INVO Fertility, Inc 8-K, filed Jul 13, 2023
INVO Fertility, Inc. (IVF)
About this 8-K
INVO Fertility, Inc filed this 8-K on July 13, 2023, reporting on events of July 7, 2023.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 3.01: Delisting notice or listing transfer
- Item 3.02: Unregistered sale of equity
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Securities registered pursuant to Section 12(b) of the Act:
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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).
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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. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
1. Closing Agreement—Asset Purchase Agreement. On July 7, 2023, Wood Violet Fertility LLC (“Buyer”), a wholly owned subsidiary of INVO Bioscience, Inc. (the “Company”) entered into a closing agreement (the “APA Closing Agreement”) with Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), The Elizabeth Pritts Revocable Living Trust (“Seller”) and Dr. Elizabeth Pritts, an individual and sole trust of Seller (“Dr. Pritts”, and together with the Seller, the “Seller Parties” related to that certain Asset Purchase Agreement dated March 16, 2023 between the parties listed above – the “APA”). Pursuant to the APA Closing Agreement, Buyer and Seller Parties agreed (a) to complete the closing of the Asset Purchase Agreement no later than July 31, 2023, which date may only be extended by mutual agreement of the Buyer and Seller Parties, and (b) that Buyer would pay $10,000 to cover the general legal and closing fees of the Seller Parties. The Company made such payment on July 10, 2023.
2. Closing Agreement—Membership Interest Purchase Agreement. On July 7, 2023, Buyer entered into a closing agreement (the “MIPA Closing Agreement”) with Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”), IVF Science, LLC and Dr. Pritts as trustee for the Elizabeth Pritts Revocable Living Trust (each a “FLOW Seller” and collectively the “FLOW Sellers”) and the Sellers’ Representative (as defined in that certain Membership Interest Purchase Agreement dated March 16, 2023 between the parties listed above (the “MIPA”). Pursuant to the MIPA Closing Agreement, Buyer and the FLOW Sellers agreed to (a) complete the closing of the MIPA no later than July 31, 2023, which date may only be extended by mutual agreement of the Buyer and the FLOW Seller, and (b) that Buyer would pay $40,000 to cover the general legal and closing fees of the FLOW Seller. The Company made such payment on July 10, 2023.
In addition, (x) the APA and the MIPA were amended under their respective Closing Agreement described above to provide that any Company stock received as an Additional Payment on any Additional Payment Date (each, as defined in the APA and the MIPA) be appropriately adjusted for any stock split or combination effectuated by the Company, and (y) the APA Closing Agreement and MIPA Closing Agreement provide that unless a new closing date is agreed to in writing the APA and the MIPA would automatically terminate if the closing for each agreement does not occur on or before July 31, 2023.
The foregoing summary of the APA Closing Agreement and the MIPA Closing Agreement do not purport to be complete and are qualified in its entirety by reference to the full text of such APA Closing Agreement and MIPA Closing Agreement which are filed hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On July 10, 2023, the Company entered into a letter agreement (the “Agreement”) with JAG Multi Investments LLC (“JAG”), a related party to Andrea Goren, our CFO, who is a beneficiary of JAG but does not have any control over JAG’s investment decisions with respect to the Company. In the Agreement, the Company and JAG agreed that (1) JAG would loan the Company $100,000 under a demand promissory note (the “Note”), (2) the date on which JAG can demand payment of principal, fees and any interest under those certain demand promissory previously issued to JAG by the Company for a total of $500,000, of which JAG may demand payment of $500,000 as of the date hereof, be extended to September 30, 2023, (3) the Company would issue JAG a warrant to purchase 150,000 shares of Company common stock (the “Warrant”); and (4) the strike price for the Warrant and the warrant issued to JAG on December 29, 2022 to purchase 350,000 shall be reset to the price of INVO’s pending public offering, if such price is lower than the strike prices then in effect.
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If paid prior to August 31, 2023, the Note is interest free until August 31, 2023. For any amount that remains outstanding past August 31, 2023, 10% annual interest would accrue from the date of issuance. At maturity, the Company agreed to pay outstanding principal, accrued interest, if any, and a financing fee of 5% if the Note is repaid by August 9, 2023, or 10% if it is repaid thereafter. The Note is callable with 10 days prior written notice, which may be delivered to the Company starting on September 30, 2023.
The Warrant may be exercised for a period of five (5) years from issuance at a price of $0.189 per share.
