Exhibit 3.1

 

CERTIFICATE OF DESIGNATION OF

THE RELATIVE RIGHTS AND PREFERENCES
OF THE
SERIES E CONVERTIBLE PREFERRED STOCK
OF

MEDPRO SAFETY PRODUCTS, INC.

 

The undersigned, the Chief Executive Officer of MedPro Safety Products, Inc., a Nevada corporation (the “Company”), in accordance with the provisions of the Nevada Revised Statutes, does hereby certify that, pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation of the Company, the following resolution creating a series of preferred stock, designated as Series E Convertible Preferred Stock, was duly adopted on December 31, 2012, as follows:

 

RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Company by provisions of the Articles of Incorporation of the Company (the “Articles of Incorporation”), there hereby is created out of the shares of the Company’s preferred stock, par value $0.01 per share, of the Company authorized in Article VI of the Articles of Incorporation (the “Preferred Stock”), a series of Preferred Stock of the Company, to be named “Series E Convertible Preferred Stock,” consisting of 20,000 shares, which series shall have the following designations, powers, preferences and relative and other special rights and the following qualifications, limitations and restrictions:

 

1. Designation and Rank. The designation of such series of the Preferred Stock shall be the Series E Convertible Preferred Stock, par value $0.01 per share (the “Series E Preferred Stock”). The maximum number of shares of Series E Preferred Stock is 20,000 shares. The Series E Preferred Stock shall rank (a) pari passu as to liquidation rights and certain other matters to the Company’s Series D Convertible Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”); and (b) senior as to liquidation rights and certain other matters to the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), and common stock, par value $0.001 per share (the “Common Stock”). For purposes of this Certificate, “Junior Stock” shall mean the Common Stock and the other series of the Preferred Stock which by their terms do not rank senior to the Series E Preferred Stock with respect to liquidation rights and other matters set forth hereunder. The Series E Preferred Stock shall be subordinate to and rank junior to all indebtedness of the Company now or hereafter outstanding.

 

2. Dividends.

 

(a) The Series E Preferred Stock will participate on a pro rata basis in any dividends declared by the Company in respect of all equity securities of the Company other than the Series A Preferred Stock. If declared by the Company, dividends on the Series E Preferred Stock shall be on a pro rata basis with the Series B Preferred Stock, the Series C Preferred Stock, Series D Preferred Stock, the Common Stock and all other equity securities of the Company ranking pari passu with the Common Stock as to the payment of dividends. The payment of dividends on the Series E Preferred Stock shall be subject to the dividend rights of the Series A Preferred Stock with respect to the payment of dividends.

 

(b) In the event of a conversion pursuant to Section 5(a) hereof, all accrued and unpaid dividends on the Series E Preferred Stock being converted shall be, at the option of the Company, either payable in cash on the Conversion Date (as defined in Section 5(b)(i) hereof), or converted into additional shares of Common Stock at the then-applicable Conversion Price (as defined in Section 5(d) hereof).

 

 

3. Voting Rights .

 

(a) Class Voting Rights. So long as the shares of Series E Preferred Stock outstanding shall equal at least ten thousand (10,000), the Company shall not, without the affirmative vote or consent of the holders of at least fifty-one percent (51%) of the shares of the Series E Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting, in which the holders of the Series E Preferred Stock vote separately as a class: (i) subject to Section 7, amend, alter or repeal the provisions of the Series E Preferred Stock, whether by merger, consolidation or otherwise, so as to adversely affect any right, preference, privilege or voting power of the Series E Preferred Stock; (ii) subject to Section 7, amend the Articles of Incorporation or By-Laws of the Company so as to affect materially and adversely any right, preference, privilege or voting power of the Series E Preferred Stock; provided, however, that any creation and issuance of another series of Preferred Stock shall not be deemed to adversely affect such rights, preferences, privileges or voting powers; and (iii) subject to Section 7, reclassify the Company’s outstanding securities in a way that adversely affects the rights, preferences, privileges or voting powers of the Series E Preferred Stock.

