Attached files
Exhibit 3.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
THE
0% SERIES J CONVERTIBLE PREFERRED STOCK OF
MABVAX THERAPEUTICS HOLDINGS, INC.
I, J.
David Hansen, hereby certify that I am the President and Chief
Executive Officer of MabVax Therapeutics Holdings, Inc. (the
“Company”), a
corporation organized and existing under the Delaware General
Corporation Law (the “DGCL”), and further do hereby
certify:
That
pursuant to the authority expressly conferred upon the Board of
Directors of the Company (the “Board”) by the Company’s
Certificate of Incorporation, as amended (the “Certificate of Incorporation”),
the Board on August 11, 2017, adopted the following resolutions
creating a series of shares of Preferred Stock designated as 0%
Series J Convertible Preferred Stock, none of which shares have
been issued, which, following filing of this Certificate of
Designations with the Secretary of State of the State of Delaware,
this Certificate of Designations shall be effective as of ________,
2017:
RESOLVED, that the
Board designates the 0% Series J Convertible Preferred Stock and
the number of shares constituting such series, and fixes the
rights, powers, preferences, privileges and restrictions relating
to such series in addition to any set forth in the Certificate of
Incorporation as follows:
TERMS OF SERIES J CONVERTIBLE PREFERRED STOCK
1. Designation
and Number of Shares. There shall hereby be created and
established a series of preferred stock of the Company designated
as “0% Series J Convertible Preferred Stock” (the
“Preferred
Shares”). The authorized number of Preferred Shares
shall be 3,400 shares. Each Preferred
Share shall have $0.01 par value (the “Par Value”). Capitalized terms not defined herein
shall have the meaning as set forth in Section 23
below.
2. Ranking.
The rights of all such shares of capital stock of the Company (the
“Junior Stock”),
other than the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred
Stock, Series H Preferred Stock, and Series I Preferred Stock,
shall be subject to the rights, powers, preferences and privileges
of the Preferred Shares. In the event of the merger or
consolidation of the Company with or into another corporation, the
Preferred Shares shall maintain their relative rights, powers,
designations, privileges and preferences provided for herein and no
such merger or consolidation shall result inconsistent
therewith.
3. Dividends. In addition to
Sections 5(a) and 11 below, from and after the first date of
issuance of any Preferred Shares (the “Initial Issuance Date”), each
holder of a Preferred Share (each, a “Holder” and collectively, the
“Holders”) shall
be entitled to receive dividends (“Dividends”) when and as declared
by the Board, from time to time, in its sole discretion, which
Dividends shall be paid by the Company out of funds legally
available therefor, payable, subject to the conditions and other
terms hereof, in cash as if such Holders had converted the
Preferred Shares into Common Stock (without regard to any
limitations on conversion) and had held such shares of Common Stock
on the record date for such dividends and distributions. Payments
under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common
Stock.
4. Conversion. Each Preferred
Share shall be convertible into validly issued, fully paid and
non-assessable shares of Common Stock (as defined below) on the
terms and conditions set forth in this Section 4.
(a) Holder’s Conversion
Right. Subject to the provisions of Section 4(e), at any
time or times on or after the Initial Issuance Date, each Holder
shall be entitled to convert any whole number of Preferred Shares
into validly issued, fully paid and non-assessable shares of Common
Stock in accordance with Section 4(c) at the
Conversion Rate (as defined below).
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(b) Conversion Rate. The number of
validly issued, fully paid and non-assessable shares of Common
Stock issuable upon conversion of each Preferred Share pursuant to
Section 4(a) shall be determined according to the
following formula (the “Conversion Rate”):
Base Amount
Conversion
Price
No
fractional shares of Common Stock are to be issued upon the
conversion of any Preferred Shares. If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up to the
nearest whole share.
(c) Mechanics of Conversion. The
conversion of each Preferred Share shall be conducted in the
following manner:
(i) Holder’s Conversion. To
convert a Preferred Share into validly issued, fully paid and
non-assessable shares of Common Stock on any date (a
“Conversion
Date”), a Holder shall deliver (whether via facsimile
or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion of
the share(s) of Preferred Shares subject to such conversion in the
form attached hereto as Exhibit I
(the “Conversion
Notice”) to the Company. If required by Section
4(c)(vi), within
five (5) Trading Days following a conversion of any such Preferred
Shares as aforesaid, such Holder shall surrender to a nationally
recognized overnight delivery service for delivery to the Company
the original certificates representing the share(s) of Preferred
Shares (the “Preferred Share
Certificates”) so converted as aforesaid.
(ii) Company’s
Response. On or before the first (1st) Trading Day
following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile an acknowledgment of confirmation, in
the form attached hereto as Exhibit II,
of receipt of such Conversion Notice to such Holder and the
Transfer Agent, which confirmation shall constitute an instruction
to the Transfer Agent to process such Conversion Notice in
accordance with the terms herein. On or before the second
(2nd)
Trading Day following the date of receipt by the Company of such
Conversion Notice, the Company shall (1) provided that the Transfer
Agent is participating in DTC Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to
which such Holder shall be entitled to such Holder’s or its
designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, or (2) if the Transfer
Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and deliver (via reputable overnight
courier) to the address as specified in such Conversion Notice, a
certificate, registered in the name of such Holder or its designee,
for the number of shares of Common Stock to which such Holder shall
be entitled. If the number of Preferred Shares represented by the
Preferred Share Certificate(s) submitted for conversion pursuant to
Section 4(c)(vi) is
greater than the number of Preferred Shares being converted, then
the Company shall if requested by such Holder, as soon as
practicable and in no event later than three (3) Trading Days after
receipt of the Preferred Share Certificate(s) and at its own
expense, issue and deliver to such Holder (or its designee) a new
Preferred Share Certificate representing the number of Preferred
Shares not converted.