The foregoing summaries of the Agreement, Note and Warrant do not purport to be complete and are qualified in its entirety by reference to the full text of such Agreement, Note and Warrant, copies of which are filed hereto as Exhibits 4.1, 4.2 and 4.3, respectively, and incorporated herein by reference.
| Item 3.01 | Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. |
On July 11, 2023, the Company received a notice from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) that, based upon the Company’s non-compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Rule”), as of July 10, 2023, the Nasdaq Hearing Panel (the “Panel”) will consider such non-compliance in its decision regarding the Company’s continued listing on Nasdaq.
The Company plans to timely submit to the Panel confirmation of its plan to regain compliance under the Rule, providing similar information to that presented to the Panel at the Company’s hearing on July 6, 2023.
As previously disclosed, the Company was granted a 180-day grace period to regain compliance with the Rule through July 10, 2023. The Company was unable to do so by that date, which resulted in the issuance of the Staff’s notice.
| Item 3.02 | Unregistered Sale of Equity Securities |
The information set forth in Item 1.01 is incorporated herein by reference. The issuances described under Item 1.01 were exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
| Exhibit No. | Exhibit | |
| 4.1 | Letter Agreement between INVO Bioscience, Inc. and JAG Multi Investments LLC. | |
| 4.2 | Demand Promissory Note dated July 10, 2023 issued by INVO Bioscience, Inc. in favor of JAG Multi Investments LLC in the amount of $100,000. | |
| 4.3 | Warrant dated July 10, 2023 issued by INVO Bioscience, Inc. in favor of JAG Multi Investments LLC. | |
| 10.1 | Closing Agreement—Asset Purchase Agreement. | |
| 10.2 | Closing Agreement—Membership Interest Purchase Agreement | |
| 104 | Cover Page Interactive Data File (embedded within the XBRL document) |
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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 hereunto duly authorized.
| Date: July 13, 2023 | INVO BIOSCIENCE, INC. |
| /s/ Steven Shum | |
| Steven Shum | |
| Chief Executive Officer |
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Exhibit 4.1
Page 1 of 4
July 10, 2023
James Goren
JAG Multi Investments LLC
c/o Bredefeld & Assoc. PC
125 Maple Avenue, Suite C
Chester, New Jersey 07930
| RE: | Demand Notes and Warrants |
Dear James
Reference is made to those certain demand notes dated October 21, October 28, November 10, December 13 and December 29, 2022 (the “Demand Notes”) issued by INVO Bioscience Inc. (“INVO”) to JAG Multi Investments LLC (“JAG”). Under the Demand Notes, JAG loaned INVO a total of $500,000, of which JAG currently may demand payment of $500,000. All capitalized terms used herein that are not defined shall have the meaning assigned to those terms in the Demand Notes.
By signing below, JAG and INVO agree to the following:
| 1. | JAG will fund an additional demand note for $100,000 today in the form attached hereto as Exhibit A; |
| 2. | JAG agrees to extend the date on which JAG can demand payment of principal, the Fee and any interest under the Demand Notes to September 30, 2023; and |
| 3. | In consideration for JAG agreeing to 1 and 2 above, INVO (a) shall issue to JAG a warrant to purchase 150,000 shares of common stock, in the form attached hereto as Exhibit B (the “July 2023 Warrant”, and (b) agrees to reset the strike price of the July 2023 Warrant as well as the warrant to purchase 350,000 shares of INVO common stock issued to JAG on December 29, 2022 to the price of INVO’s pending public offering, if such price is lower that the warrant strike prices then in effect. |
Page 2 of 4
Also, JAG hereby represents and warrants that it is an “accredited investor”, as such term is defined in Regulation D promulgated by the Commission under the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable it to utilize the information made available by INVO to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment.
