Valuation Reset Clause Samples
A Valuation Reset clause establishes a mechanism for periodically adjusting the value of an asset, security, or financial instrument to reflect current market conditions or agreed-upon benchmarks. This adjustment may occur at set intervals or upon the occurrence of specific events, and it typically applies to instruments like convertible notes, derivatives, or structured finance products. By ensuring that valuations remain accurate and up-to-date, the clause helps prevent disputes over asset worth and protects parties from significant market fluctuations, thereby promoting fairness and transparency in ongoing financial relationships.
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Valuation Reset. If prior to the end of the Valuation Period, the Company issues its equity or equity-linked securities in one or a series of related public or private offerings resulting in aggregate gross proceeds to the Company of at least $5,000,000 at an effective price per share of Common Stock (such effective price, the “Reset Price”) less than $0.375 (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of the Common Stock occurring after the date hereof, including the Reverse Split) (the “Base Price”), then no later than the closing date of such offering (such closing date, the “Reset Date”), the Company shall issue to each Investor (i) additional shares of Common Stock (the “Reset Shares”) so that after giving effect to such issuance, the effective price per share of Common Stock acquired by such Investor hereunder (irrespective of the number of Shares or Warrants actually then held by such Investor and excluding shares issuable upon the exercise of the Warrants) shall be equal to the Reset Price and (ii) additional Warrants (the “Reset Warrants”) covering a number of shares of Common Stock equal to 50% of the Reset Shares (the “Reset Warrant Shares”).