UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
SCHEDULE
13D
Under the Securities Exchange Act of 1934
(Amendment No. 20)*
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Ontrak, Inc. |
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(Name of Issuer) |
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Common Stock, $0.0001 par value per share |
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(Title of Class of Securities) |
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44919F 104 |
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(CUSIP Number of Class of Securities) |
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Terren
S. Peizer
Acuitas
Group Holdings, LLC
200 Dorado Beach Drive #3831
Dorado, Puerto Rico 00646
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
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November 14, 2023 |
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(Date of Event which Requires Filing of this Statement) |
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If
the filing person has previously filed a Statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D
and is filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. ¨
Note: Schedules filed in paper format shall include
a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7(b) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be
filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this
cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934
(“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 44919F 104 |
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Page 2 of 5 Pages |
1 |
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Acuitas Group Holdings, LLC |
2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) ¨
(b) ¨ |
3 |
SEC USE ONLY |
4 |
SOURCE OF FUNDS (See Instructions)
OO |
5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |
¨ |
6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
California |
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH |
7 |
SOLE VOTING POWER
0 |
8 |
SHARED VOTING POWER
49,573,056 |
9 |
SOLE DISPOSITIVE POWER
0 |
10 |
SHARED DISPOSITIVE POWER
49,573,056 |
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
49,573,056 |
12 |
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) |
¨ |
13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
86.82%1 |
14 |
TYPE OF REPORTING PERSON (See Instructions)
OO |
1 |
Based on 57,100,174 Shares
deemed outstanding pursuant to Rule 13d-3(d)(1), calculated as the sum of (i) 27,563,898 Shares
expected to be outstanding as of immediately following the closing of the Offering (which is inclusive of all 18,054,791 Shares
issued to Humanitario on November 14, 2023 in respect of the Notes Conversion (without giving effect to the conversion or exercise
of any other outstanding securities of the Company or to additional Shares to be issued following the Stockholder Approval in
respect of the Notes Conversion (each as defined below)), as disclosed by the Company in the Final Prospectus (Registration No.
333-273029) filed with the SEC on November 13, 2023 (the “November 2023 Prospectus”), (ii) an aggregate of
25,091,830 Shares underlying the Keep Well Warrants issued to Acuitas (including the Conversion Warrant (as defined below) issued to
Acuitas on November 14, 2023 upon the Notes Conversion), representing the sum of (1) 7,037,039 Shares underlying the Keep Well
Warrants previously issued to Acuitas prior to the Notes Conversion and (2) 18,054,791 Shares underlying the Conversion Warrant
prior to the Stockholder Approval pursuant to the Fifth Amendment (without giving effect to any increase in the number of Shares
subject thereto following the Stockholder Approval), (iii) 2,222,223 Shares issuable to Acuitas Capital (or its designee) upon the
conversion of the Surviving Note prior to the Stockholder Approval (assuming a conversion price equal to $0.90 per share prior to
the Stockholder Approval, and without giving effect to the reduction of the conversion price upon the effectiveness of the
Stockholder Approval), and (iv) 2,222,223 Shares underlying the Keep Well Warrant issuable to Acuitas Capital (or its designee) upon
the conversion of the Surviving Note prior to the Stockholder Approval (assuming (1) a conversion price equal to $0.90 per share and
(2) any accrued interest on the Surviving Note is paid in cash), as described in more detail in Item 4 below. |
SCHEDULE 13D
CUSIP No. 44919F 104 |
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Page 3 of 5 Pages |
1 |
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Terren S. Peizer |
2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) ¨
(b) ¨ |
3 |
SEC USE ONLY |
4 |
SOURCE OF FUNDS (See Instructions)
OO |
5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |
¨ |
6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America |
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH |
7 |
SOLE VOTING POWER
49,573,056 |
8 |
SHARED VOTING POWER
0 |
9 |
SOLE DISPOSITIVE POWER
49,573,056 |
10 |
SHARED DISPOSITIVE POWER
0 |
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
49,573,056 |
12 |
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) |
¨ |
13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
86.82%2 |
14 |
TYPE OF REPORTING PERSON (See Instructions)
HC; IN |
2 |
Based on 57,100,174 Shares deemed outstanding pursuant to Rule 13d-3(d)(1), calculated as the sum of (i) 27,563,898 Shares expected to be outstanding as of immediately following the closing of the Offering (which is inclusive of all 18,054,791 Shares issued to Humanitario on November 14, 2023 in respect of the Notes Conversion (without giving effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following the Stockholder Approval in respect of the Notes Conversion)), as disclosed by the Company in the November 2023 Prospectus, (ii) an aggregate of 25,091,830 Shares underlying the Keep Well Warrants issued to Acuitas (including the Conversion Warrant issued to Acuitas on November 14, 2023 upon the Notes Conversion), representing the sum of (1) 7,037,039 Shares underlying the Keep Well Warrants previously issued to Acuitas prior to the Notes Conversion and (2) 18,054,791 Shares underlying the Conversion Warrant prior to the Stockholder Approval pursuant to the Fifth Amendment (without giving effect to any increase in the number of Shares subject thereto following the Stockholder Approval), (iii) 2,222,223 Shares issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving Note prior to the Stockholder Approval (assuming a conversion price equal to $0.90 per share prior to the Stockholder Approval, and without giving effect to the reduction of the conversion price upon the effectiveness of the Stockholder Approval), and (iv) 2,222,223 Shares underlying the Keep Well Warrant issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving
Note prior to the Stockholder Approval (assuming (1) a conversion price equal to $0.90 per share and (2) any accrued interest on the Surviving
Note is paid in cash), as described in more detail in Item 4 below. |
SCHEDULE 13D
CUSIP No. 44919F 104 |
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Page 4 of 5 Pages |
AMENDMENT NO. 20 TO SCHEDULE 13D
This Amendment No. 20
to Schedule 13D (this “Amendment”) is being filed by Acuitas Group Holdings, LLC, a California limited liability company
(“Acuitas”), and Terren S. Peizer (“Mr. Peizer”) (collectively, the “Reporting Persons”)
to amend the Schedule 13D originally filed with the Securities and Exchange Commission (the “SEC”) on October 20,
2010, as amended by Amendment No. 1 to Schedule 13D filed on December 6, 2011, Amendment No. 2 to Schedule 13D filed on
April 27, 2012, Amendment No. 3 to Schedule 13D filed on September 20, 2012, Amendment No. 4 to Schedule 13D filed
on February 14, 2013, Amendment No. 5 to Schedule 13D filed on May 11, 2021, Amendment No. 6 to Schedule 13D filed
on July 27, 2021, Amendment No. 7 to Schedule 13D filed on August 16, 2021, Amendment No. 8 to Schedule 13D filed
on November 2, 2021, Amendment No. 9 to Schedule 13D filed on April 18, 2022, Amendment No. 10 to Schedule 13D filed on September
2, 2022, Amendment No. 11 to Schedule 13D filed on September 8, 2022, Amendment No. 12 to Schedule 13D filed on November 22, 2022, Amendment
No. 13 to Schedule 13D filed on January 4, 2023, Amendment No. 14 to Schedule 13D filed on January 6, 2023, Amendment No. 15 to Schedule
13D filed on February 23, 2023, Amendment No. 16 to Schedule 13D filed on March 7, 2023, Amendment No. 17 to Schedule 13D filed on March
8, 2023, Amendment No. 18 to Schedule 13D filed on June 27, 2023 and Amendment No. 19 to Schedule 13D filed on November 2, 2023 (as amended
and supplemented, the “Original Statement” and, as amended and supplemented by this Amendment, the “Statement”),
relating to common stock, par value $0.0001 per share (the “Shares”), of Ontrak, Inc., a Delaware corporation
(the “Company”). Capitalized terms used herein but not defined have the respective meanings ascribed to them in the
Original Statement.