(iii) Record
Holder. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of Preferred Shares
shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date.
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(iv) Company’s
Failure to Timely Convert. If the Company shall fail, for
any reason or for no reason, to issue to a Holder within three (3)
Trading Days after the Company’s receipt of a Conversion
Notice (whether via facsimile or otherwise) (the
“Share Delivery
Deadline”), a certificate for the number of shares of
Common Stock to which such Holder is entitled and register such
shares of Common Stock on the Company’s share register or to
credit such Holder’s or its designee’s balance account
with DTC for such number of shares of Common Stock to which such
Holder is entitled upon such Holder’s conversion of any
Preferred Shares (as the case may be) (a “Conversion Failure”), then, in
addition to all other remedies available to such Holder, such
Holder, upon written notice to the Company, may void its Conversion
Notice with respect to, and retain or have returned (as the case
may be) any Preferred Shares that have not been converted pursuant
to such Holder’s Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the
date of such notice pursuant to the terms of this Certificate of
Designations or otherwise and (y) the Company shall pay in cash to
such Holder on each day after such third (3rd) Trading Day that
the issuance of such shares of Common Stock is not timely effected
an amount equal to 1.5% of the product of (A) the aggregate number
of shares of Common Stock not issued to such Holder on a timely
basis and to which the Holder is entitled and (B) the Closing Sale
Price of the Common Stock on the Trading Day immediately preceding
the last possible date on which the Company could have issued such
shares of Common Stock to the Holder without violating Section
4(c). In addition to the foregoing, if
within three (3) Trading Days after the Company’s receipt of
a Conversion Notice (whether via facsimile or otherwise), the
Company shall fail to issue and deliver a certificate to such
Holder and register such shares of Common Stock on the
Company’s share register or credit such Holder’s or its
designee’s balance account with DTC for the number of shares
of Common Stock to which such Holder is entitled upon such
Holder’s conversion hereunder (as the case may be), and if on
or after such third (3rd) Trading Day such
Holder (or any other Person in respect, or on behalf, of such
Holder) purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such
Holder of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all
or any portion of the number of shares of Common Stock, issuable
upon such conversion that such Holder so anticipated receiving from
the Company, then, in addition to all other remedies available to
such Holder, the Company shall, within three (3) Business Days
after such Holder’s request and in such Holder’s
discretion, either (i) pay cash to such Holder in an amount equal
to such Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of such Holder) (the
“Buy-In Price”),
at which point the Company’s obligation to so issue and
deliver such certificate or credit such Holder’s balance
account with DTC for the number of shares of Common Stock to which
such Holder is entitled upon such Holder’s conversion
hereunder (as the case may be) (and to issue such shares of Common
Stock) shall terminate, or (ii) promptly honor its obligation to so
issue and deliver to such Holder a certificate or certificates
representing such shares of Common Stock or credit such
Holder’s balance account with DTC for the number of shares of
Common Stock to which such Holder is entitled upon such
Holder’s conversion hereunder (as the case may be) and pay
cash to such Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of
Common Stock multiplied by (B) the lowest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the
date of the applicable Conversion Notice and ending on the date of
such issuance and payment under this clause (ii).
(v) Pro Rata Conversion; Disputes.
In the event the Company receives a Conversion Notice from more
than one Holder for the same Conversion Date and the Company can
convert some, but not all, of such Preferred Shares submitted for
conversion, the Company shall convert from each Holder electing to
have Preferred Shares converted on such date a pro rata amount of
such Holder’s Preferred Shares submitted for conversion on
such date based on the number of Preferred Shares submitted for
conversion on such date by such Holder relative to the aggregate
number of Preferred Shares submitted for conversion on such date.
In the event of a dispute as to the number of shares of Common
Stock issuable to a Holder in connection with a conversion of
Preferred Shares, the Company shall issue to such Holder the number
of shares of Common Stock not in dispute and resolve such dispute
in accordance with Section 22.
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(vi) Book-Entry. Notwithstanding
anything to the contrary set forth in this Section 4, upon conversion of any Preferred Shares in
accordance with the terms hereof, no Holder thereof shall be
required to physically surrender the certificate representing the
Preferred Shares to the Company following conversion thereof unless
(A) the full or remaining number of Preferred Shares represented by
the certificate are being converted (in which event such
certificate(s) shall be delivered to the Company as contemplated by
this Section 4(c)(vi)) or (B)
such Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting
reissuance of Preferred Shares upon physical surrender of any
Preferred Shares. Each Holder and the Company shall maintain
records showing the number of Preferred Shares so converted by such
Holder and the dates of such conversions or shall use such other
method, reasonably satisfactory to such Holder and the Company, so
as not to require physical surrender of the certificate
representing the Preferred Shares upon each such conversion. In the
event of any dispute or discrepancy, such records of such Holder
establishing the number of Preferred Shares to which the record
holder is entitled shall be controlling and determinative in the
absence of manifest error. A Holder and any transferee or assignee,
by acceptance of a certificate, acknowledge and agree that, by
reason of the provisions of this paragraph, following conversion of
any Preferred Shares, the number of Preferred Shares represented by
such certificate may be less than the number of Preferred Shares
stated on the face thereof. Each certificate for Preferred Shares
shall bear the following legend:
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES J PREFERRED STOCK REPRESENTED BY
THIS CERTIFICATE, INCLUDING SECTION 4(c)(vi) THEREOF. THE NUMBER OF SHARES OF SERIES J
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN
THE NUMBER OF SHARES OF SERIES J PREFERRED STOCK STATED ON THE FACE
HEREOF PURSUANT TO SECTION 4(c)(vi) OF THE
CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES J
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.
(d) Taxes. The Company shall pay
any and all documentary, stamp, transfer (but only in respect of
the registered holder thereof), issuance and other similar taxes
that may be payable with respect to the issuance and delivery of
shares of Common Stock upon the conversion of Preferred
Shares.