 

(b) General Voting Rights . Except with respect to transactions upon which the Series E Preferred Stock shall be entitled to vote separately as a class pursuant to Section 3(a) above and except as otherwise required by Nevada law, the Series E Preferred Stock shall have no voting rights. The Common Stock into which the Series E Preferred Stock is convertible shall, upon issuance, have all of the same voting rights as other issued and outstanding Common Stock of the Company, and none of the rights of the Series E Preferred Stock.

 

4. Liquidation Preference.

 

(a) In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of shares of Series E Preferred Stock that are outstanding shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders, an amount equal to $50.00 per share (the “Series E Liquidation Preference Amount”) of the Series E Preferred Stock, plus any accrued but unpaid dividends thereon, at the same time as the liquidation preference amount of the Series D Preferred Stock, plus any accrued but unpaid dividends thereon, shall be payable to the holders of Series D Preferred Stock, and before any payment shall be made or any assets distributed to the holders of Junior Stock. If the assets of the Company are not sufficient to pay in full both the Series E Liquidation Preference Amount and the liquidation preference amount of the Series D Preferred Stock, plus any amount payable to the holders of outstanding shares of any series of Preferred Stock or any other class of stock ranking pari passu, as to rights on liquidation, dissolution or winding up, with the Series D Preferred Stock and the Series E Preferred Stock, then all of said assets will be distributed among the holders of the Series E Preferred Stock and the other classes of stock ranking pari passu with the Series D Preferred Stock and the Series E Preferred Stock, if any, ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The liquidation payment with respect to each outstanding fractional share of Series E Preferred Stock shall be equal to a ratably proportionate amount of the liquidation payment with respect to each outstanding share of Series E Preferred Stock. All payments for which this Section 4(a) provides shall be in cash, property (valued at its fair market value as determined by an independent appraiser reasonably acceptable to the holders of a majority of the Series E Preferred Stock) or a combination thereof; provided, however, that no cash shall be paid to holders of Junior Stock unless each holder of the outstanding shares of Series E Preferred Stock has been paid in cash the full Series E Liquidation Preference Amount plus any accrued and unpaid dividends to which such holder is entitled as provided herein. After payment of the full Series E Liquidation Preference Amount plus any accrued and unpaid dividends to which each holder is entitled, such holders of shares of Series E Preferred Stock will not be entitled to any further participation as such in any distribution of the assets of the Company.

 

(b) A consolidation or merger of the Company with or into any other corporation or corporations, or a sale of all or substantially all of the assets of the Company, or the effectuation by the Company of a transaction or series of related transactions in which more than 50% of the voting shares of the Company is disposed of or conveyed shall, at the option of holders of at least fifty-one percent (51%) of the then outstanding shares of Series E Preferred Stock, be deemed to be a liquidation, dissolution, or winding up within the meaning of this Section 4. In the event of the merger or consolidation of the Company with or into another corporation, the Series E Preferred Stock shall maintain its relative powers, designations and preferences provided for herein, and no merger shall result which is inconsistent herewith unless otherwise approved by holders of at least fifty-one percent (51%) of the then outstanding shares of Series E Preferred Stock; provided, however, that the number of outstanding shares of Preferred Stock must be greater than ten thousand (10,000) for the voting rights set out in this Section to apply.

 

 

(c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, stating a payment date and the place where the distributable amounts shall be payable, shall be given by mail, postage prepaid, no less than forty-five (45) days prior to the payment date stated therein, to the holders of record of the Series E Preferred Stock at their respective addresses as the same shall appear on the books of the Company.