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ITEM 3. |
SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION |
Item 3 of the Statement is
hereby amended and supplemented to include the information disclosed in Item 4 below, which information is incorporated by reference herein.
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ITEM 4. |
PURPOSE OF TRANSACTION |
Item 4 of the Statement is
hereby amended and supplemented by adding the following information:
“As previously disclosed,
on October 31, 2023, Acuitas Capital LLC, an entity wholly owned by Acuitas (“Acuitas Capital”), the Company, certain
of the Company’s subsidiaries and U.S. Bank Trust Company, National Association, entered into the Fifth Amendment (the “Fifth
Amendment”) to the Master Note Purchase Agreement, dated as of April 15, 2022, as amended by that certain First Amendment made
as of August 12, 2022, that certain Second Amendment made as of November 19, 2022, that certain Third Amendment made as of December 30,
2022 and that certain Fourth Amendment made as of June 23, 2023 (as amended through and including the Fifth Amendment, the “Existing
Keep Well Agreement”, and as modified by the November 9 Agreement (as defined below), the “Keep Well Agreement”).
On November 9, 2023, the Company
and Acuitas Capital entered into a letter agreement (the “November 9 Agreement”) under which the minimum amount to
be raised in an equity financing for such financing to constitute a “Qualified Financing” (as such term is defined in the
Keep Well Agreement) was reduced from $8.0 million to $6.0 million. The foregoing summary of the November 9 Agreement does not purport
to be complete and is qualified in its entirety by reference to the full text of the November 9 Agreement, which is attached hereto as
Exhibit 99.24 and incorporated by reference herein.
On November 14, 2023, the
Company closed its previously announced public offering (the “Offering”) of Shares and warrants to purchase Shares
at a combined public offering price of $0.60 per Share and accompanying warrants (the “Public Offering Price”), as
disclosed by the Company in its current report on Form 8-K filed with the SEC on November 15, 2023.
Notes
Conversion. In accordance with the Fifth Amendment, on November 14, 2023 and before the closing of the Offering, the Company
issued 18,054,791 Shares to Humanitario Capital LLC, an entity wholly owned by Acuitas (“Humanitario”), upon the conversion
of the aggregate principal amount of all the outstanding senior secured convertible notes (the “Keep Well Notes”) previously
issued by the Company to Acuitas Capital under the Keep Well Agreement, plus all accrued and unpaid interest thereon, minus $7.0 million
(the “Notes Conversion”). The Notes Conversion was effected in accordance with the terms (including the conversion
price) of the Keep Well Agreement and the Keep Well Notes. On November 14, 2023, in connection with the Notes Conversion, and in accordance
with the Keep Well Agreement, the Company issued to Acuitas a warrant, in the form attached to the Keep Well Agreement, to purchase up
to 18,054,791 Shares with an exercise price of $0.90 per share (the “Conversion Warrant”), which was the conversion
price of the Keep Well Notes converted in the Notes Conversion.
Because the Public Offering
Price was less than the conversion price at which the Keep Well Notes were converted in the Notes Conversion, upon the effectiveness of
the Stockholder Approval (as defined below): (1) the Company will issue to Acuitas Capital (or its designee) additional Shares such that
the total number of Shares issued in respect of the Notes Conversion plus such additional Shares will equal the number of shares the Company
would have issued in respect of the Notes Conversion if the Keep Well Notes converted therein were converted at a conversion price equal
to the Public Offering Price; and (2) the exercise price of the Conversion Warrant will be reduced to $0.60 per share (i.e., the
Public Offering Price), and the number of Shares subject to the Conversion Warrant will be increased to the number of Shares that would
have been subject to the Conversion Warrant if the Keep Well Notes converted in the Notes Conversion were converted at a conversion price
equal to the Public Offering Price. Accordingly, upon the effectiveness of the Stockholder Approval, the Company will issue an additional
9,027,395 Shares to Acuitas Capital (or its designee) in respect of the Notes Conversion, the exercise price of the Conversion Warrant
will be reduced to $0.60 per share, subject to further adjustment as set forth therein, and the number of Shares subject to the Conversion
Warrant will be increased by 9,027,395 (collectively, the “Notes Conversion Modifications”).
Private
Placement. In accordance with the terms of the Fifth Amendment, on November 14, 2023, concurrent with the closing of the
Offering, the Company issued to Humanitario in a private placement (the “Private Placement”) an unregistered pre-funded
warrant to purchase up to 18,333,333 Shares (the “Private Placement Pre-Funded Warrant”) and an unregistered warrant
to purchase up to 36,666,666 Shares (the “Private Placement Warrant” and, together with the Private Placement Pre-Funded
Warrant, the “Private Placement Securities”), for total consideration of $11.0 million. The consideration for the Private
Placement Securities purchased by Humanitario consisted of (a) the $6.0 million Acuitas Capital previously delivered to the Company in
June 2023 and September 2023 in accordance with the Keep Well Agreement and (b) a reduction of the aggregate amounts outstanding under
the Keep Well Notes (after giving effect to the Notes Conversion) to $2.0 million (the Keep Well Note evidencing such $2.0 million, the
“Surviving Note”). Each Private Placement Pre-Funded Warrant was sold with two Private Placement Warrants, with each
Private Placement Warrant exercisable for one Share.
The following is a summary
of the material terms of the Private Placement Securities. The following summary is not complete and is subject to, and qualified in its
entirety by, the full terms of the Private Placement Securities, copies of which are attached hereto as Exhibits 99.25 and 99.26 and incorporated
by reference herein.
Exercisability
and Term. The exercisability of the Private Placement Securities is subject to the Stockholder Approval. Upon the effectiveness
of the Stockholder Approval, (a) the Private Placement Pre-Funded Warrant may be exercised at any time until exercised in full, and (b)
the Private Placement Warrant may be exercised through the fifth anniversary of the date of the effectiveness of the Stockholder Approval.
The Private Placement Securities may be exercised on a cashless basis.
Exercise
Price. The exercise price of the Private Placement Pre-Funded Warrant is $0.0001 per share, subject to customary adjustment
in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock. The exercise
price of the Private Placement Warrant is $0.85 per share, subject to adjustment as further described below.