(e) Limitation on Beneficial
Ownership. Notwithstanding anything to the contrary
contained in this Certificate of Designations, the Preferred Shares
held by a Holder shall not be convertible by such Holder, and the
Company shall not effect any conversion of any Preferred Shares
held by such Holder, to the extent (but only to the extent) that
such Holder or any of its affiliates would beneficially own in
excess of 4.99% (the “Maximum
Percentage”) of the Common Stock. To the extent
the above limitation applies, the determination of whether the
Preferred Shares held by such Holder shall be convertible
(vis-à-vis other convertible, exercisable or exchangeable
securities owned by such Holder or any of its affiliates) and of
which such securities shall be convertible, exercisable or
exchangeable (as among all such securities owned by such Holder and
its affiliates) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to
the Company for conversion, exercise or exchange (as the case may
be). No prior inability of a Holder to convert Preferred Shares, or
of the Company to issue shares of Common Stock to such Holder,
pursuant to this Section 4(e) shall have any effect on the
applicability of the provisions of this Section 4(e) with
respect to any subsequent determination of convertibility or
issuance (as the case may be). For purposes of this Section 4(e),
beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of
percentage ownership) shall be determined in accordance with
Section 13(d) of the 1934 Act and the rules and regulations
promulgated thereunder. The provisions of this Section 4(e) shall
be implemented in a manner otherwise than in strict conformity with
the
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terms
of this Section 4(e) to correct this Section 4(e) (or any portion
hereof) which may be defective or inconsistent with the intended
Maximum Percentage beneficial ownership limitation herein contained
or to make changes or supplements necessary or desirable to
properly give effect to such Maximum Percentage limitation. The
limitations contained in this Section 4(e) shall apply to a
successor holder of Preferred Shares. The holders of Common Stock
shall be third party beneficiaries of this Section 4(e) and the
Company may not waive this Section 4(e). For any reason at any
time, upon the written or oral request of a Holder, the Company
shall within two (2) Business Days confirm orally and in writing to
such Holder the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock, including,
without limitation, pursuant to this Certificate of Designations.
By written notice to the Company, any Holder may increase or
decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any
such increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to such Holder sending such notice and not
to any other Holder. For purposes hereof, in determining the number
of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as reflected in (1)
the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the Securities and Exchange Commission, as the
case may be, (2) a more recent public announcement by the Company,
or (3) any other notice by the Company setting forth the number of
shares of Common Stock outstanding. For any reason at any time,
upon the written or oral request of a holder of Preferred Shares,
the Company shall within three (3) Business Days confirm orally and
in writing to such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including the
Preferred Shares, by the Holder and its Affiliates since the date
as of which such number of outstanding shares of Common Stock was
reported, that in any event are convertible or exercisable, as the
case may be, into shares of the Company’s Common Stock within
60 days’ of such calculation and that are not subject to a
limitation on conversion or exercise analogous to the limitation
contained herein. The provisions of this paragraph shall be
construed and implemented in a manner in accordance with Section
13(d) of the 1934 Act and the rules and regulations promulgated
thereunder.
(f) 19.99% Conversion Blocker.
Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to issue any shares of Common Stock
upon conversion of the Series J Preferred Stock, and the Holder of
any shares of Series J Preferred Stock shall not have the right to
receive upon conversion of any shares of the Series J Preferred
Stock if the issuance of such shares of Common Stock would exceed
the aggregate number of shares of Common Stock which the Company
may issue upon conversion of the Series J Preferred Stock without
breaching the Company's obligations under the rules or regulations
of the Nasdaq Capital Market, which aggregate number equals 19.99%
of the number of shares outstanding on the Closing Date (the
“Exchange Cap”),
except that such limitation shall not apply in the event that the
Company obtains the approval of its stockholders as required by the
applicable rules of the Nasdaq Capital Market for issuances of
Common Stock in excess of such amount. Until such approval is
obtained, no Holder shall be issued in the aggregate, upon
conversion of the Series J Preferred Stock into shares of Common
Stock in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the total
amount of shares of Common Stock issuable to the Holder upon
conversion of the Series J Preferred Stock and the denominator of
which is the total amount of shares of Common Stock issuable to all
Holders upon conversion of the Series J Preferred Stock (with
respect to each Holder, the "Exchange Cap Allocation"). In the event
that any Holder shall sell or otherwise transfer any of such
Holder's shares of Series J Preferred Stock, the transferee shall
be allocated a pro rata portion of such Holder's Exchange Cap
Allocation, and the restrictions of the prior sentence shall apply
to such transferee with respect to the portion of the Exchange Cap
Allocation allocated to such transferee. In the event that any
Holder of shares of Series J Preferred Stock shall convert all of
such Holder's shares of Series J Preferred Stock into a number of
shares of Common Stock which, in the aggregate, is less than such
Holder's Exchange Cap Allocation, then the difference between such
Holder's Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such Holder shall be allocated to the
respective Exchange Cap Allocations of the remaining Holders of
shares of the Series J Preferred Stock on a pro rata basis in
proportion to the aggregate Conversion Price of shares of the
Series J Preferred Stock then held by each such
Holder.
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5. Rights Upon Issuance of Purchase
Rights and Other Corporate Events.
(a) Purchase Rights. In addition to
any adjustments pursuant to Section 7 below, if at any time the
Company grants, issues or sells any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property
pro rata to all of the record holders of any class of Common Stock
(the “Purchase
Rights”), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such Holder could have acquired if
such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of all the Preferred Shares
(without taking into account any limitations or restrictions on the
convertibility of the Preferred Shares) held by such Holder
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 Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights (provided, however, to the extent that such
Holder’s right to participate in any such Purchase Right
would result in such Holder exceeding the Maximum Percentage, then
such Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for
such Holder until such time, if ever, as its right thereto would
not result in such Holder exceeding the Maximum
Percentage).