 

5. Conversion. The holder of Series E Preferred Stock shall have the following conversion rights (the “Conversion Rights”):

 

(a) Right to Convert. At any time on or after the date of first issuance of the Series E Preferred Stock (the “Initial Issuance Date”), the holder of Series E Preferred Stock may, at such holder’s option, elect to convert (a “Conversion”) all or any portion of the shares of Series E Preferred Stock held by such person (provided that the minimum amount of such shares converted shall be ten thousand (10,000), unless the holder owns less than such number of shares, in which case any conversion by such holder will be for all shares of Series E Preferred Stock owned by such holder) into a number of fully paid and nonassessable shares of Common Stock equal to the quotient of (i) the Series E Liquidation Preference Amount of each of the shares of Series E Preferred Stock being converted by (ii) the Conversion Price (as defined in Section 5(d) below) then in effect as of the date of the delivery by such holder of its notice of election to convert. In the event of a liquidation, dissolution or winding up of the Company (including any event contemplated in Section 4(b) if such event is deemed a liquidation, dissolution or winding up of the Company by the holders of at least fifty-one percent (51%) of the then outstanding shares of Series E Preferred Stock), the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series E Preferred Stock. The Company shall provide to each holder of shares of Series E Preferred Stock notice of such liquidation, dissolution or winding up, which notice shall (i) be sent at least fifteen (15) days prior to the termination of the Conversion Rights (or, if the Company obtains lesser notice thereof, then as promptly as possible after the date that it has obtained notice thereof) and (ii) state the amount per share of Series E Preferred Stock that will be paid or distributed on such liquidation, dissolution or winding up, which statement will include such calculation (A) based upon the liquidation preference applicable to each share of Series E Preferred Stock and, (B) on an as-converted basis.

 

(b) Mechanics of Conversion. The Conversion of Series E Preferred Stock shall be conducted in the following manner:

 

(i) Holder’s Delivery Requirements. To convert Series E Preferred Stock into full shares of Common Stock on any date (the “Conversion Date”), the holder thereof shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 5:00 p.m., New York time on such date, a copy of a fully executed notice of conversion (the “Conversion Notice”), in the form attached as an exhibit to the Company’s Preferred Stock Agreement dated December 31, 2013, to the Company at its then principal offices, Attention: Chief Executive Officer, and (B) deliver via overnight delivery service to the Company as soon as practicable following such Conversion Date the original certificates representing the shares of Series E Preferred Stock being converted (or an indemnification undertaking with respect to such shares in the case of their loss, theft or destruction) (the “Preferred Stock Certificates”) and the originally executed Conversion Notice.

 

(ii) Company’s Response. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to such holder. Upon receipt by the Company of a copy of the fully executed Conversion Notice and any original certificates representing the shares of Series E Preferred Stock being converted, the Company or its designated transfer agent (the “Transfer Agent”), as applicable, shall, within three (3) business days following the date of receipt by the Company of the fully executed Conversion Notice and any original certificates representing the shares of Series E Preferred Stock being converted, issue and deliver to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified in the Conversion Notice, or via physical certificate if so specified in the Conversion Notice, registered in the name of the holder or its designee, for the number of shares of Common Stock to which the holder shall be entitled. Notwithstanding the foregoing to the contrary, the Company or its Transfer Agent shall only be obligated to issue and deliver the shares to the DTC, on a holder’s behalf via DWAC if a registration statement providing for the resale of the shares of Common Stock issuable upon conversion of the Series E Preferred Stock is effective or such shares are otherwise eligible for legend removal, and if the Transfer Agent is a participant in the DWAC system. If the shares of Common Stock to be received pursuant to the Conversion Notice are not registered or otherwise eligible for legend removal, the Transfer Agent shall issue a physical certificate in the name of the holder representing such shares with a restrictive legend as set forth in the Company’s Preferred Stock Agreement dated December 31, 2013, and a notation that such shares are deemed owned by the holder as of the Initial Issuance Date for purposes of determining the holder’s holding period under Rule 144 of the Securities Act of 1933, as amended. If the number of shares of Preferred Stock represented by the Preferred Stock Certificate(s) submitted for conversion is greater than the number of shares of Series E Preferred Stock being converted, then the Company shall, as soon as practicable and in no event later than three (3) business days after receipt of the Preferred Stock Certificate(s) and at the Company’s expense, issue and deliver to the holder a new Preferred Stock Certificate representing the number of shares of Series E Preferred Stock not converted.