In addition to customary adjustment
in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock, the exercise
price of the Private Placement Warrant and the number of Shares issuable upon exercise thereof are subject to adjustment upon the occurrence
of the events described below (collectively, the “Warrant Adjustment Provisions”).
| · | Adjustment at the Later of the 2.5 Year Mark and Stockholder Approval. At the later of (a) May
14, 2026, the two and a half year anniversary of the date the Private Placement Warrant was issued and (b) the date that Stockholder Approval
is obtained and deemed effective (the later of (a) and (b), the “Trigger Date”), the exercise price of the Private
Placement Warrant will be reduced to the greater of (i) $0.1584 per share, which was 20% of the last closing bid price of the Company’s
common stock before the Company entered into the securities purchase agreement with the investors in the Offering and (ii) the lesser
of (x) the then exercise price and (y) the lowest volume weighted average price of the Company’s common stock on any trading day
during the five trading day period immediately before the Trigger Date. |
| · | Alternative Exercise Price Following Certain Issuances. If the Company issues or sells, or enters
into any agreement to issue or sell, any common stock, common stock equivalents, or rights, warrants or options to purchase shares of
the Company’s capital stock or common stock equivalents that are issuable or convertible into or exchangeable or exercisable for
Shares at a price which varies or may vary with the market price of the Company’s common stock (excluding customary adjustments
in the event of stock dividends, stock splits, reorganizations or similar events), the holder will have the right, in its sole discretion,
to substitute the variable price for the exercise price of the Private Placement Warrant. |
| · | Adjustment for Stock Combination Events. In the event of stock dividends, stock splits, reorganizations
or similar events affecting the Company’s common stock (a “Stock Combination Event”), if the Event Market Price
(as defined below) is less than the exercise price of the Private Placement Warrant then in effect (after giving effect to customary adjustments
thereto as a result of the event), then on the 16th trading day immediately following the Stock Combination Event, the exercise price
of the Private Placement Warrant will be reduced to the Event Market Price. “Event Market Price” means, with respect
to any Stock Combination Event, the quotient determined by dividing (x) the sum of the volume weighted average price of the Company’s
common stock for each of the five lowest trading days during the 20 consecutive trading day period ending and including the trading day
immediately preceding the 16th trading day after the date of such Stock Combination Event, by (y) five. |
| · | Adjustment Upon Restricted Investor Subsequent Placement. If at any time prior to the three and
a half year anniversary of the date the Private Placement Warrant is exercisable, the Company (1) grants, issues or sells (or enters into
any agreement to grant, issue or sell) any Shares, non-convertible indebtedness and/or common stock equivalents to Acuitas Capital or
its affiliates that results in a reduction of the exercise price in accordance with the terms of the Private Placement Warrant or (2)
consummates (or enters into any agreement with respect to) any other financing with Acuitas Capital or its affiliates (any transaction
described in clause (1) or (2), other than certain exempt issuances, a “Restricted Transaction”), and the exercise
price of the Private Placement Warrant is greater than the lowest volume weighted average price of the Company’s common stock on
any trading day during the five trading day period immediately following the public announcement of such Restricted Transaction, then
the exercise price of the Private Placement Warrant will be reduced to the lowest volume weighted average price on any trading day during
such five trading day period. |
| · | Adjustment for Dilutive Issuances. If the Company issues (or enters into any agreement to issue)
any Shares or common stock equivalents, excluding certain exempt issuances, for a consideration per share less than the exercise price
of the Private Placement Warrant in effect immediately prior to such issuance or deemed issuance, then the exercise price of the Private
Placement Warrant will be reduced to an amount equal to the consideration per share at which the Company’s common stock or common
stock equivalents were issued or deemed issued. |
| · | Adjustment to Number of Shares Issuable Upon Exercise. Simultaneously with any adjustment to the
exercise price on or prior to the three and a half year anniversary of the date the Private Placement Warrant is exercisable, the number
of Shares issuable upon exercise will be increased or decreased proportionally, such that the aggregate exercise price of the Private
Placement Warrant, after taking into account the adjustment in the exercise price, will be equal to the aggregate exercise price before
the adjustment in the exercise price. |
Fundamental
Transaction. In the event of a fundamental transaction, as described in the Private Placement Securities and which generally
includes any reorganization, recapitalization or reclassification of the Company’s common stock, the sale, transfer or other disposition
of all or substantially all of the Company’s properties or assets, the Company’s consolidation or merger with or into another
person, the acquisition of more than 50% of the Company’s outstanding common stock, or any person or group becoming the beneficial
owner of 50% of the voting power represented by the Company’s outstanding common stock, the holder of the Private Placement Securities
will be entitled to receive upon exercise thereof the kind and amount of securities, cash or other property that the holder would have
received had it exercised the Private Placement Securities immediately prior to such fundamental transaction. Additionally, as more fully
described in the Private Placement Securities, in the event of certain fundamental transactions, the holder will be entitled to receive
consideration in an amount equal to the Black Scholes Value (as defined in the Private Placement Securities) of the Private Placement
Securities on the date of consummation of such transaction.
Surviving
Note. Under the terms of the Fifth Amendment, the Surviving Note will mature on May 14, 2026, unless it becomes due and
payable in full earlier. Subject to the effectiveness of the Stockholder Approval, the conversion price of the Surviving Note will be
the lesser of (i) $2.40 per share, subject to adjustment for stock splits and the like, and (ii) the greater of (a) the consolidated closing
bid price of the Company’s common stock on the trading day immediately prior to conversion and (b) $0.60 per share, subject to adjustment
for stock splits and the like.
The Shares issued and that
will be issued in respect of the Notes Conversion, the Conversion Warrant, the Shares issuable upon exercise of the Conversion Warrant,
the Private Placement Securities, and the Shares issuable upon exercise of the Private Placement Securities, were issued and will be issued,
as applicable, pursuant to the exemptions provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) promulgated
thereunder.
Stockholder
Approval. As previously disclosed, under the terms of the Fifth Amendment, the Company was required to seek stockholder
approval (the “Stockholder Approval”) in accordance with the rules of the Nasdaq Stock Market (the “Listing
Rules”) of (A) the issuance of the Shares issuable upon exercise of the Private Placement Securities that, in the aggregate
with the Shares issuable upon exercise of the warrants to purchase Shares sold in the Offering, are in excess of the maximum number of
Shares permitted to be issued without such approval under the Listing Rules (which amount was 4,295,068, or 19.99% of the total number
of Shares outstanding immediately following the Notes Conversion and immediately prior to the closing of the Offering and the Private
Placement), (B) the amendment to the conversion price of the Surviving Note under the Fifth Amendment, (C) the elimination of the provision
in the Keep Well Agreement that prohibited the issuance of Shares upon the conversion of any Keep Well Note or the exercise of any warrant
issued under the Keep Well Agreement to the extent that, immediately after giving effect to the issuance of any such shares, Acuitas Capital
and its affiliates would beneficially own Shares representing more than 90% of the total number of Shares outstanding as of the time of
such issuance, and (D) any other terms of the Offering, the Private Placement and/or the Fifth Amendment that require approval of the
Company’s stockholders under the Listing Rules, including the Notes Conversion Modifications and the Warrant Adjustment Provisions
(collectively, the “Stockholder Approval Matters”).
On November 15, 2023, pursuant
to the terms of the Support Agreement (as previously defined), Acuitas and Humanitario, which collectively owned a majority of the outstanding
Shares as of that date, executed and delivered to the Company a written consent approving the Stockholder Approval Matters. According
to the Company, the Company will file an information statement regarding the Stockholder Approval Matters with the SEC and mail an information
statement to the holders of the Company’s common stock so the Stockholder Approval can become effective as soon as practicable.