| Sincerely, | AGREED AND ACCEPTED BY | |
| INVO BIOSCIENCE INC. | JAG MULTI INVESTMENTS LLC | |
| /s/ Steve Shum | /s/ James Goren | |
| Steve Shum, CEO | James Goren, Managing Member |
Page 3 of 4
EXHIBIT A
Form of Demand Note
(see Exhibit 4.2)
Page 4 of 4
EXHIBIT B
Form of Warrant
(see Exhibit 4.3)
Exhibit 4.2
DEMAND PROMISSORY NOTE
| $100,000.00 | Sarasota, FL |
| July 10, 2023 |
For value received, and intending to be legally bound, INVO Bioscience Inc. (the “Maker”), promises to pay the total sum of one hundred thousand dollars ($100,000.00) to JAG MULTI INVESTMENTS LLC (the “Holder”) together with a financing fee (the “Fee”) of (a) five percent (5%) if the this demand promissory note (this “Note”) is repaid within thirty (30) days hereof, or (b) ten percent (10%) if this Note repaid after thirty days hereof. Should this Note not be repaid in full by August 31, 2023, interest shall accrue on the Note from the date hereof until paid, at the rate of ten percent (10%) per annum (computed on the basis of a 360-day year of twelve 30-day months). Principal, the Fee and any interest due shall be paid in full on demand, following ten (10) calendar day prior written notice, which may be given by Holder starting on September 30, 2023. Payments shall be applied first to any accrued interest and then to the financing fee and shall be made at such place as the Holder may direct.
This Note may be prepaid in whole or in part at any time without penalty, premium or other consideration.
All presentment notice of protest or notice of nonpayment or dishonor are hereby waived, and the failure of the Holder to exercise any of his rights hereunder in any instance shall not constitute a waiver thereof in that or any other instance.
Notwithstanding anything stated to the contrary herein, this Note shall become immediately due and payable, without any demand or notice whatsoever, upon the commencement of any bankruptcy, reorganization, receivership or insolvency proceeding by or against the Maker, or upon the Maker making any assignment for the benefit of creditors.
In the event that this Note, together with all accrued but unpaid interest hereon, is not paid within ten (10) days after the date upon which payment becomes due pursuant to the terms of this Note, then the Maker agrees to pay all reasonable attorney’s fees and expenses incurred by the Holder in enforcing the obligations of the Maker under this Note.
This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of the Maker or the Holder, but only by an agreement in writing signed by both the Maker and the Holder.
This note shall be construed in accordance with the laws of the State of New York, without regard to those provisions related to choice of law.
[Signature follows on next page]
IN WITNESS WHEREOF, the Maker has executed and delivered this instrument effective as of the date first written above.
| By Maker: | |
| /s/ Steve Shum | |
| Steve Shum | |
| Chief Executive Officer | |
| INVO Bioscience Inc. |
Exhibit 4.3
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Warrant No. 2023-11s
WARRANT
INVO BIOSCIENCE, INC.
| Warrant Shares: 150,000 | Initial Issuance Date: July 10, 2023 Initial Exercise Date: July 10, 2023 |
THIS WARRANT (the “Warrant”) certifies that, for value received, JAG MULTI INVESTMENTS LLC 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 July 10, 2023 (the “Initial Exercise Date”) and on or prior to the close of business on the five year anniversary of the Initial Issuance Date set forth above (the “Termination Date”) but not thereafter, to subscribe for and purchase from INVO Bioscience, Inc., a Nevada corporation (the “Company”), up to 150,000 shares of Common Stock (“Warrant Shares”) having an expiration date on the Termination Date. The purchase price of one Warrant Share 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 Letter Agreement (the “Agreement”), dated July 10, 2023, among the Company and the purchasers signatory thereto.
Section 2. Exercise.
a) Exercise of Warrants. Exercise of the purchase rights for Warrant Shares represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto as Exhibit A and within two (2) Trading Days of the date said Notice of Exercise is delivered to the Company; provided that if the Notice of Exercise is received after 12 p.m. EST on such day, then the Company will have three (3) Trading Days for delivery, the Company shall have received payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below. 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 form 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 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 Warrant Share under this Warrant shall be $0.189, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at any time after the six month anniversary of the Initial Issuance Date and on the date a Notice of Exercise is delivered to the Company, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then 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) = | the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise; | |
| (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. |
Assuming the Holder has held the Warrant for at least six months in the case of such a cash-less exercise, the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the exercise of the Warrant prior to removing the legend and the Company will use its best efforts including delivering an opinion to the Company’s transfer agent at its own expense to ensure the forgoing. 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 registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c).
“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, 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) if the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 5(o).
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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 Company’s transfer agent (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 pursuant to Rule 144, 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 two (2) Trading Days after the delivery to the Company of the Notice of Exercise provided that such Notice of Exercise is received by 12 p.m. EST and three (3) Trading Days for any Notice of Exercise received after 12 p.m. EST (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. 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), $5 per Trading Day (increasing to $10 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.