 

 

(iii) Dispute Resolution . In the case of a dispute as to the arithmetic calculation of the number of shares of Common Stock to be issued upon a Conversion, the Company shall cause its Transfer Agent to promptly issue to the holder the number of shares of Common Stock that is not disputed and shall submit the arithmetic calculations to the holder via facsimile as soon as possible, but in no event later than two (2) business days after receipt of such holder’s Conversion Notice. If such holder and the Company are unable to agree upon the arithmetic calculation of the number of shares of Common Stock to be issued upon such conversion within one (1) business day of such disputed arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile the disputed arithmetic calculation of the number of shares of Common Stock to be issued upon such conversion to the Company’s independent, outside accountant. The Company shall cause the accountant to perform the calculations and notify the Company and the holder of the results no later than seventy-two (72) hours from the time it receives the disputed calculations. Such accountant’s calculation shall be binding upon all parties absent manifest error. The reasonable expenses of such accountant in making such determination shall be paid by the Company, in the event the holder’s calculation was correct, or by the holder, in the event the Company’s calculation was correct, or equally by the Company and the holder in the event that neither the Company’s or the holder’s calculation was correct. The period of time in which the Company is required to effect conversions or redemptions under this Certificate of Designation shall be tolled with respect to the subject conversion or redemption pending resolution of any dispute by the Company made in good faith and in accordance with this Section 5(b)(iii).

 

(iv) Record Holder . The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of the Series E Preferred Stock shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(v) Company’s Failure to Timely Convert . If within seven (7) business days of the Company’s receipt of an executed copy of the Conversion Notice (so long as the applicable Preferred Stock Certificates and original Conversion Notice are received by the Company on or before such third business day) (the “Delivery Date”) the Transfer Agent shall fail to issue and deliver to a holder the number of shares of Common Stock to which such holder is entitled upon such holder’s conversion of the Series E Preferred Stock or to issue a new Preferred Stock Certificate representing the number of shares of Series E Preferred Stock to which such holder is entitled pursuant to Section 5(b)(ii) (a “Conversion Failure”), in addition to all other remedies available to the holder hereunder or otherwise, the Company shall pay additional damages to such holder on each business day after such seventh (7^th ) business day that such conversion is not timely effected in an amount equal to 0.5% of the product of (A) the number of shares of Common Stock not issued to the holder on a timely basis pursuant to Section 5(b)(ii) and to which such holder is entitled and, in the event the Company has failed to deliver a Preferred Stock Certificate to the holder on a timely basis pursuant to Section 5(b)(ii), the number of shares of Common Stock issuable upon conversion of the shares of Series E Preferred Stock represented by such Preferred Stock Certificate, as of the last possible date which the Company could have issued such Preferred Stock Certificate to such holder without violating Section 5(b)(ii) and (B) the Closing Bid Price (as defined below) of the Common Stock on the last possible date which the Company could have issued such Common Stock and such Preferred Stock Certificate, as the case may be, to such holder without violating Section 5(b)(ii). If the Company fails to pay the additional damages set forth in this Section 5(b)(v) within fifteen (15) business days of the date incurred, then such payment shall bear interest at the rate of 2.0% per month (pro rated for partial months) until such payments are made. The term “Closing Bid Price” shall mean, for any security as of any date, the last closing bid price of such security on the OTC.QB maintained by the OTC Markets Group, Inc. or other quotation venue or principal exchange on which such security is traded as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported on any other trading platform maintained by the OTC Markets Group, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the outstanding shares of Series E Preferred Stock.