As of the date hereof, the Company has not filed such information statement with the SEC nor mailed it to the holders of the Company’s
common stock.”
|
ITEM 5. |
INTEREST IN SECURITIES OF THE ISSUER |
Item 5(a) and (b) of
the Statement is amended and restated in its entirety as follows:
“(a) and (b)
All
percentages of Shares outstanding contained herein are based on 57,100,174 Shares deemed outstanding pursuant to Rule 13d-3(d)(1)
(without giving effect to the effectiveness of the Stockholder Approval), calculated as the sum of:
|
(i) |
27,563,898 Shares expected to be outstanding as of immediately following the closing of the Offering (which is inclusive of all 18,054,791 Shares issued to Humanitario on November 14, 2023 in respect of the Notes Conversion (without giving effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following the Stockholder Approval in respect of the Notes Conversion), as described in more detail in Item 4 above), as disclosed by the Company in the Final Prospectus (Registration No. 333-273029) filed with the SEC on November 13, 2023; |
|
(ii) |
an
aggregate of 25,091,830 Shares underlying the Keep Well Warrants issued to Acuitas (including the Conversion Warrant issued to Acuitas
on November 14, 2023 upon the Notes Conversion), representing the sum of (1) 7,037,039 Shares underlying the Keep Well Warrants previously
issued to Acuitas prior to the Notes Conversion and (2) 18,054,791 Shares underlying the Conversion Warrant prior to the Stockholder Approval
pursuant to the Fifth Amendment (without giving effect to any increase in the number of Shares subject thereto following the Stockholder
Approval), as described in more detail in Item 4 above;1
|
|
(iii) |
2,222,223 Shares issuable to Acuitas Capital
(or its designee) upon the conversion of the Surviving Note prior to the Stockholder Approval (assuming a conversion price equal to $0.90
per share prior to the Stockholder Approval, and without giving effect to the reduction of the conversion price upon the effectiveness
of the Stockholder Approval), as described in more detail in Item 4 above; and |
|
|
|
|
(iv) |
2,222,223 Shares underlying the Keep Well Warrant issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving Note
prior to the Stockholder Approval (assuming (1) a conversion price equal to $0.90 per share and (2) any accrued interest on the Surviving
Note is paid in cash). |
As
of November 15, 2023, each of the Reporting Persons may be deemed to have beneficial ownership of 49,573,056 Shares, consisting
of:
|
(i) |
an aggregate of 20,036,780 Shares beneficially owned by the Reporting Persons as of November 15, 2023 immediately following the closing of the Private Placement, representing the sum of (1) 1,981,989 Shares beneficially owned by the Reporting Persons prior to the Private Placement and (2) 18,054,791 Shares issued to Humanitario on November 14, 2023 upon the Notes Conversion prior to the Stockholder Approval pursuant to the terms of the Fifth Amendment (without giving effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following the Stockholder Approval in respect of the Notes Conversion), as described in more detail in Item 4 above; |
1 Amendments 15 to 19 to the Statement incorrectly identified
Acuitas Capital as the record holder of the outstanding Keep Well Warrants previously issued under the Keep Well Agreement. Acuitas is
the record holder of such warrants.
|
(ii) |
an aggregate of 25,091,830 Shares underlying the
Keep Well Warrants issued to Acuitas (including the Conversion Warrant issued to Acuitas upon the Notes Conversion), representing the
sum of (1) 7,037,039 Shares underlying the Keep Well Warrants previously issued to Acuitas prior to the Notes Conversion and (2) 18,054,791
Shares underlying the Conversion Warrant prior to the Stockholder Approval pursuant to the terms of the Fifth Amendment (without giving
effect to any increase in the number of Shares subject thereto following the Stockholder Approval), as described in more detail in Item
4 above;
|
|
(iii) |
2,222,223 Shares issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving Note prior to the Stockholder Approval (assuming a conversion price equal to $0.90 per share prior to the Stockholder Approval, and without giving effect to the reduction of the conversion price upon the effectiveness of the Stockholder Approval), as described in more detail in Item 4 above; and |
|
|
|
|
(iv) |
2,222,223 Shares underlying the Keep Well Warrant issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving Note
prior to the Stockholder Approval (assuming (1) a conversion price equal to $0.90 per share and (2) any accrued interest on the Surviving
Note is paid in cash). |
The
Shares beneficially owned by the Reporting Persons represent approximately 86.82% of the total number of Shares outstanding as of November
15, 2023 (without giving effect to the effectiveness of the Stockholder Approval). Acuitas may be deemed to share the power to vote or
direct the vote and dispose or direct the disposition of all of the 49,573,056 Shares with Mr. Peizer. Mr. Peizer may be deemed
to have the sole power to vote or direct the vote and dispose or direct the disposition of all of the 49,573,056 Shares.
Assuming
the effectiveness of the Stockholder Approval within 60 days hereof, the exercise of all of the outstanding Keep Well Warrants issued
to Acuitas (including the Conversion Warrant issued to Acuitas upon the Notes Conversion), the exercise of all of the outstanding Private
Placement Securities issued to Humanitario following the Stockholder Approval, and the conversion of the Surviving Note into Shares following
the Stockholder Approval, in each case as further described below, each of the Reporting Persons would be deemed to have beneficial ownership
of 124,850,067 Shares, consisting of:
|
(i) |
an aggregate of 20,036,780 Shares beneficially owned by the Reporting Persons as of November 15, 2023 immediately following the closing of the Private Placement, representing the sum of (1) 1,981,989 Shares beneficially owned by the Reporting Persons prior to the Private Placement and (2) 18,054,791 Shares issued to Humanitario on November 14, 2023 upon the Notes Conversion prior to the Stockholder Approval pursuant to the terms of the Fifth Amendment (without giving effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following the Stockholder Approval in respect of the Notes Conversion), as described in more detail in Item 4 above; |
|
(ii) |
an
additional 9,027,395 Shares to be issued to Acuitas Capital (or its designee) following the Stockholder Approval (assuming the conversion
price for the Keep Well Notes in the Notes Conversion will be reduced from $0.90 per share to $0.60 per share upon the effectiveness
of the Stockholder Approval), as described in more detail in Item 4 above;
|
|
(iii) |
an aggregate of 25,091,830 Shares underlying the
Keep Well Warrants issued to Acuitas (including the Conversion Warrant issued to Acuitas upon the Notes Conversion), representing the
sum of (1) 7,037,039 Shares underlying the Keep Well Warrants previously issued to Acuitas prior to the Notes Conversion and (2) 18,054,791
Shares underlying the Conversion Warrant prior to the Stockholder Approval pursuant to the terms of the Fifth Amendment (without giving
effect to any increase in the number of Shares subject thereto following the Stockholder Approval), as described in more detail in Item
4 above;
|
|
(iv) |
an additional 9,027,395 Shares to become subject to the Conversion Warrant following the Stockholder Approval (assuming the conversion price for the Keep Well Notes in the Notes Conversion will be reduced from $0.90 per share to $0.60 per share upon the effectiveness of the Stockholder Approval), as described in more detail in Item 4 above; |
|
(v) |
an
aggregate of 54,999,999 Shares underlying the Private Placement Securities issued to Humanitario on November 14, 2023 in the Private
Placement, representing the sum of (1) 18,333,333 Shares underlying the Private Placement Pre-Funded Warrant and (2) 36,666,666 Shares
underlying the Private Placement Warrant, in each case, after giving effect to the exercisability thereof upon the effectiveness of the
Stockholder Approval, as described in more detail in Item 4 above;
|
|
(vi) |
3,333,334 Shares
issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving Note following the Stockholder Approval (assuming
(1) the conversion price for the Surviving Note will be reduced from $0.90 per share to $0.60 per share upon the effectiveness of
the Stockholder Approval and (2) any accrued interest thereon is paid in cash), as described in more detail in Item 4 above; and |
|
|
|
|
(vii) |
3,333,334 Shares underlying the Keep Well Warrant issuable to Acuitas Capital (or its designee) upon the conversion of the Surviving Note
following the Stockholder Approval (assuming (1) a conversion price equal to $0.60 per share and (2) any accrued interest on the Surviving
Note is paid in cash).” |
Item 5(c) of the Statement
is hereby supplemented with the following:
“Except as described
in this Statement, the Reporting Persons had no transactions in the securities of the Company since the most recent filing on Schedule
13D.”