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.
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 Unit 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 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.
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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.
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 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), 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 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 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. 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 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 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 since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% 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 Warrant 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.
b) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 3(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
c) Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant, with the prior written consent of the Holder, 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.
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d) 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) or Section 2(d) 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 the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined below) 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 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 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) 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 and (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 the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation 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(i) 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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e) 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.
f) 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 mail to the Holder 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 mailed to the Holder at its last 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 mail such notice or any defect therein or in the mailing 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, 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, 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 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 Exercise 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.
d) Transfer Restrictions. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
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.
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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, 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 (the “Required Reserve Amount”). 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).
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.
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 waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. 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 may 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.
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l) Amendment. This Warrant (other than Section 2(e)) may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
m) Severability. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
n) Headings. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
o) Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth on its signature page to the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
********************
(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.
| INVO BIOSCIENCE, INC. | ||
| By: | /s/ Steve Shum | |
| Name: | Steve Shum | |
| Title: | CEO | |
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EXHIBIT A
NOTICE OF EXERCISE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
INVO BIOSCIENCE, INC.
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of INVO Bioscience, Inc., a Nevada corporation (the “Company”), evidenced by Warrant No. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
| ____________ | a “Cash Exercise” with respect to _________________ Warrant Shares; and/or | |
| ____________ | a “Cashless Exercise” with respect to _______________ Warrant Shares. |
2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________ Warrant Shares in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
| Issue to: | ||
☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
| DTC Participant: | ||
| DTC Number: | ||
| Account Number: |
Date: _____________ __,
Name of Registered Holder
By:
Name:
Title:
Tax ID:____________________________
Facsimile:__________________________
E-mail Address:_____________________
-Exhibit A-
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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) | |
| Dated: _______________ __, ______ | |
| Holder’s Signature: | |
| Holder’s Address: |
-Exhibit B-
| -13- |
Exhibit 10.1
Closing Agreement
This Closing Agreement (this “Agreement”) is effective as of July 7, 2023, and entered into by and among Wood Violet Fertility LLC, a Delaware limited liability company (the “Buyer”) and Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (the “Company”), The Elizabeth Pritts Revocable Living Trust (the “Seller”), and Dr. Elizabeth Pritts, an individual and sole trustee of Seller (“Dr. Pritts”, and together with the Seller, the “Seller Parties”).
W I T N E S S E T H:
WHEREAS, the Parties entered into an Asset Purchase Agreement dated March 16, 2023 (the “Asset Purchase Agreement”);
WHEREAS, the defined terms in this Agreement are, unless otherwise specified herein, as they are defined in the Asset Purchase Agreement; and
WHEREAS, the parties desire to complete the Closing on or before July 31, 2023.
NOW, THEREFORE, in consideration of the premises and mutual promises herein made, the parties, intending to be legally bound, hereby agree as follows:
| 1. | Closing. Buyer and Seller Parties agree to complete the Closing no later than July 31, 2023 (the “Closing Date”), and such Closing Date may only be extended by mutual agreement of the Buyer and the Seller Parties. Prior to the Closing, the Parties will retain their respective rights and comply with all duties and obligations set forth in the Asset Purchase Agreement. Seller and Company agree to provide to Buyer all financial information and operating results requested by Buyer with respect to Company’s performance in Q2 2023. | |
| 2. | Additional Consideration. Buyer agrees to pay to Seller Parties the sum of $10,000, on or before July 7, 2023, to cover general legal and closing costs. The payment shall be made by wire transfer pursuant to the wiring instructions provided by the Sellers to Buyer. For the avoidance of doubt, such payment is in addition to the Purchase Price and is nonrefundable. | |
| 3. | Post-Closing Additional Payment Adjustment. Section 2.3.2 of the Asset Purchase Agreement is hereby amended by adding the following language immediately after the last sentence in such section: |
The Parties acknowledge and agree that any INVO Parent Stock received as an Additional Payment on any Additional Payment Date shall be adjusted for any stock splits and combinations effectuated in INVO Parent Stock on or after the date hereof as follows: if INVO Parent at any time on or after the date hereof (A) subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of INVO Parent Stock into a greater number of shares, the amount of shares of INVO Parent Stock to be received as an Additional Payment on any Additional Payment Date will be proportionately increased and (B) combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of INVO Parent Stock into a smaller number of shares, the amount of shares of INVO Parent Stock to be received as an Additional Payment on any Additional Payment Date will be proportionately decreased. By way of example, if after the date hereof, INVO shall effectuate a 1-for-10 reverse stock split of the INVO Parent Stock whereby each ten (10) shares of INVO Parent Stock are converted into one (1) share of INVO Parent Stock, then the amount of shares of INVO Parent Stock issuable on any Additional Payment Date shall be proportionately reduced to reflect such 1-for-10 reverse stock split and accordingly the shares of INVO Parent Stock issuable on the first Additional Payment Date, the second Additional Payment Date and the third Additional Payment Date would be Eight Thousand (8,000) shares, Five Thousand Five Hundred (5,500) shares and Three Thousand Five Hundred (3,500) shares, respectively. This provision shall be applicable for the duration of the Term of the Asset Purchase Agreement.