(b) Other Corporate Events. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that each Holder will
thereafter have the right to receive upon a conversion of all the
Preferred Shares held by such Holder (i) in addition to the shares
of Common Stock receivable upon such conversion, such securities or
other assets to which such Holder would have been entitled with
respect to such shares of Common Stock had such shares of Common
Stock been held by such Holder upon the consummation of such
Corporate Event (without taking into account any limitations or
restrictions on the convertibility of the Preferred Shares
contained in this Certificate of Designations) or (ii) in lieu of
the shares of Common Stock otherwise receivable upon such
conversion, such securities or other assets received by the holders
of shares of Common Stock in connection with the consummation of
such Corporate Event in such amounts as such Holder would have been
entitled to receive had the Preferred Shares held by such Holder
initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a
conversion rate for such consideration commensurate with the
Conversion Rate. The provisions of this Section 5(b) shall apply similarly and equally to
successive Corporate Events and shall be applied without regard to
any limitations on the conversion of the Preferred Shares contained
in this Certificate of Designations.
6. Rights Upon Fundamental
Transactions. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Certificate of
Designations referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the
Company under this Certificate of Designations with the same effect
as if such Successor Entity had been named as the Company herein
and therein. In addition to the foregoing, upon consummation of a
Fundamental Transaction, the Successor Entity shall deliver to each
Holder confirmation that there shall be issued upon conversion of
the Preferred Shares at any time after the consummation of such
Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 5 and 11, which shall continue to be receivable
thereafter)) issuable upon the conversion of the Preferred Shares
prior to such Fundamental Transaction, such shares of the Successor
Entity (including its Parent Entity) or other consideration which
each Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had all the Preferred Shares held
by each Holder been converted immediately prior to such Fundamental
Transaction (without regard to any limitations on the conversion of
the Preferred Shares contained in this Certificate of
Designations), as adjusted in accordance with the provisions of
this Certificate of Designations. The provisions of this Section
6 shall apply similarly and equally to
successive Fundamental Transactions and shall be applied without
regard to any limitations on the conversion of the Preferred
Shares.
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7. Rights Upon
Issuance of Other Securities.
(a) For so long as the
Holder has Series J Preferred Stock, if the Company at any time on
or after the Initial Issuance Date issues or sells, or is deemed to
have sold, Common Stock, or common equivalent shares, for
consideration per share less than the Conversion Price in effect
immediately prior to the issuance (the “Lower Issuance
Price”), then the Conversion Price in effect immediately
prior to such issuance will be adjusted to the Lower Issuance
Price, provided however the Lower Issuance Price shall not be less
than $0.10. Notwithstanding the foregoing, the adjustment provided
for in this Section 7 (a) shall not apply to the issuance of
Company capital stock upon exercise of options or restricted stock
granted prior to the date hereof pursuant to employee benefit plans
approved by the Company’s Board of Directors.
(b) Adjustment of
Conversion Price upon Subdivision or Combination of Common Stock.
Without limiting any provision of Sections 5 and 11, if the Company at any time on or after the
Initial Issuance Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. Without limiting any
provision of Sections 5 and 11, if the
Company at any time on or after the Initial Issuance Date combines
(by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior
to such combination will be proportionately increased. Any
adjustment pursuant to this Section 7(b) shall become effective immediately after
the effective date of such subdivision or combination. If any event
requiring an adjustment under this Section 7(b) occurs during the period that a Conversion
Price is calculated hereunder, then the calculation of such
Conversion Price shall be adjusted appropriately to reflect such
event.
(c) Other Events.
In the event that the Company (or any Subsidiary) shall take any
action to which the provisions hereof are not strictly applicable,
or, if applicable, would not operate to protect any Holder from
dilution or if any event occurs of the type contemplated by the
provisions of this Section 7 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features), then the Board shall in good faith determine and
implement an appropriate adjustment in the Conversion Price so as
to protect the rights of such Holder, provided that no such
adjustment pursuant to this Section 7(c) will increase the Conversion Price as
otherwise determined pursuant to this Section 7, provided further
that if such Holder does not accept such adjustments as
appropriately protecting its interests hereunder against such
dilution, then the Board and such Holder shall agree, in good
faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination
shall be final and binding and whose fees and expenses shall be
borne by the Company.
(d) Calculations. All
calculations under this Section 7 shall be made by rounding to the
nearest one-hundred thousandth of a cent or the nearest
1/100th of
a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Stock.
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8. Authorized Shares.
(a) Reservation. The Company shall
initially reserve out of its authorized and unissued Common Stock a
number of shares of Common Stock equal to 100% of the Conversion
Rate with respect to the Base Amount of each Preferred Share as of
the Initial Issuance Date (without taking into account any
limitations on the conversion of such Preferred Shares set forth in
herein) issuable pursuant to the terms of this Certificate of
Designations from the Initial Issuance Date through the second
anniversary of the Initial Issuance Date assuming (without taking
into account any limitations on the issuance of securities set
forth herein). So long as any of the Preferred Shares are
outstanding, the Company shall take all action necessary to reserve
and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the conversion of
the Preferred Shares, as of any given date, 100% of the number of
shares of Common Stock as shall from time to time be necessary to
effect the conversion of all of the Preferred Shares issued as of
the Initial Issuance Date, without taking into account any
limitations on the issuance of securities set forth herein),
provided that at no time shall the number of shares of Common Stock
so available be less than the number of shares required to be
reserved by the previous sentence (without regard to any
limitations on conversions contained in this Certificate of
Designations) (the “Required
Amount”). The initial number of shares of Common Stock
reserved for conversions of the Preferred Shares and each increase
in the number of shares so reserved shall be allocated pro rata
among the Holders based on the number of Preferred Shares held by
each Holder on the Initial Issuance Date or increase in the number
of reserved shares (as the case may be) (the “Authorized Share Allocation”). In
the event a Holder shall sell or otherwise transfer any of such
Holder’s Preferred Shares, each transferee shall be allocated
a pro rata portion of such Holder’s Authorized Share
Allocation. Any shares of Common Stock reserved and allocated to
any Person which ceases to hold any Preferred Shares shall be
allocated to the remaining Holders of Preferred Shares, pro rata
based on the number of Preferred Shares then held by such
Holders.