ITEM 6. |
Contracts, arrangements, understandings or relationships with respect to the securities of the issuer |
Item 6 of the Statement is
hereby amended and supplemented to include the information disclosed in Item 4 above, which information is incorporated by reference herein.
ITEM 7. |
Materials to be Filed as Exhibits |
Item 7 of the Statement is
hereby amended and supplemented by adding the following:
SIGNATURE
After reasonable inquiry and
to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: November 15, 2023
|
ACUITAS GROUP HOLDINGS, LLC |
|
|
|
By: |
/s/ Terren S. Peizer |
|
|
Terren S. Peizer, Chairman |
|
|
|
/s/ Terren S. Peizer |
|
Terren S. Peizer |
Exhibit 99.24
November 9, 2023
Acuitas Capital LLC
Attention: Terren S. Peizer
200 Dorado Beach Drive #3831
Dorado, Puerto Rico 00646
Mr. Peizer:
This letter relates to that certain Master Note
Purchase Agreement dated as of April 15, 2022, among Ontrak, Inc., a Delaware corporation, as issuer, certain of its Subsidiaries,
as Guarantors, Acuitas Capital LLC, a Delaware limited liability company, and U.S. Bank Trust Company, National Association, as collateral
agent for the Secured Parties, as amended by that certain First Amendment thereto, dated as of August 12, 2022, that certain Second
Amendment thereto, dated as of November 19, 2022, that certain Third Amendment thereto, dated as of December 30, 2022, that
certain Fourth Amendment to Master Note Purchase Agreement, dated as of June 23, 2023, and that certain Fifth Amendment to Master
Note Purchase Agreement, dated as of October 31, 2023 (as amended to date, the “Keep Well Agreement”). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Keep Well Agreement.
For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Purchaser hereby agree as follows:
| 1. | Qualified Financing. The definition of “Qualified Financing” is hereby amended to replace
the “$8,000,000” set forth therein with “$6,000,000.” |
| 2. | Miscellaneous. This letter, which may be executed in separate counterparts (any of which may be
delivered by PDF or other electronic means), and each of which shall be deemed an original, shall be binding upon the Company and Purchaser
and their respective successors and assigns and may not be amended or modified except in writing. |
If you agree with the foregoing, please so indicate
by signing below and returning a copy of this letter to the Company, which will constitute the agreement of the Company and Purchaser
with respect to the matters set forth herein.
|
Sincerely, |
|
|
|
Ontrak, Inc. |
|
|
|
/s/ James Park |
|
James Park |
|
Chief Financial Officer |
|
|
Acknowledged and Agreed: |
|
|
|
Acuitas Capital LLC |
|
|
|
/s/ Terren S. Peizer |
|
Terren S. Peizer |
|
Chairman |
|
Exhibit 99.25
NEITHER THIS WARRANT, NOR THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE COMPANY
MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
PRE-FUNDED COMMON STOCK PURCHASE WARRANT
ontrak,
inc.
Warrant Shares: 18,333,333 | |
Issuance Date: November 14, 2023 |
THIS PRE-FUNDED COMMON STOCK
PURCHASE WARRANT (this “Warrant”) certifies that, for value received, Humanitario Capital 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
the date that the Stockholder Approval is obtained and deemed effective (the “Initial Exercise Date”) and until
this Warrant is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase
from Ontrak, Inc., a Delaware corporation (the “Company”), up to 18,333,333 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.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“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 on the Pink Open Market (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 Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Stockholder
Approval” means such approval as may be required by the applicable rules and regulations of the Trading Market from the Company’s
stockholders with respect to, among other things, the issuance of shares of Common Stock upon exercise of this Warrant and the warrant
issued to Holder in connection with this Warrant.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Equiniti Trust Company, the current transfer agent of the Company, with a mailing address of 1110 Centre Pointe
Curve, Suite 101, Mendota Heights, MN 55120 and an email address of EQSS-RelationshipManagement@equiniti.com, and any successor transfer
agent of 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 on the Pink Open Market
(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 holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
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 Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed
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 this 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.
b)
Exercise Price. The aggregate exercise price of this Warrant, except for a nominal
exercise price of $0.0001 per Warrant Share, was pre-funded to the Company on or prior to
the Issuance Date and, consequently, no additional consideration (other than the nominal exercise price of $0.0001 per
Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall not
be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any
reason whatsoever. The remaining unpaid exercise price per share of Common Stock under this Warrant shall be $0.0001,
subject to adjustment hereunder (the “Exercise Price”).
c)
Cashless Exercise. This Warrant may also be exercised, in whole or in part, 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) 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.
| 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 there is an effective registration statement permitting the resale of the Warrant
Shares by the Holder, 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 third Trading Day after the Warrant Share Delivery
Date) 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 the Holder and upon surrender of this Warrant, 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 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.
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.
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.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) 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) 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.
c)
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) 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.
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 or any
Subsidiary, 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 or 50% or more of the voting power of the common equity of the Company, (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 50% or more of the outstanding shares of Common Stock or 50% or
more of the voting power of the common equity of the Company (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 , 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. 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. 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 in accordance with the provisions of this Section 3(d) 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 be added to the term “Company” under this Warrant (so that
from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant referring to the
“Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally),
and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company
prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this
Warrant with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named
as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d)
regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii)
whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
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 deliver to the Holder by 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 (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, 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 email to the Holder at its last 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.
Section 4. Transfer
of Warrant.
a)
Transferability. 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 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.
Section 5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise; No Settlement in Cash. 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. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be
required to net cash settle an exercise of this Warrant.
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 this Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of this 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 this 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, during the period this 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 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).
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)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant 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 Warrant (whether brought against a party hereto or their 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, 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 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 suit, 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 Warrant 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 either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees
and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant 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. Without limiting any other
provision of this Warrant, 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 and all notices or other communications or deliveries to be provided by the Holder hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at ___________, Attention: ___________, email address: ___________, or such other email
address or address as the Company may specify for such purposes by notice to the Holder. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized
overnight courier service addressed to the Holder at the e-mail address or address of the Holder appearing on the books of the Company.
Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission,
if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City
time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at
the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder 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.
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 the 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 such 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,
on the one hand, and the written consent of the Holder, on the other hand.
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.