 

 

(vi) Buy-In Rights . In addition to any other rights available to the holders of Series E Preferred Stock, if the Company fails to cause its Transfer Agent to transmit to the holder a certificate or certificates representing the shares of Common Stock issuable upon conversion of the Series E Preferred Stock on or before the Delivery Date, and if after such date the holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the holder of the shares of Common Stock issuable upon conversion of Series E Preferred Stock which the holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (1) pay in cash to the holder the amount 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 (A) the number of shares of Common Stock issuable upon conversion of Series E Preferred Stock that the Company was required to deliver to the holder in connection with the conversion at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the holder, either reinstate the shares of Series E Preferred Stock and equivalent number of shares of Common Stock for which such conversion was not honored or deliver to the holder the number of shares of Common Stock that would have been issued had the Company timely complied with its conversion 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 conversion of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay to 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, together with applicable confirmations and other evidence reasonably requested by the Company. 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 certificates representing shares of Common Stock upon conversion of the Series E Preferred Stock as required pursuant to the terms hereof.

 

(c) Intentionally omitted.

 

(d) Conversion Price. The term “Conversion Price” shall mean $3.00 per share on a 1 to 1 basis, subject to adjustment under Section 5(e) hereof. Notwithstanding any adjustment hereunder, at no time shall the Conversion Price be greater than $3.00 per share except if it is adjusted pursuant to Section 5(e)(i).

 

(e) Adjustments of Conversion Price .

 

(i) Adjustments for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Effective Date, effect a stock split of the outstanding Common Stock, the Conversion Price shall be proportionately decreased. If the Company shall at any time or from time to time after the Effective Date, combine the outstanding shares of Common Stock, the Conversion Price shall be proportionately increased. Any adjustments under this Section 5(e)(i) shall be effective at the close of business on the date the stock split or combination becomes effective.

 

(ii) Adjustments for Certain Dividends and Distributions . If the Company shall at any time or from time to time after the Effective Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Price shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction:

 

 

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and

 

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

 

(iii) Adjustment for Other Dividends and Distributions . If the Company shall at any time or from time to time after the Effective Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Company other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the holders of Series E Preferred Stock shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the number of securities of the Company which they would have received had their Series E Preferred Stock been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 5(e)(iii) with respect to the rights of the holders of the Series E Preferred Stock; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions, and provided further, however, that no such adjustment shall be made if the holders of Series E Preferred Stock simultaneously receive (i) a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series E Preferred Stock had been converted into Common Stock on the date of such event or (ii) a dividend or other distribution of shares of Series E Preferred Stock which are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.

 

(iv) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock issuable upon conversion of the Series E Preferred Stock at any time or from time to time after the Effective Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Sections 5(e)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section 5(e)(v)), then, and in each event, an appropriate revision to the Conversion Price shall be made and provisions shall be made (by adjustments of the Conversion Price or otherwise) so that the holder of each share of Series E Preferred Stock shall have the right thereafter to convert such share of Series E Preferred Stock into the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock into which such share of Series E Preferred Stock might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

 

(v) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Effective Date there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 5(e)(i), (ii) and (iii), or a reclassification, exchange or substitution of shares provided for in Section 5(e)(iv)), or a merger or consolidation of the Company with or into another corporation where the holders of outstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity immediately after such merger or consolidation, or the sale of all or substantially all of the Company’s properties or assets to any other person (an “Organic Change”), then as a part of such Organic Change an appropriate revision to the Conversion Price shall be made if necessary and provision shall be made if necessary (by adjustments of the Conversion Price or otherwise) so that the holder of each share of Series E Preferred Stock shall have the right thereafter to convert such share of Series E Preferred Stock into the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from Organic Change. Notwithstanding the foregoing, the provisions set forth above regarding an Organic Change shall not pertain to the issuance of Common Stock in connection with any future strategic acquisitions which are approved in writing by the holders of at least fifty-one percent (51%) of the then outstanding shares of the Series D Preferred Stock and Series E Preferred Stock, voting together as a single voting group; provided that, such approval will not to be unreasonably withheld (each a “Permitted Future Transaction”). In any such case appropriate adjustment shall be made in the application of the provisions of this Section 5(e)(v) with respect to the rights of the holders of the Series E Preferred Stock after the Organic Change to the end that the provisions of this Section 5(e)(v) (including any adjustment in the Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of the Series E Preferred Stock) shall be applied after that event in as nearly an equivalent manner as may be practicable.

 

 

(vi) Adjustments for Issuance of Additional Shares of Common Stock. If at any time following the Initial Issuance Date, the Company shall issue or sell any additional shares of Common Stock (other than as provided in the foregoing subsections (i) through (v) of this Section 5(e) or pursuant to Common Stock Equivalents (hereafter defined) granted or issued prior to the Initial Issuance Date) (the “Additional Shares of Common Stock”), at a price per share (“New Price”) less than the Conversion Price then in effect or without consideration, then the Conversion Price shall be reduced concurrently with such issue to the New Price. No adjustment of the Conversion Price shall be made under this Section 5(e)(vi) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Common Stock Equivalents (as defined below), if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefore) pursuant to Section 5(e)(vii).

 

(vii) Issuance of Common Stock Equivalents. The provisions of this Section 5(e)(vii) shall apply if (a) the Company, at any time after the Initial Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock other than Series E Preferred Stock (“Convertible Securities”), or (b) any rights or warrants or options to purchase any such Common Stock or Convertible Securities (collectively, “Common Stock Equivalents”) shall be issued or sold. If the price per share for which Additional Shares of Common Stock may be issuable pursuant to any such Common Stock Equivalent shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be adjusted as provided in the first sentence of subsection (vi) of this Section 5(e). No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of any Convertible Security or Common Stock Equivalent.

 

(viii) Consideration for Stock. If any shares of Common Stock or Convertible Securities other than the Series E Preferred Stock, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold:

 

(1)         in connection with any merger or consolidation in which the Company is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Company shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefor shall be deemed to be the fair value, as determined reasonably and in good faith by the Board of Directors of the Company, of such portion of the assets and business of the nonsurviving corporation as such Board may determine to be attributable to such shares of Common Stock, Convertible Securities, rights or warrants or options, as the case may be; or

 

 

(2)         in the event of any consolidation or merger of the Company in which the Company is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Company shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Company for stock or other securities of any corporation, the Company shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation. If any such calculation results in adjustment of the applicable Conversion Price, or the number of shares of Common Stock issuable upon conversion of the Series E Preferred Stock, the determination of the applicable Conversion Price or the number of shares of Common Stock issuable upon conversion of the Series E Preferred Stock immediately prior to such merger, consolidation or sale, shall be made after giving effect to such adjustment of the number of shares of Common Stock issuable upon conversion of the Series E Preferred Stock. If any consideration received by the Company for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise applicable shall be as determined in good faith by the Board of Directors of the Company. If Common Stock is issued with other shares or securities or other assets of the Company for consideration which covers both, the consideration computed as provided in this Section (5)(e)(viii) shall be allocated among such securities and assets as determined in good faith by the Board of Directors of the Company.

 

(ix) Record Date. In case the Company shall take record of the holders of its Common Stock or any other Preferred Stock for the purpose of entitling them to subscribe for or purchase Common Stock or Convertible Securities, then the date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.

 

(x) Certain Issuances Excepted. Anything in Section 5(e) or otherwise in this Agreement to the contrary notwithstanding, the Company shall not be required to make any adjustment to the Conversion Price upon the following issuances (“Excepted Issuances”) (i) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the effective date of this Certificate of Designations or issued pursuant to the Series D Senior Secured Promissory Note dated September 12, 2012 between the Company and Vision Opportunity Master Fund, Ltd. (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the holders), (iii) the issuance of Common Stock and stock-based awards granted pursuant to the MedPro Safety Products, Inc. 2008 Stock and Incentive Compensation Plan, (iv) the issuance of Common Stock pursuant to the Company’s Technology Development and Option Agreement with SGPF, LLC, as amended, and (v) the issuance of Common Stock issued in connection with a Permitted Future Transaction.