(b) Insufficient Authorized Shares.
If, notwithstanding Section 8(a) and
not in limitation thereof, at any time while any of the Preferred
Shares remain outstanding the Company does not have a sufficient
number of authorized and unissued shares of Common Stock to satisfy
its obligation to have available for issuance upon conversion of
the Preferred Shares at least a number of shares of Common Stock
equal to the Required Amount (an “Authorized Share Failure”), then
the Company shall promptly take all action necessary to increase
the Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve and have available the
Required Amount for all of the Preferred Shares then outstanding.
Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than ninety (90) days after
the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders or conduct a consent
solicitation for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement
and shall use its commercially reasonable efforts to solicit its
stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its Board to recommend to the
stockholders that they approve such proposal. In the event that the
Company is prohibited from issuing shares of Common Stock upon a
conversion of any Preferred Share due to the failure by the Company
to have sufficient shares of Common Stock available out of the
authorized but unissued shares of Common Stock (such unavailable
number of shares of Common Stock, the “Authorization Failure Shares”), in
lieu of delivering such Authorization Failure Shares to such Holder
of such Preferred Shares, the Company shall pay cash in exchange
for the cancellation of such Preferred Shares convertible into such
Authorized Failure Shares at a price equal to the sum of (i) the
product of (x) such number of Authorization Failure Shares and (y)
the Closing Sale Price on the Trading Day immediately preceding the
date such Holder delivers the applicable Conversion Notice with
respect to such Authorization Failure Shares to the Company and
(ii) to the extent such Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Holder of Authorization Failure
Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of such Holder incurred in connection
therewith.
-8-
9. Voting Rights. Except as
otherwise expressly required by law, each holder of Preferred
Shares shall be entitled to vote on all matters submitted to
shareholders of the Company and shall be entitled to the number of
votes for each Preferred Share owned at the record date for the
determination of shareholders entitled to vote on such matter or,
if no such record date is established, at the date such vote is
taken or any written consent of shareholders is solicited, equal to
the number of shares of Common Stock such Preferred Shares are
convertible into (voting as a class with Common Stock) substituting
the consolidated Closing Bid Price on the date prior to execution
of the Purchase Agreement for the Conversion Rate in Section 4(b)
hereof, but not in excess of the conversion limitations set forth
in Section 4(e) or Section 4(f) herein. Except as otherwise
required by law, the holders of Preferred Shares shall vote
together with the holders of Common Stock on all matters and shall
not vote as a separate class.
10. Liquidation, Dissolution,
Winding-Up. In the event of a Liquidation Event, the Holders
shall be entitled to receive in cash out of the assets of the
Company, whether from capital or from earnings available for
distribution to its shareholders (the “Liquidation Funds”), before any
amount shall be paid to the holders of any of shares of Junior
Stock, an amount per Preferred Share equal to the greater of (a)
125% of the Base Amount thereof on the date of such payment, and
(b) the amount per share such Holder would receive if such Holder
converted such Preferred Shares into Common Stock immediately prior
to the date of such payment; provided, however, that, if the
Liquidation Funds are insufficient to pay the full amount due to
the Holders and holders of shares of Parity Stock (stock ranking
equal to the Preferred Shares), then each Holder and each holder of
Parity Stock shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such
Holder and such holder of Parity Stock as a liquidation preference,
in accordance with their respective certificate of designation (or
equivalent), as a percentage of the full amount of Liquidation
Funds payable to all holders of Preferred Shares and all holders of
shares of Parity Stock. To the extent necessary, the Company shall
cause such actions to be taken by each of its Subsidiaries so as to
enable, to the maximum extent permitted by law, the proceeds of a
Liquidation Event to be distributed to the Holders in accordance
with this Section 10. All the preferential amounts to be paid to
the Holders under this Section 10 shall be paid or set apart for
payment before the payment or setting apart for payment of any
amount for, or the distribution of any Liquidation Funds of the
Company to the holders of shares of Junior Stock in connection with
a Liquidation Event as to which this Section 10
applies.
11. Participation. In addition to
any adjustments pursuant to Section 7(b), the Holders shall, as holders of
Preferred Shares, be entitled to receive such dividends paid and
distributions made to the holders of shares of Common Stock to the
same extent as if such Holders had converted each Preferred Share
held by each of them into shares of Common Stock (without regard to
any limitations on conversion herein or elsewhere) and had held
such shares of Common Stock on the record date for such dividends
and distributions. Payments under the preceding sentence shall be
made concurrently with the dividend or distribution to the holders
of shares of Common Stock (provided, however, to the extent that a
Holder’s right to participate in any such dividend or
distribution would result in such Holder exceeding the Maximum
Percentage, then such Holder shall not be entitled to participate
in such dividend or distribution to such extent (or the beneficial
ownership of any such shares of Common Stock as a result of such
dividend or distribution to such extent) and such dividend or
distribution to such extent shall be held in abeyance for the
benefit of such Holder until such time, if ever, as its right
thereto would not result in such Holder exceeding the Maximum
Percentage).