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)
Stockholder Approval. The Company shall either (x) if the Company shall have obtained the prior written consent of the requisite
stockholders (the “Stockholder Consent”) to obtain the Stockholder Approval, inform the Company’s stockholders
of the receipt of the Stockholder Consent by preparing and filing with the Commission, as promptly as practicable, but prior to the 30th
day after the Issuance Date (or, if such filing is delayed by a court or regulatory agency, in no event later than 60 days after the Issuance
Date), an information statement with respect thereto or (y) provide each stockholder entitled to vote at a special meeting of stockholders
of the Company (the “Stockholder Meeting”), which shall be promptly called and held not later than 60 days after the
Issuance Date (the “Stockholder Meeting Deadline”), a proxy statement soliciting such stockholder’s affirmative
vote in favor of the Stockholder Approval (the date the Stockholder Approval is obtained, the “Stockholder Approval Date”),
and the Company shall use its reasonable best efforts to solicit proxies in favor of the Stockholder Approval and to cause the Board of
Directors to recommend to the stockholders that they vote in favor of the Stockholder Approval. If, despite the Company's reasonable best
efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional
Stockholder Meeting to be held within 90 days after the Stockholder Meeting Deadline. If, despite the Company's reasonable best efforts
the Stockholder Approval is not obtained at such subsequent Stockholder Meeting, the Company shall cause an additional Stockholder Meeting
to be held semi-annually thereafter until the Stockholder Approval is obtained.
p)
Registration Rights. Section 7.2 of the Purchase Warrants for Common Shares issued by the Company to the Holder pursuant
to that certain Master Note Purchase Agreement, dated as of April 15, 2022, among the Company, certain of its subsidiaries, Acuitas Capital
LLC, and U.S. Bank Trust Company, National Association, as amended by that certain First Amendment to Master Note Purchase Agreement made
as of August 12, 2022, that certain Second Amendment to Master Note Purchase Agreement made as of November 19, 2022, that certain Third
Amendment to Master Note Purchase Agreement made as of December 30, 2022, that certain Fourth Amendment to the Master Note Purchase Agreement
made as of June 23, 2023, and that certain Fifth Amendment to the Master Note Purchase Agreement made as of October 31, 2023, is incorporated
herein and shall apply mutatis mutandis to the Warrant Shares.
********************
(Signature Page Follows)
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.
|
ontrak,
inc. |
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By: |
/s/ James Park |
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Name: James Park |
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Title: Chief Financial Officer |
NOTICE OF EXERCISE
To: ontrak,
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:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: |
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
|
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: |
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(Please Print) |
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Address: |
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(Please Print) |
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Phone Number: |
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Email Address: |
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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Exhibit 99.26
NEITHER THIS WARRANT, NOR THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
COMMON STOCK PURCHASE WARRANT
ontrak,
inc.
| Warrant
Shares: 36,666,666 | | |
| Issuance
Date: November 14, 2023 | |
THIS COMMON STOCK PURCHASE WARRANT
(this “Warrant”) certifies that, for value received, Humanitario Capital 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
the date that the Stockholder Approval is obtained and deemed effective (the “Initial Exercise Date”) and on or prior
to 5:00 p.m. (New York City time) on the five year anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Ontrak, Inc., a Delaware corporation (the “Company”), up
to 36,666,666 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.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“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 on the Pink Open Market
(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 Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Event
Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum
of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading Day period
ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date, divided
by (y) five (5). All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination,
recapitalization or other similar transaction during such period.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options or other equity-based awards (and shares of Common
Stock issued upon exercise or settlement of such options or other equity-based awards) to employees, officers or directors of the Company
for services rendered to the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose,
(b) securities upon the exercise of or conversion of any securities issued under the Securities Purchase Agreement and/or the Prospectus
(as defined below) and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding
on the Issuance Date, provided that such securities have not been amended since the Issuance Date to increase the number of such securities
or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or
combinations or the like) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities”
(as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection
therewith from the Issuance Date until one hundred eighty (180) days following the closing of the purchase and sale of securities (the
“Closing”) pursuant to the prospectus (the “Prospectus”) contained in the Registration Statement,
and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries,
an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) this Warrant
and pre-funded warrants to purchase Common Stock in the private placement described in the Prospectus and the shares of Common Stock issued
upon exercise of such warrants.
“Lock-Up
Agreement” means the lock-up agreement to be entered into by and among the Company and each of the officers and directors of
the Company and Acuitas Capital LLC.
“Per Share
Purchase Price” equals $0.60, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations
and other similar transactions of the Common Stock that occur after the date of the Securities Purchase Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Public
Offering Transaction Documents” means the Common Stock Purchase Warrant offered by the Prospectus, the Securities Purchase Agreement,
the Lock-Up Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with
the transactions contemplated under the Securities Purchase Agreement.
“Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-273029).
“Restricted
Investor” means Acuitas Capital, LLC or any of its affiliates.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities
Purchase Agreement” means the securities purchase agreement to be entered into between the Company and each purchaser identified
on the signature pages to such securities purchase agreement in connection with the public offering contemplated by the Prospectus.
“Stockholder Approval”
means such approval as may be required by the applicable rules and regulations of the Trading Market from the Company’s stockholders
with respect to, among other things, the issuance of shares of Common Stock upon exercise of this Warrant and the pre-funded warrant issued
to Holder in connection with this Warrant.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Equiniti Trust Company, the current transfer agent of the Company, with a mailing address of 1110 Centre Pointe
Curve, Suite 101, Mendota Heights, MN 55120 and an email address of EQSS-RelationshipManagement@equiniti.com, and any successor transfer
agent of the Company.
“Trigger
Date” means the later of (i) two and one-half (2.5) year anniversary of the Issuance Date and (ii) the date that Stockholder
Approval is obtained and deemed effective.
“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 on the
Pink Open Market (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 Holder and reasonably acceptable to the Company, the fees and expenses of which
shall be paid by the Company.
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 Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed 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 this 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.
b) Exercise
Price. The exercise price per share of Common Stock under this Warrant shall be $0.85, subject to adjustment hereunder (the “Exercise
Price”). In addition, on the Trigger Date, the Exercise Price shall be reduced, and only reduced, to the greater of (i) $0.1584
and (ii) the lesser of (x) the then Exercise Price and (y) the lowest VWAP on any Trading Day during the five (5) Trading
Day period immediately prior to the Trigger Date (the greater of (i) and (ii), “Reset Exercise Price”, which shall
thereafter be the new Exercise Price, subject to further adjustment hereunder, and such five (5) Trading Day period shall be referred
to herein as the “Measurement Period”) and the number of Warrant Shares issuable hereunder shall be increased such
that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price to the Reset Exercise
Price, shall be equal to the aggregate Exercise Price prior to the Trigger Date. The Company shall notify the Holder of the applicable
adjustment to the Exercise Price as of the Trigger Date (the “Trigger Date Adjustment Notice”). For purposes of clarification,
whether or not the Company provides the Trigger Date Adjustment Notice pursuant to this Section 2(b), the Holder shall only be required
to pay the Reset Exercise Price with respect to any exercise of this Warrant on or after the first Trading Day during the Measurement
Period, regardless of whether the Holder accurately refers to such price in any Notice of Exercise. If the aggregate Exercise Price paid
by the Holder in connection with the exercise of this Warrant on or after the first Trading Day during the Measurement Period exceeds
the amount that should have been paid based on the Reset Exercise Price, the Company shall promptly return any excess aggregate Exercise
Price to the Holder. Any adjustment to the Exercise Price pursuant to this Section 2(b) shall be effective retroactively to
the first Trading Day during the Measurement Period.
c) Cashless
Exercise. This Warrant may also be exercised, in whole or in part, 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) 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.
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).
| 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 or its nominee (“DTC”) through its Deposit or Withdrawal at Custodian
system (“DWAC”) if the Company is then a participant in such system and there is an effective registration statement
permitting the resale of the Warrant Shares by Holder, 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 third Trading Day after the Warrant Share Delivery Date) 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. Notwithstanding the foregoing, with respect to any
Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, the Company agrees
to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the
Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise
Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date. |
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, 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 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 this 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 this 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.
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 DTC (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.
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.
b) Adjustment
Upon Issuance of Shares of Common Stock. If and whenever on or after the date of issuance of this Warrant (the “Issuance
Date”), the Company, directly or indirectly, grants, issues or sells (or enters into any agreement to grant, issue or sell),
or in accordance with this Section 3(b) is deemed to have granted, issued or sold, any shares of Common Stock and/or Common
Stock Equivalents (including the granting, issuance or sale of shares of Common Stock owned or held by or for the account of the Company,
but excluding any Exempt Issuance) for a consideration per share (the “New Issuance Price”) less than a price equal
to the Exercise Price in effect immediately prior to such grant, issuance or sale or deemed grant, issuance or sale (such Exercise Price
then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then immediately after such Dilutive Issuance, the Applicable Price shall be reduced to an amount equal to the New Issuance Price. For
all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under
this Section 3(b)), the following shall be applicable:
i. Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any rights,
warrants or options to subscribe for or purchase shares of preferred stock and/or Common Stock or Common Stock Equivalents (“Options”)
and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such Option or otherwise pursuant to the
terms 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 grant, issuance or sale (or the time of execution of such agreement to grant, issue or sell,
as applicable) 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 at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Common Stock Equivalents issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal
to (1) the lower of (x) 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 granting, issuance or sale (or pursuant to the agreement to grant, issue or sell, as applicable)
of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise
of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one
share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options
or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the
granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and
upon conversion, exercise or exchange of any Common Stock Equivalent issuable upon exercise of such Option or otherwise pursuant to the
terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option
(or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance
of such shares of Common Stock or of such Common Stock Equivalents upon the exercise of such Options or otherwise pursuant to the terms
of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents.
ii. Issuance
of Common Stock Equivalents. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Common
Stock Equivalents and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise
or exchange thereof or otherwise pursuant to the terms 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 (or the time of execution
of such agreement to issue or sell, as applicable) of such Common Stock Equivalents 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 at any time issuable upon the conversion,
exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum
of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the
issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Common Stock Equivalent and upon conversion, exercise
or exchange of such Common Stock Equivalent or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth
in such Common Stock Equivalent for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions)
upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or
payable to the holder of such Common Stock Equivalent (or any other Person) upon the issuance or sale (or the agreement to issue or sell,
as applicable) of such Common Stock Equivalent plus the value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Common Stock Equivalent (or any other Person). Except as contemplated below, no further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock
Equivalents or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Common Stock Equivalents is made upon
exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(b),
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
iii. Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Common Stock Equivalents, or the rate at which any Common Stock
Equivalents are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than
proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), 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 Common Stock Equivalents 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 Common Stock Equivalents (including, without limitation, any Option or Common Stock Equivalents that was
outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then such
Option or Common Stock Equivalents 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 Common Stock Equivalent 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 part of a Dilutive Issuance (as determined by the Holder,
the “Primary Security”, and such Option and/or Common Stock Equivalent and/or Adjustment Right, the “Secondary
Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction,
(or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have
at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated
under the same plan of financing), the aggregate consideration per share of Common Stock with respect to such Primary Security shall be
deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Common Stock
Equivalent, 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 3(b)(ii) above and (z) the lowest VWAP on any Trading Day
during the five (5) Trading Day period (the “Adjustment Period”) 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 applicable
Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Warrant is
exercised, on any given date such warrant is exercised (each, an “Adjustment Exercise Date”) during any such Adjustment
Period, solely with respect to such portion of this Warrant exercised on such applicable Adjustment Exercise Date, such applicable Adjustment
Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Adjustment Exercise Date). If any shares
of Common Stock, Options or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the gross amount of consideration received by the Company therefor. If any shares of Common Stock,
Options or Common Stock Equivalents 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 Common Stock Equivalents 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 Common Stock Equivalents (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. For purposes of hereof, “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 this Section 3(b))
of shares of Common Stock (other than rights of the type described in Section 3(c) and Section 3(d) hereof) 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).
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 Common Stock Equivalents or (B) to subscribe for
or purchase shares of Common Stock, Options or Common Stock Equivalents, then such record date will be deemed to be the date of the issuance
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. Holder’s
Right of Alternative Exercise Price Following Issuance of Certain Options or Common Stock Equivalents. In addition to and not in limitation
of the other provisions of this Section 3(b), if the Company in any manner issues or sells, or enters into any agreement to issue
or sell, any Common Stock, Options or Common Stock Equivalents (any such securities, “Variable Price Securities”) after
the date of the Securities Purchase Agreement that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable
for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of
one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as
share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein
referred to as, the “Variable Price”), the Company shall provide notice thereof to the Holder on the date of such agreement
and the issuance of such Variable Price Securities. From and after the date the Company enters into such agreement or issues any such
Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable
Price for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant
that solely for purposes of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The
Holder’s election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on
a Variable Price for any future exercises of this Warrant.
vii. Stock
Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date an event referred to in Section 3(a) occurs
(each, a “Stock Combination Event”, and the date on which such event occurs, the “Stock Combination Event
Date”) and the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment to the
Exercise Price in accordance with Section 3(a)), then on the sixteenth (16th) Trading Day immediately following such Stock Combination
Event, the Exercise Price then in effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in accordance with
Section 3(a)) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment
in the immediately preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made.
viii. Adjustment
Upon Restricted Investor Subsequent Placement. If at any time prior to the Share Adjustment Expiration Date (as defined below), the
Company, directly or indirectly, (I) grants, creates, issues or sells (or enters into any agreement to grant, issue or sell), or
in accordance with this Section 3(b) is deemed to have granted, issued or sold, any shares of Common Stock, non-convertible
indebtedness and/or Common Stock Equivalents to any Restricted Investor (including, without limitation, the granting, issuance or sale
of shares of Common Stock or Common Stock Equivalents owned or held by or for the account of the Company, but excluding any Dilutive Issuance
(or deemed Dilutive Issuance) that results in a reduction of the Exercise Price in accordance with this Section 3(b) (disregarding
any adjustments pursuant to this Section 3(b)(viii)) ) or (II) consummates (or enters into any agreement with respect to) any
other financing with any Restricted Investor (any transaction described in clauses (I) or (II) above, a “Restricted
Transaction”; provided that in no event shall any Exempt Issuance be deemed a Restricted Transaction) and the Applicable Price
is greater than the lowest VWAP of the Common Stock on any Trading Day during the five (5) Trading Day period immediately following
the public announcement of such Restricted Transaction (the “Restricted Transaction Measuring Period”), then the Applicable
Price shall be reduced to the lowest VWAP on any Trading Day during the Restricted Transaction Measuring Period (for the avoidance of
doubt: (y) if such public announcement is released prior to the opening of the applicable Trading Market on a Trading Day, then such
Trading Day shall be the first Trading Day in such five Trading Day period, and (z) if this Warrant is exercised during any Restricted
Transaction Measuring Period (the date on which this Warrant is so exercised, a “Restricted Transaction Exercise Date”),
then solely with respect to such portion of this Warrant exercised on such applicable Restricted Transaction Exercise Date, such applicable
Restricted Transaction Measuring Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Restricted
Transaction Exercise Date) .
