Transaction Documents, then, the prevailing party in such action or proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

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f.              Entire Agreement. The Agreement, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

g.             Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

h.             Independent Nature of Holders' Obligations And Rights. The obligations of the Holder under this Agreement and any other holder (collectively, the "Other Holders") of Existing Warrant under any other agreement substantially similar to this Agreement (the "Other Agreements") are several and not joint with the obligations of any of the Holders, and the Holder shall not be responsible in any way for the performance of the obligations of any Other Holder under any Other Agreement. Nothing contained herein or in any Other Agreement, and no action taken by the Holder pursuant hereto or any Other Holder pursuant to thereto, shall be deemed to constitute the Holders as, and the Company acknowledges that the Holders do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert or as a group, and the Company shall not assert any such claim with respect to such obligations or the transactions contemplated by this Agreement or any Other Agreement and the Company acknowledges that the Holders are not acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement and any Other Agreement. The Company acknowledges and the Holder confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose.

 

i.           Amendment. This Agreement may not be changed, amended, terminated, augmented, rescinded or discharged (other than in accordance with its terms), in whole or in part, except by a writing executed by the parties hereto.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the Holder and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first written above.

 

  COMPANY:
     
  NANOVIRICIDES, INC.

 

 

  By:  
    Name:
    Title:  

 

  Address for delivery of Existing Warrants:
       
    NanoViricides, Inc.
    1 Controls Drive
    Shelton, Connecticut 06484
   

 

 

 

IN WITNESS WHEREOF, the Holder and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first written above.

 

  HOLDER:
   
   

 

 

By:  
    Name:
    Title:  

 

  Number of Existing Warrants to be
surrendered in the Exchange
: 173,611
   
  Number of New Common Shares to be
issued in the Exchange
: 338,612
   
  Number of New Warrants to be issued in the Exchange: 173,611
   
   
  Address for delivery of New Warrants:

 

 

  

EXHIBIT A

 

Form of New Warrant

 

See attached.

 

Exhibit 10.3

 

COMMON STOCK PURCHASE WARRANT

 

Nanoviricides, inc.

 

Warrant Shares: 173,611   Issue Date: February 27, 2019
   

Exchange Date: January 29, 2020

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ______________________. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Exchange Date, subject to the availability of authorized shares of Common Stock, and on or prior to 5:00 p.m. (New York City time) on August 27, 2024 (the “Termination Date”) but not thereafter, to subscribe for and purchase from NanoViricides, Inc., a Nevada corporation (the “Company”), up to 173,611 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.              Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated February 27, 2019, among the Company and the purchasers signatory thereto.

 

Section 2.              Exercise.

 

a)            Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Exchange Date, subject to the availability of authorized shares of Common Stock, and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

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b)             Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $3.00, subject to adjustment hereunder (the “Exercise Price”).

 

c)             Cashless Exercise. At the Holder's election, this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(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) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant.  The Company agrees not to take any position contrary to this Section 2(c).

 

2

 

 

Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Closing Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) the last closing bid price of the Common Stock on a Trading Market, as reported by Bloomberg, at 4:02:00 p.m. (New York City time), (b) if OTCQB or OTCQX is not a Trading Market, the last bid price of the Common Stock for such date on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent closing bid price per share of the Common Stock so reported or (d) in all other cases, the closing bid price of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

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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.

 

Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

Option Value” means the value of an Option based on the Black-Scholes Option Pricing Model obtained from the "OV" function on Bloomberg determined based on the Closing Bid Price of the Common Stock on the Trading Day immediately prior to the public announcement of the pricing of the applicable Option (or, if the pricing is not publicly announced, the Closing Bid Price of the Common Stock on the Trading Day immediately prior to the pricing of the applicable Option) and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately preceding the public announcement of the pricing of the applicable Option, (C) an underlying price per share equal to the Closing Bid Price of the Common Stock as of the Trading Day immediately prior to the public announcement of the pricing of the applicable Option (or, if the pricing is not publicly announced, the most recent Closing Bid Price of the Common Stock prior to the pricing of the applicable Option), and (D) a remaining option time equal to the time between the date of the public announcement of the pricing of the applicable Option (or, if the pricing is not publicly announced, the Trading Day immediately prior to the pricing of the applicable Option) and the expiration date of such Option.

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

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d)             Mechanics of Exercise.

 

i.            Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

ii.           Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.          Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

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iv.          Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder 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 (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the 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 shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.           No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

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vi.          Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii.         Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e)                Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) 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. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

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Section 3.               Certain Adjustments.