12. Vote to Change the Terms of or Issue
Preferred Shares. In addition to any other rights provided
by law, except where the vote or written consent of the holders of
a greater number of shares is required by law or by another
provision of the Certificate of Incorporation, without first
obtaining the affirmative vote at a meeting duly called for such
purpose or the written consent without a meeting of the Holders of
Preferred Shares representing a majority of Preferred Shares
outstanding on such date (the “Required Holders”), voting
together as a single class, the Company shall not: (a) amend or
repeal any provision of, or add any provision to, its Certificate
of Incorporation or bylaws, or file any certificate of designations
or articles of amendment of any series of shares of preferred
stock, if such action would adversely alter or change in any
respect the preferences, rights, privileges or powers, or
restrictions provided for the benefit, of the Preferred Shares,
regardless of whether any such action shall be by means of
amendment to the Certificate of Incorporation or by merger,
consolidation or otherwise; (b) increase or decrease (other than by
conversion) the authorized number of Preferred Shares; (c) issue
any Preferred Shares after the Initial Issuance Date; or (d)
without limiting any provision of Section 16, whether or not prohibited by the terms of
the Preferred Shares, circumvent a right of the Preferred
Shares.
-9-
13. Intentionally
Omitted.
14. Lost or Stolen Certificates.
Upon receipt by the Company of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any
certificates representing Preferred Shares (as to which a written
certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or
destruction, of an indemnification undertaking by the applicable
Holder to the Company in customary and reasonable form and, in the
case of mutilation, upon surrender and cancellation of the
certificate(s), the Company shall execute and deliver new
certificate(s) of like tenor and date.
15. Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies
provided in this Certificate of Designations shall be cumulative
and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and
no remedy contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy. Nothing herein
shall limit any Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with
the terms of this Certificate of Designations. The Company
covenants to each Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein.
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 a Holder 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 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, each Holder
shall be entitled, in addition to all other available remedies, to
an injunction restraining any such breach or any such threatened
breach, without the necessity of showing economic loss and without
any bond or other security being required. The Company shall
provide all information and documentation to a Holder that is
requested by such Holder to enable such Holder to confirm the
Company’s compliance with the terms and conditions of this
Certificate of Designations.
16. Noncircumvention. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation, bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, 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 Certificate of
Designations, and will at all times in good faith carry out all the
provisions of this Certificate of Designations and take all action
as may be required to protect the rights of the Holders. Without
limiting the generality of the foregoing or any other provision of
this Certificate of Designations, the Company (i) shall not
increase the par value of any shares of Common Stock receivable
upon the conversion of any Preferred Shares above the Conversion
Price then in effect, (ii) shall take all such actions as may
be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common
Stock upon the conversion of Preferred Shares and (iii) shall, so
long as any Preferred Shares are outstanding, take all action
necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares, the maximum
number of shares of Common Stock as shall from time to time be
necessary to effect the conversion of the Preferred Shares then
outstanding (without regard to any limitations on conversion
contained herein).
17. Failure
or Indulgence Not Waiver. No failure or delay on the part of
a Holder 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.
No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party. This Certificate
of Designations shall be deemed to be jointly drafted by the
Company and all Holders and shall not be construed against any
Person as the drafter hereof.
-10-
18. Notices. The Company shall
provide each Holder of Preferred Shares with prompt written notice
of all actions taken pursuant to the terms of this Certificate of
Designations, including in reasonable detail a description of such
action and the reason therefor. Whenever notice is required to be
given under this Certificate of Designations, unless otherwise
provided herein. Without limiting the generality of the foregoing,
the Company shall give written notice to each Holder (i) promptly
following any adjustment of the Conversion Price, setting forth in
reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B)
with respect to any grant, issuances, or sales of any Options,
Convertible Securities or rights to purchase stock, warrants,
securities or other property to all holders of shares of Common
Stock as a class or (C) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation,
provided, in each case, that such information shall be made known
to the public prior to, or simultaneously with, such notice being
provided to any Holder.
19. Transfer of Preferred Shares.
The Holder may transfer some or all of its Preferred Shares without
the consent of the Company.
20. Preferred Shares Register. The
Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice
to the Holders), a register for the Preferred Shares, in which the
Company shall record the name, address and facsimile number of the
Persons in whose name the Preferred Shares have been issued, as
well as the name and address of each transferee. The Company may
treat the Person in whose name any Preferred Shares is registered
on the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events
recognizing any properly made transfers.
21. Stockholder Matters;
Amendment.
(a) Stockholder
Matters. Any stockholder action, approval or consent required,
desired or otherwise sought by the Company pursuant to the DGCL,
the Certificate of Incorporation, this Certificate of Designations
or otherwise with respect to the issuance of Preferred Shares may
be effected by written consent of the Company’s stockholders
or at a duly called meeting of the Company’s stockholders,
all in accordance with the applicable rules and regulations of the
DGCL. This provision is intended to comply with the applicable
sections of the DGCL permitting stockholder action, approval and
consent affected by written consent in lieu of a
meeting.
(b) Amendment. This
Certificate of Designations or any provision hereof may be amended
by obtaining the affirmative vote at a meeting duly called for such
purpose, or written consent without a meeting in accordance with
the DGCL, of the Required Holders, voting separate as a single
class, and with such other stockholder approval, if any, as may
then be required pursuant to the DGCL and the Certificate of
Incorporation.
(i) In the case of a
dispute relating to a Closing Bid Price, a Closing Sale Price, a
Conversion Price or fair market value (as the case may be)
(including, without limitation, a dispute relating to the
determination of any of the foregoing), the Company or such
applicable Holder (as the case may be) shall submit the dispute via
facsimile (I) within two (2) Business Days after delivery of the
applicable notice giving rise to such dispute to the Company or
such Holder (as the case may be) or (II) if no notice gave rise to
such dispute, at any time after such Holder learned of the
circumstances giving rise to such dispute. If such Holder and the
Company are unable to resolve such dispute relating to such Closing
Bid Price, such Closing Sale Price, such Conversion Price, or such
fair market value (as the case may be) by 5:00 p.m. (New York time)
on the third (3rd) Business Day
following such delivery by the Company or such Holder (as the case
may be) of such dispute to the Company or such Holder (as the case
may be), then such Holder shall select an independent, reputable
investment bank to resolve such dispute.