 

(f) No Impairment. The Company shall not, by amendment of its Articles 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 to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series E Preferred Stock against impairment. If a holder shall elect to convert any shares of Series E Preferred Stock as provided herein, the Company cannot refuse conversion based on any claim that such holder or anyone associated or affiliated with such holder has been engaged in any violation of law, unless (i) an order from the Securities and Exchange Commission prohibiting such conversion or (ii) an injunction from a court, on notice, restraining and/or adjoining conversion of all or of said shares of Series E Preferred Stock shall have been issued and the Company posts a surety bond for the benefit of such holder in an amount equal to 120% of the Series E Liquidation Preference Amount of the Series E Preferred Stock such holder has elected to convert, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such holder in the event it obtains judgment in its favor.

 

(g) Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion of the Series E Preferred Stock pursuant to this Section 5, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such Series E Preferred Stock a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon written request of the holder of such affected Series E Preferred Stock, at any time, furnish or cause to be furnished to such holder a like certificate setting forth such adjustments and readjustments, the Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of a share of such Series E Preferred Stock. Notwithstanding the foregoing, the Company shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent (1%) of such adjusted amount.

 

 

(h) Issue Taxes. The Company shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series E Preferred Stock pursuant hereto; provided, however , that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

 

(i) Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile or three (3) business days following being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed to the holder of record at its address appearing on the books of the Company. The Company will give written notice to each holder of Series E Preferred Stock at least twenty (20) days prior to the date on which the Company closes its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Company will also give written notice to each holder of Series E Preferred Stock at least twenty (20) days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to such holder prior to such information being made known to the public.

 

(j) Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of the Series E Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall round the number of shares to be issued upon conversion up to the nearest whole number of shares.

 

(k) Reservation of Common Stock. The Company shall, so long as any shares of Series E Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series E Preferred Stock, such number of shares of Common Stock that are not issued or reserved for issuance as of the Initial Issuance Date; provided, however , the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, free of preemptive rights and other similar contractual rights of stockholders, a number of shares of Common Stock equal to one hundred fifty percent (150%) of the number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the shares of Series E Preferred Stock then outstanding. The initial number of shares of Common Stock reserved for conversions of the Series E Preferred Stock and any increase in the number of shares so reserved shall be allocated pro rata among the holders of the Series E Preferred Stock based on the number of shares of Series E Preferred Stock held by each holder of record at the time of issuance of the Series E Preferred Stock or increase in the number of reserved shares, as the case may be. If a holder shall sell or otherwise transfer any of such holder’s shares of Series E Preferred Stock, each transferee shall be allocated a pro rata portion of the number of reserved shares of Common Stock reserved for such transferor.

 

(l) Retirement of Series E Preferred Stock. Conversion of Series E Preferred Stock shall be deemed to have been effected on the Conversion Date. Upon conversion of only a portion of the number of shares of Series E Preferred Stock represented by a certificate surrendered for conversion, the Company shall issue and deliver to such holder at the expense of the Company, a new certificate covering the number of shares of Series E Preferred Stock representing the unconverted portion of the certificate so surrendered as required by Section 5(b)(ii).

