PROPOSAL NO. 1
WARRANT REPRICING PROPOSAL
General
Momentus is asking stockholders to approve, in accordance with Nasdaq Listing Rule 5635(d), the repricing of certain existing warrants of the Company (the “Warrant Repricing Proposal”). As previously disclosed, on January 17, 2024, we closed a transaction with an institutional investor as the purchaser (the “Investor”) in which we sold, and the Investor purchased, in a registered direct offering (i) an aggregate of 900,000 shares of the Company’s Class A common stock, at a purchase price of $1.085 per share of Class A common stock and one January 2024 Warrant (as defined below), (ii) in lieu of Class A common stock, at the election of the Investor, pre-funded warrants to purchase 2,787,000 shares of Class A common stock, at a purchase price of $1.08499 per pre-funded warrant, and (iii) warrants to purchase 3,687,000 shares of Class A common stock (the “January 2024 Warrants”), pursuant to the terms of a Securities Purchase Agreement (the “Securities Purchase Agreement”) that we entered into with the Investor.
Additionally, the Securities Purchase Agreement provides for a warrant repricing transaction (the “Warrant Repricing Transaction”) with respect to warrants to purchase up to 5,808,538 shares of the Company’s Class A common stock initially issued by the Company to the Investor on November 9, 2023 (the “November 2023 Warrants”). The Securities Purchase Agreement requires the Company, among its other obligations, to hold a meeting of stockholders by April 16, 2024 to request stockholder approval of the Warrant Repricing Transaction (the “Stockholder Approval”) for a reduction of the exercise price from $3.862 per share to $0.96 per share and an extension of the termination date of the November 2023 Warrants to five years following the date on which the Company receives the Stockholder Approval.
If the Stockholder Approval is not obtained at the Special Meeting, then the Company will be required to call another meeting of stockholders every sixty days thereafter to seek the Stockholder Approval until the earlier of the date Stockholder Approval is achieved and May 9, 2024, which is the date that is six months after the November 9, 2023 issuance date of the November 2023 Warrants. If Stockholder Approval is not obtained by May 9, 2024, then automatically and without any approval of stockholders (i) the exercise price of the November 2023 Warrants will be reduced (if and only if such new exercise price on the repricing date is lower than the exercise price of the November 2023 Warrants then in effect) to be the Minimum Price (as defined below) of the Class A Stock on May 9, 2024, and (ii) the termination date of the November 2023 Warrants will be extended to May 9, 2029.
The November 2023 Warrants and the January 2024 Warrants both provide that the Investor will not have the right to exercise any portion of such warrants if the exercise would cause (i) the aggregate number of shares of our Class A common stock beneficially owned by the Investor (together with its affiliates) to exceed 4.99% (or, at the election of the Investor, 9.99%) of the number of shares of Class A common stock outstanding immediately after giving effect to the exercise, or (ii) the combined voting power of the Company’s securities beneficially owned by the Investor (together with its affiliates) to exceed 4.99% (or, at the election of the Investor, 9.99%) of the combined voting power of all of the Company’s securities then outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants.
Nasdaq Stockholder Approval Requirement
Listing Rule 5635(d) requires stockholder approval in connection with a transaction, other than a public offering, involving the sale or issuance by the issuer of Common Stock (or securities convertible into or exchangeable for Common Stock) equal to 20% or more of the Common Stock or 20% or more of the voting power of such company outstanding before the issuance for a price that is less than the lower of: (i) the closing price of the Common Stock immediately preceding the signing of the binding agreement for the issuance of such securities and (ii) the average closing price of the Common Stock for the five trading days immediately preceding the signing of the binding agreement for the issuance of such securities (the “Minimum Price” as provided in Nasdaq Listing Rule 5635(d)).