-11-
(ii) Such
Holder and the Company shall each deliver to such investment bank
(x) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 22(a) and (y) written documentation supporting
its position with respect to such dispute, in each case, no later
than 5:00 p.m. (New York time) by the fifth (5th) Business Day
immediately following the date on which such Holder selected such
investment bank (the “Dispute
Submission Deadline”) (the documents referred to in
the immediately preceding clauses (x) and (y) are collectively
referred to herein as the “Required Dispute Documentation”)
(it being understood and agreed that if either such Holder or the
Company fails to so deliver all of the Required Dispute
Documentation by the Dispute Submission Deadline, then the party
who fails to so submit all of the Required Dispute Documentation
shall no longer be entitled to (and hereby waives its right to)
deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such
investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and such Holder
or otherwise requested by such investment bank, neither the Company
nor such Holder shall be entitled to deliver or submit any written
documentation or other support to such investment bank in
connection with such dispute (other than the Required Dispute
Documentation).
(iii) The
Company and such Holder shall cause such investment bank to
determine the resolution of such dispute and notify the Company and
such Holder of such resolution no later than ten (10) Business Days
immediately following the Dispute Submission Deadline. The fees and
expenses of such investment bank shall be borne solely by the
Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest
error.
(i) In the case of a
dispute as to the arithmetic calculation of a Conversion Rate, the
Company or such Holder (as the case may be) shall submit the
disputed arithmetic calculation via facsimile (i) within two (2)
Business Days after delivery of the applicable notice giving rise
to such dispute to the Company or such Holder (as the case may be)
or (ii) if no notice gave rise to such dispute, at any time after
such Holder learned of the circumstances giving rise to such
dispute. If such Holder and the Company are unable to resolve such
disputed arithmetic calculation of such Conversion Rate by 5:00
p.m. (New York time) on the third (3rd) Business Day
following such delivery by the Company or such Holder (as the case
may be) of such disputed arithmetic calculation, then such Holder
shall select an independent, reputable accountant or accounting
firm to perform such disputed arithmetic calculation.
(ii) Such
Holder and the Company shall each deliver to such accountant or
accounting firm (as the case may be) (x) a copy of the initial
dispute submission so delivered in accordance with the first
sentence of this Section 22(a) and (y)
written documentation supporting its position with respect to such
disputed arithmetic calculation, in each case, no later than 5:00
p.m. (New York time) by the fifth (5th) Business Day
immediately following the date on which such Holder selected such
accountant or accounting firm (as the case may be) (the
“Submission
Deadline”) (the documents referred to in the
immediately preceding clauses (x) and (y) are collectively referred
to herein as the “Required
Documentation”) (it being understood and agreed that
if either such Holder or the Company fails to so deliver all of the
Required Documentation by the Submission Deadline, then the party
who fails to so submit all of the Required Documentation shall no
longer be entitled to (and hereby waives its right to) deliver or
submit any written documentation or other support to such
accountant or accounting firm (as the case may be) with respect to
such disputed arithmetic calculation and such accountant or
accounting firm (as the case may be) shall perform such disputed
arithmetic calculation based solely on the Required Documentation
that was delivered to such accountant or accounting firm (as the
case may be) prior to the Submission Deadline). Unless otherwise
agreed to in writing by both the Company and such Holder or
otherwise requested by such accountant or accounting firm (as the
case may be), neither the Company nor such Holder shall be entitled
to deliver or submit any written documentation or other support to
such accountant or accounting firm (as the case may be) in
connection with such disputed arithmetic calculation of the
Conversion Rate (other than the Required
Documentation).
-12-
(iii) The
Company and such Holder shall cause such accountant or accounting
firm (as the case may be) to perform such disputed arithmetic
calculation and notify the Company and such Holder of the results
no later than ten (10) Business Days immediately following the
Submission Deadline. The fees and expenses of such accountant or
accounting firm (as the case may be) shall be borne solely by the
Company, and such accountant’s or accounting firm’s (as
the case may be) arithmetic calculation shall be final and binding
upon all parties absent manifest error.
(c) Miscellaneous. The
Company expressly acknowledges and agrees that (i) this Section
22 constitutes an agreement to
arbitrate between the Company and such Holder (and constitutes an
arbitration agreement) under § 7501, et seq. of the New York
Civil Practice Law and Rules (“CPLR”) and that each party shall
be entitled to compel arbitration pursuant to CPLR § 7503(a)
in order to compel compliance with this Section 22, (ii) the terms of this Certificate of
Designations shall serve as the basis for the selected investment
bank’s resolution of the applicable dispute, such investment
bank shall be entitled (and is hereby expressly authorized) to make
all findings, determinations and the like that such investment bank
determines are required to be made by such investment bank in
connection with its resolution of such dispute and in resolving
such dispute such investment bank shall apply such findings,
determinations and the like to the terms of this Certificate of
Designations, (iii) the terms of this Certificate of Designations
shall serve as the basis for the selected accountant’s or
accounting firm’s performance of the applicable arithmetic
calculation, (iv) for clarification purposes and without
implication that the contrary would otherwise be true, disputes
relating to matters described in Section 22(a) shall be governed by Section 22(a) and not by Section 22(b), (v) such Holder (and only such Holder),
in its sole discretion, shall have the right to submit any dispute
described in this Section 22 to any
state or federal court sitting in The City of New York, Borough of
Manhattan in lieu of utilizing the procedures set forth in this
Section 22 and (vi) nothing in this
Section 22 shall limit such Holder
from obtaining any injunctive relief or other equitable remedies
(including, without limitation, with respect to any matters
described in Section 22(a) or Section
22(b)).