 

(m) Regulatory Compliance. If any shares of Common Stock to be reserved for the purpose of conversion of Series E Preferred Stock require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Company shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

 

 

6. Participation Right. If the Company shall at any time following the Initial Issuance Date propose to sell or issue for consideration Equity Securities (defined below) to any person (an “Acquiror”), then the Company shall ensure that each holder of Series E Preferred Stock will be permitted to participate (the “Participation Right”) on a pro rata basis (or such lesser amount as may be determined by the holder of Series E Preferred Stock in such its sole discretion) in any such sale or issuance. The Participation Right shall entitle the holder of Series E Preferred Stock to purchase or be issued additional Equity Securities on the same terms and for the same consideration as the Acquiror, but will not reduce the amount of Equity Securities the Company can sell or issue to the Acquiror. The Participation Right will entitle each holder of Series E Preferred Stock to acquire, and require the Company to issue, up to an amount of Equity Securities as shall allow each holder to maintain its relative ownership interest in the Company on a fully diluted basis. For the purposes of making any pro-rata calculation required under this Section 6, all Equity Securities of the Company directly or indirectly owned by such holder of Series E Preferred Stock (including any Equity Securities owned by affiliates of such holder (without duplication)) on a fully diluted and as-converted, exchanged or exercised basis shall be included in such calculation. Notwithstanding the foregoing, the Participation Right shall not apply to any offering for the sole purpose of issuing Equity Securities: (i) to directors, officers, employees, consultants, advisors or other service providers of the Company, (ii) pursuant to the conversion or exercise of convertible or exercisable securities outstanding on the date hereof, (iii) in connection with a bona fide acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise which is otherwise permitted hereunder, (iv) in connection with any stock split, stock dividend, recapitalization, reclassification or similar event, (v) pursuant to the Company’s Technology Development and Option Agreement with SGPF, LLC, as amended, and (vi) the issuance of Common Stock issued in connection with a Permitted Future Transaction. For the purposes of this Certificate, “Equity Securities” means (i) any shares of any class of capital stock of the Company, and (ii) any debt or equity outstanding or similar instrument convertible into or exercisable or exchangeable for, with or without consideration, any shares of any class of capital stock of the Company.

 

7. Vote to Change the Terms of or Issue Preferred Stock. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting, of the holders of not less than fifty-one percent (51%) of the then outstanding shares of Series E Preferred Stock, shall be required for any change to this Certificate of Designation or the Company’s Articles of Incorporation which would amend, alter, change or repeal any of the powers, designations, preferences and rights of the Series E Preferred Stock.

 

8. Redemption by the Company at the Option of the Holder. In addition to all other rights of the holders of Series E Preferred Stock contained herein, beginning on the date that is thirty-six (36) months following the date of Initial Issuance Date, the holders of at least fifty-one percent (51%) of the shares of the Series E Preferred Stock outstanding at such time shall have the right at any time, upon provision of notice by such holders, to require the Company to redeem all (or such portion as is described in such notice) of such holder’s shares of Series E Preferred Stock at a price per share of Series E Preferred Stock equal to one hundred percent (100%) of the Liquidation Preference Amount, plus any accrued but unpaid dividends thereon. In such event, the Company shall pay to the holders of Series E Preferred Stock, in cash, all amounts required hereunder not less than thirty (30) calendar days following the Company’s receipt of such notice.

 

9. Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates representing the shares of Series E Preferred Stock, and, in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Company that is reasonably acceptable to the Company and, in the case of mutilation; upon surrender and cancellation of the Preferred Stock Certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date, provided, however, that the Company shall not be obligated to re-issue Preferred Stock Certificates if the holder contemporaneously requests the Company to convert such shares of Series E Preferred Stock into Common Stock.

 

 

10. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Certificate of Designation. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of the Series E Preferred Stock and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holders of the Series E Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

11. Specific Shall Not Limit General; Construction. No specific provision contained in this Certificate of Designation shall limit or modify any more general provision contained herein. This Certificate of Designation shall be deemed to be jointly drafted by the Company and all initial holders of the Series E Preferred Stock and shall not be construed against any person as the drafter hereof.

 

12. Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of Series E Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate and does affirm the foregoing as true this 31st day of December, 2012.

 

	MEDPRO SAFETY PRODUCTS, INC.
	By:	/s/ W. Craig Turner
	Name:	W. Craig Turner
	Title:	Chairman of the Board and Chief Executive Officer