| 1 |
| 4. | Failure to Close. In the event that Parties fail to close on the purchase pursuant to the Asset Purchase Agreement on or before July 31, 2023, regardless of the reason for the failure to close, and unless there is another signed written extension among the Parties, then the Membership Interest Purchase Agreement shall be deemed terminated consistent with Section 8.1(a) therein. | |
| 5. | Governing Law. This Agreement shall be governed by the laws of the State of Wisconsin. | |
| 6. | Construction. If any portion of this Agreement is found to be invalid or illegal, the remaining provisions shall nevertheless be binding with the same effect as though the invalid or illegal parts were deleted. | |
| 7. | Non-Waiver. No delay or failure by any party to exercise any right under this Agreement or partial or single exercise of that right shall constitute a waiver of that or any other right unless expressly provided herein. | |
| 8. | Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together shall be one in the same instrument. A duplicate copy of this Agreement signed by all parties shall be valid and binding as if one original of the Agreement was signed by the parties. A photographic, or electronic copy of the signature(s) of the undersigned will be deemed to be equivalent to the original hereof and may be used as a duplicate original. | |
| 9. | Binding Effect. This Agreement shall be binding upon all the parties hereto and their heirs, personal representatives, legal representatives, successors and assigns. |
[SIGNATURE PAGE TO FOLLOW]
| 2 |
| PURCHASER: | ||
| Wood Violet Fertility, LLC, a Delaware limited liability company | ||
| By: | /s/ Steve Shum | |
| Steve Shum, President | ||
| COMPANY: | ||
| Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute | ||
| By: | /s/ Dr. Elizabeth Pritts | |
| Dr. Elizabeth Pritts, President | ||
| SELLER PARTIES: | ||
| The Elizabeth Pritts Revocable Living Trust | ||
| By: | /s/ Dr. Elizabeth Pritts | |
| Dr. Elizabeth Pritts, M.D., Trustee | ||
| Dr. Elizabeth Pritts, an individual | ||
| By: | /s/ Dr. Elizabeth Pritts | |
| Dr. Elizabeth Pritts | ||
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Exhibit 10.2
Closing Agreement
This Closing Agreement (this “Agreement”) is effective as of July 7, 2023, and entered into by and among (i) Wood Violet Fertility LLC, a Delaware limited liability company (“Purchaser”), (ii) Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“Company”); (iii) IVF Science, LLC, a Wisconsin limited liability company (“IVF Science”) owned by Wael Megid, Ph.D. (“Dr. Megid”) and Dr. Elizabeth Pritts as trustee for the Elizabeth Pritts Revocable Living Trust, a Trust created under the laws of the State of Wisconsin (each a “Seller” and collectively, the “Sellers”) and (iv) the Sellers’ Representative (as defined in the Membership Interest Purchase Agreement), each a “Party” and collectively, the “Parties.”
W I T N E S S E T H:
WHEREAS, the Parties entered into a Membership Interest Purchase Agreement dated March 16, 2023 (“Membership Interest Purchase Agreement”);
WHEREAS, the defined terms in this Agreement are, unless otherwise specified herein, as they are defined in the Membership Interest Purchase Agreement; and
WHEREAS, the parties desire to complete the Closing on or before July 31, 2023.