 

a)             Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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b)            Subsequent Equity Sales. If and whenever on or after January 24, 2020, the Company publicly announces or the Company issues or sells, enters into a definitive, binding agreement pursuant to which the Company is required to issue or sell, or, in accordance with clauses (i) or (ii) of this Section 3(b), is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such public announcement, issue or sale or deemed issuance or sale or entry into such a definitive binding agreement (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Exercise Price under this Section 3(b), the following shall be applicable:

 

(i) Issuance of Options If the Company in any manner grants or sells or enters into a definitive, binding agreement pursuant to which is required to grant or sell, or the Company publicly announces the issuance or sale of, any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(b)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise of such Convertible Securities.

 

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(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells, or enters into a definitive, binding agreement pursuant to which is required to grant or sell or the Company publicly announces the issuance or sale of, any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 3(b)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange or exercise thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions of this Section 3(b), no further adjustment of the Exercise Price shall be made by reason of such issue or sale.

 

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(iii) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for shares of Common Stock increases or decreases at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of January 24, 2020 are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

(iv) Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”, and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(b)(i) or Section 3(b)(ii) above and (z) the lowest VWAP of the Common Stock on any Trading Day during the five Trading Day period (or, if this Warrant is exercised, in whole or in part, prior to the end of such five (5) Trading Day Period, with respect to any given portion of this Warrant so exercised, such shorter period ending on the applicable Exercise Date thereof) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such four Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

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(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

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(vi) No Readjustments. For the avoidance of doubt, in the event the Exercise Price has been adjusted pursuant to this Section 3(b) and the Dilutive Issuance that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled after the facts for any reason whatsoever, in no event shall the Exercise Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.

 

(vii) Defined Terms. As used here, (x) “Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 3(b)) of shares of Common Stock that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights), and (y) "Excluded Securities" means any shares of Common Stock issued or issuable: (i) in connection with any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer or director for services provided to the Company, (ii) pursuant to the terms of the Warrants; provided that the terms of such Warrants are not amended, modified or changed on or after January 24, 2020; (iii) upon exchange, conversion or exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding January 24, 2020, provided that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the January 24, 2020, (iv) in the Company's underwritten offering of up to 2,875,000 shares of Common Stock for $3.00 per share pursuant to the Company’s shelf registration statement on Form S-1, as amended (File No. 333-235306), which became effective on January 9, 2020 and (v) in payment of licenses or other business arrangements to related parties, affiliates, consultants or contractors of the Company in an amount not to exceed 50,000 shares of Common Stock (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction related to the Common Stock occurring after January 27, 2020) provided that such shares of Common Stock bear a restrictive legend, are not freely tradable upon issuance and are not subject to resale registration rights.

 

c)            Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) or Section 3(b) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, 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 grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

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d)            Pro Rata Distributions. During such time as this Warrant is outstanding, if 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, 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 (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of 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 (provided, however, that, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

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e)             Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock 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) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, if the Fundamental Transaction is not within the Company's control, including not approved by the Company's Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity, as of the date of consummation of such Fundamental Transaction, the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, 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 which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) 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 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), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents 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 and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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f)             Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)            Notice to Holder.

 

i.                Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.               Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 4.               Transfer of Warrant.

 

a)             Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)             New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)             Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

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d)            Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

e)             Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.               Miscellaneous.

 

a)             No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

b)            Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)             Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)            Authorized Shares.

 

The Company covenants that, to the extent the Company increases its authorized shares of Common Stock during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (or such lesser number that is then becomes available from time to time) provided that any shares of Common Stock that becomes authorized shall be allocated pro rata among this Warrant and any similar warrants to purchase shares of Common Stock issued by the Company on the Exchange Date that is substantially similar to this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)            Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)             Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

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g)            Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waier of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)           Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i)             Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)             Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)            Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)             Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)           Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

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n)             Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

o)            No Net Cash Settlement. Without limiting the rights of a Holder to receive Warrant Shares on a cashless exercise pursuant to Section 2(c), and without limiting the rights of a Holder under Section 2(d)(i) and Section 2(d)(iv), in no event will the Company be required to net cash settle an exercise of this Warrant.

 

p)            Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

********************

 

(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.

 

NANOVIRICIDES, INC.
   
  By:                         
  Name: Anil Diwan
  Title: President, Chairman

 

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NOTICE OF EXERCISE

 

To:        nANOVIRICIDES, INC.

 

(1)   The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), 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

 

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)   Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: _____________________________________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _______________________________________________________________________________

Name of Authorized Signatory: _________________________________________________________________________________________________

Title of Authorized Signatory: __________________________________________________________________________________________________

Date: _____________________________________________________________________________________________________________________

 

 

 

EXHIBIT B

 

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

 

Name:  
  (Please Print)
   
Address:  
  (Please Print)
   
Phone Number:  
   
Email Address:  
   
Dated: _______________ __, ______  
   
Holder’s Signature:      
       
Holder’s Address: