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Warrant – Most warrants provide for net settlement within the warrant agreement. Look for a net cash settlement provision. Net cash settlement is used as a means of tacking on the warrant holding period to the stock holding period for purposes of Rule 144. Rule Rule 144(d)(3)(ii) basically allows the holder to meet the Rule 144 holding period for the stock based on the issue date of the warrant as long as the warrant was exchanged for the stock in an entirely cashless exchange. This cashless exercise provision meets the ASC 815-10-15-99 net settlement criteria (net settlement under contract terms).

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