NOW, THEREFORE, in consideration of the premises and mutual promises herein made, the parties, intending to be legally bound, hereby agree as follows:
| 1. | Closing. Purchaser and Sellers agree to complete the Closing no later than July 31, 2023 (the “Closing Date”), and such Closing Date may only be extended by mutual agreement of the Purchaser and the Sellers. Prior to the Closing, the Parties will retain their respective rights and comply with all duties and obligations set forth in the Asset Purchase Agreement. Sellers and Company agree to provide to Purchaser all financial information and operating results requested by Purchaser with respect to Company’s performance in Q2 2023. | |
| 2. | Additional Consideration. Purchaser agrees to pay to Sellers the sum of $40,000, on or before July 7, 2023, allocated 85% to Dr. Elizabeth Pritts, as Trustee to the Elizabeth Pritts Revocable Living Trust, and 15% to IVF Science, LLC, to cover the general legal and closing fees. The payment shall be made by wire transfer pursuant to the wiring instructions provided by Sellers to Purchaser. For the avoidance of doubt, such payment is in addition to the Purchase Price and is nonrefundable. | |
| 3. | Post-Closing Additional Payment Adjustment. Section 2.2 of the Membership Interest Purchase Agreement is hereby amended by adding the following language immediately after the last sentence in such section: |
The Parties acknowledge and agree that any INVO Parent Stock received as an Additional Payment on any Additional Payment Date shall be adjusted for any stock splits and combinations effectuated in INVO Parent Stock on or after the date hereof as follows: if INVO Parent at any time on or after the date hereof (A) subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of INVO Parent Stock into a greater number of shares, the amount of shares of INVO Parent Stock to be received as an Additional Payment on any Additional Payment Date will be proportionately increased and (B) combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of INVO Parent Stock into a smaller number of shares, the amount of shares of INVO Parent Stock to be received as an Additional Payment on any Additional Payment Date will be proportionately decreased. By way of example, if after the date hereof, INVO shall effectuate a 1-for-10 reverse stock split of the INVO Parent Stock whereby each ten (10) shares of INVO Parent Stock are converted into one (1) share of INVO Parent Stock, then the amount of shares of INVO Parent Stock issuable on any Additional Payment Date shall be proportionately reduced to reflect such 1-for-10 reverse stock split and accordingly the shares of INVO Parent Stock issuable on the first Additional Payment Date, the second Additional Payment Date and the third Additional Payment Date would be Thirty-Two Thousand (32,000) shares, Twenty-Two Thousand (22,000) shares and Fourteen Thousand (14,000) shares, respectively.
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| 4. | Failure to Close. In the event that Parties fail to close on the purchase pursuant to the Membership Interest Purchase Agreement on or before July 31, 2023, regardless of the reason for the failure to close, and unless there is another signed written extension among the Parties, then the Membership Interest Purchase Agreement shall be deemed terminated consistent with Section 8.1(a) therein. | |
| 5. | Governing Law. This Agreement shall be governed by the laws of the State of Wisconsin. | |
| 6. | Construction. If any portion of this Agreement is found to be invalid or illegal, the remaining provisions shall nevertheless be binding with the same effect as though the invalid or illegal parts were deleted. | |
| 7. | Non-Waiver. No delay or failure by any party to exercise any right under this Agreement or partial or single exercise of that right shall constitute a waiver of that or any other right unless expressly provided herein. | |
| 8. | Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together shall be one in the same instrument. A duplicate copy of this Agreement signed by all parties shall be valid and binding as if one original of the Agreement was signed by the parties. A photographic, or electronic copy of the signature(s) of the undersigned will be deemed to be equivalent to the original hereof and may be used as a duplicate original. | |
| 9. | Binding Effect. This Agreement shall be binding upon all the parties hereto and their heirs, personal representatives, legal representatives, successors and assigns. |
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| PURCHASER: | ||
| Wood Violet Fertility, LLC, a Delaware limited liability company | ||
| By: | /s/ Steve Shum | |
| Steve Shum, President | ||
| COMPANY: | ||
| Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company | ||
| By: | /s/ Elizabeth Pritts | |
| Elizabeth Pritts Revocable Living Trust, Elizabeth Pritts, M.D., Trustee | ||
| SELLERS’ REPRESENTATIVE: | ||
| /s/ Dr. Elizabeth Pritts | ||
| Dr. Elizabeth Pritts | ||
| SELLERS: | ||
| Elizabeth Pritts Revocable Living Trust | ||
| By: | /s/ Elizabeth Pritts | |
| Elizabeth Pritts, M.D., Trustee | ||
| IVF Science, LLC, a Wisconsin limited liability Company | ||
| By: | /s/ Wael Megid | |
| Wael Megid, Managing Member | ||
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