ix. Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions in this Section 3(b) are
not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution of the type the provisions of this Section 3(b) are
intended to protect, or if any event occurs of the type contemplated by the provisions of this Section 3(b) but not expressly
covered by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights
with equity features, but excluding, for the avoidance of doubt, any Exempt Issuance), then the Board of Directors shall in good faith
determine an appropriate adjustment to the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the Holder
from dilution of the type the provisions of this Section 3(b) are intended to protect; provided that no such adjustment pursuant
to this Section 3(b)(ix) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant
to this Section 3(b); provided further that if the Holder does not accept such adjustments as appropriately protecting the Holder
against such dilution, then the Board of Directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally
recognized standing to determine such appropriate adjustments, whose determination shall be final and binding absent manifest error and
whose fees and expenses shall be borne by the Company.
x. Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 3(b) at any time on
or prior to the three and a half (3.5) year anniversary of the Initial Exercise Date (the “Share Adjustment Expiration Date”),
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).
xi. Voluntary
Adjustment By Company. Subject to the rules and regulations of the Trading Market and with the prior written consent of the Holder,
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.
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) 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)
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.
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) 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.
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 or any Subsidiary,
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 or 50% or more of the voting power of the common equity of the Company, (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 50% or more of the outstanding shares of Common Stock or
50% or more of the voting power of the common equity of the Company (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, 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. 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, that, if the Fundamental Transaction is not within the Company's control, including not approved by the
Company's Board of Directors, the Holder shall only be entitled to receive from the Company or any Successor Entity 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; provided, further, that if holders of
Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will
be deemed to have received common stock of the Successor Entity (which Successor Entity may be the Company following such Fundamental
Transaction) in such 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 contemplated
Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility,
(2) the 100 day volatility or (3) the 365 day volatility, each of clauses (1)-(3) as 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 contemplated Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the highest
VWAP during the period beginning on the Trading Day immediately preceding the public announcement of the applicable contemplated Fundamental
Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s
request pursuant to this Section 3(d) and (D) a remaining option time equal to the time between the date of the public
announcement of the applicable contemplated 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 (or such other consideration) 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 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 be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such
Fundamental Transaction, each and every provision of this Warrant referring to the “Company” shall refer instead to each of
the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly
and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor
Entities shall assume all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and
such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt,
the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company
has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction
occurs prior to the Initial Exercise Date.
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 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 (or any of its Subsidiaries) is a party,
any sale or transfer of all or substantially all of its assets, 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 email to the Holder at its
last email address as it shall appear upon the Warrant Register (as defined in Section 4(c) herein) 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.
Section 4. Transfer
of Warrant.
a) Transferability.
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. This 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 this 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 of this Warrant 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.
Section 5. Miscellaneous.
a) No
Rights as Stockholder Until Exercise; No Settlement in Cash. 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. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in
no event shall the Company be required to net cash settle an exercise of this Warrant.
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 this Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of this 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 this 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, during the period this 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 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).
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) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant 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 Warrant (whether brought against a party hereto or their 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, 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 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 suit, 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 Warrant 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 either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in
such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant 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. Without limiting any other provision of this
Warrant, 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 and all notices or other communications or deliveries to be provided by the Holder hereunder including, without limitation, any Notice
of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed
to the Company, at 333 S.E. 2nd Avenue, Suite 2000, Miami, FL 33131, Attention: Brandon H. LaVerne, email address:
blaverne@ontrakhealth.com, or such other email address or address as the Company may specify for such purposes by notice to the Holder.
Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally,
by e-mail, or sent by a nationally recognized overnight courier service addressed to the Holder at the e-mail address or address of the
Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set
forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of
transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to
whom such notice is required to be given. To the extent that any notice provided hereunder 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.
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 the 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 such 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, on the one hand, and
the written consent of the Holder, on the other hand.
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.
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) Stockholder
Approval. The Company shall either (x) if the Company shall have obtained the prior written consent of the requisite stockholders
(the “Stockholder Consent”) to obtain the Stockholder Approval, inform the Company’s stockholders of the receipt
of the Stockholder Consent by preparing and filing with the Commission, as promptly as practicable, but prior to the 30th day
after the Issuance Date (or, if such filing is delayed by a court or regulatory agency, in no event later than 60 days after the Issuance
Date), an information statement with respect thereto or (y) provide each stockholder entitled to vote at a special meeting of stockholders
of the Company (the “Stockholder Meeting”), which shall be promptly called and held not later than 60 days after the
Issuance Date (the “Stockholder Meeting Deadline”), a proxy statement soliciting such stockholder’s affirmative
vote in favor of the Stockholder Approval (the date the Stockholder Approval is obtained, the “Stockholder Approval Date”),
and the Company shall use its reasonable best efforts to solicit proxies in favor of the Stockholder Approval and to cause the Board of
Directors to recommend to the stockholders that they vote in favor of the Stockholder Approval. If, despite the Company's reasonable best
efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional
Stockholder Meeting to be held within 90 days after the Stockholder Meeting Deadline. If, despite the Company's reasonable best efforts
the Stockholder Approval is not obtained at such subsequent Stockholder Meeting, the Company shall cause an additional Stockholder Meeting
to be held semi-annually thereafter until the Stockholder Approval is obtained.
p) Registration
Rights. Section 7.2 of the Purchase Warrants for Common Shares issued by the Company to the Holder pursuant to that certain Master
Note Purchase Agreement, dated as of April 15, 2022, among the Company, certain of its subsidiaries, Acuitas Capital LLC, and U.S.
Bank Trust Company, National Association, as amended by that certain First Amendment to Master Note Purchase Agreement made as of August 12,
2022, that certain Second Amendment to Master Note Purchase Agreement made as of November 19, 2022, that certain Third Amendment
to Master Note Purchase Agreement made as of December 30, 2022, that certain Fourth Amendment to the Master Note Purchase Agreement
made as of June 23, 2023, and that certain Fifth Amendment to the Master Note Purchase Agreement made as of October 31, 2023,
is incorporated herein and shall apply mutatis mutandis to the Warrant Shares.
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(Signature Page Follows)
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.
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ontrak,
inc. |
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By: |
/s/ James Park |
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Name: James Park |
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Title: Chief Financial Officer |
NOTICE OF EXERCISE
To: ontrak,
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:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: |
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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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: |
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(Please Print) |
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Address: |
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(Please Print) |
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Phone Number: |
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Email Address: |
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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Ontrak (NASDAQ:OTRKP)
過去 株価チャート
から 5 2024 まで 6 2024
Ontrak (NASDAQ:OTRKP)
過去 株価チャート
から 6 2023 まで 6 2024