23. Certain Defined Terms. For
purposes of this Certificate of Designations, the following terms
shall have the following meanings:
(a) “1934
Act” means the Securities Exchange Act of
1934, as amended.
(b) “Base Amount” means, with respect
to each Preferred Share, as of the applicable date of
determination, the sum of (1) the Stated Value thereof, plus (2)
the Unpaid Dividend Amount thereon as of such date of
determination.
(c) “Bloomberg” means Bloomberg,
L.P.
(d) “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.
(e) “Closing Bid Price” and
“Closing Sale
Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price
or the closing trade price (as the case may be) then the last bid
price or last trade price, respectively, of such security prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or
trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).
If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price
(as the case may be) of such security on such date shall be the
fair market value as mutually determined by the Company and the
applicable Holder. If the Company and such Holder are unable to
agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in
Section 22. All such determinations
shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such
period.
-13-
(f) “Common Stock” means (i) the
Company’s shares of common stock, $0.01 par value per share,
and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification
of such common stock.
(g) “Conversion Price” means, with
respect to each Preferred Share, as of any Conversion Date or other
applicable date of determination, $0.55 subject to adjustment as
provided herein.
(h) “Convertible
Securities” means any stock or other security (other
than Options) that is at any time and under any circumstances,
directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to
acquire, any shares of Common Stock.
(i) “Eligible Market” means The New
York Stock Exchange, the NYSE MKT, The Nasdaq Global Select Market,
The Nasdaq Global Market, The Nasdaq Capital Market, the
Over-the-Counter Bulletin Board, the OTCQB Marketplace or the OTCQX
(or any successor thereto).
(j) “Fundamental Transaction” means
that (i) the Company or any of its Subsidiaries shall, directly or
indirectly, in one or more related transactions, (1) consolidate or
merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person unless
immediately following the closing of such transaction or series of
related transactions the Persons holding more than 50% of the
Voting Stock of the Company prior to such closing continue to hold
more than 50% of the Voting Stock of the Company following such
closing, or (2) sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective
properties or assets to any other Person, or (3) assist any other
Person in making a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (4) consummate a
stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other Person whereby
such other Person acquires more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the other Person or other Persons
making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement
or other business combination) excluding any equity financing
transaction in which shares of Voting Stock are issued, or (5)
reorganize, recapitalize or reclassify the Common Stock, or (ii)
any “person” or “group” (as these terms are
used for purposes of Sections 13(d) and 14(d) of the 1934 Act and
the rules and regulations promulgated thereunder) is or shall
become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 50% of the
aggregate ordinary voting power represented by issued and
outstanding Voting Stock of the Company.
(k) “Liquidation
Event” means the
liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or
involuntary. Notwithstanding the foregoing, 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
transactions in which more than 50% of the voting shares of
the Company is disposed of or
conveyed, shall be deemed to be a Liquidation
Event.
(l) “Options” means any rights,
warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
(m) “Parent Entity” of a Person means
an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is
quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with
the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.
(n) “Person”
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or
agency thereof.
-14-
(o) “Principal
Market” means the The NASDAQ Capital
Market.
(p) “Purchase Agreement” means that
certain Stock Purchase Agreement by and among the Company and the
initial holders of Preferred Shares, dated as of August 11, 2017,
as may be amended from time in accordance with the terms
thereof.
(q) “SEC”
means the Securities and Exchange Commission or the successor
thereto.
(r) “Stated Value” shall mean $550 per
share, subject to adjustment for stock splits, stock dividends,
recapitalizations, reorganizations, reclassifications,
combinations, subdivisions or other similar events occurring after
the Initial Issuance Date with respect to the Preferred
Shares.
(s) “Subsidiaries” means any Person in
which the Company, directly or indirectly, (I) owns any of the
outstanding capital stock or holds any equity or similar interest
of such Person or (II) controls or operates all or any part of the
business, operations or administration of such Person.
(t) “Successor Entity” means the Person
(or, if so elected by the Required Holders, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction
or the Person (or, if so elected by the Required Holders, the
Parent Entity) with which such Fundamental Transaction shall have
been entered into.
(u) “Trading Day” means, as applicable,
(x) with respect to all price determinations relating to the Common
Stock, any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading
Day in writing by the Required Holders or (y) with respect to all
determinations other than price determinations relating to the
Common Stock, any day on which The NASDAQ Stock Market (or any
successor thereto) is open for trading of securities.
(v) “Unpaid Dividend Amount” means, as
of the applicable date of determination, with respect to each
Preferred Share, all declared and unpaid Dividends on such
Preferred Share.
(w) “Voting
Stock” of a Person means capital stock of such Person
of the class or classes pursuant to which the holders thereof have
the general voting power to elect, or the general power to appoint,
at least a majority of the board of directors, managers, trustees
or other similar governing body of such Person (irrespective of
whether or not at the time capital stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
24. Disclosure. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Certificate of Designations, unless the Company has in good
faith determined that the matters relating to such notice do not
constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall simultaneously with
any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or
otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to each
Holder contemporaneously with delivery of such notice, and in the
absence of any such indication, each Holder shall be allowed to
presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its
Subsidiaries.
* * * *
*
-15-
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations of Series J Convertible Preferred Stock of MabVax
Therapeutics Holdings, Inc. to be signed by its President and Chief
Executive Officer on this ___ day of _________, 2017.
By:
/s/ J. David
Hansen________________
Name:
J. David Hansen
Title:
President and Chief Executive Officer
-16-
EXHIBIT I
MABVAX THERAPEUTICS HOLDINGS, INC.
CONVERSION NOTICE
Reference is made
to the Certificate of Designations, Preferences and Rights of the
Series J Convertible Preferred Stock of MabVax Therapeutics
Holdings, Inc. (the “Certificate of Designations”). In
accordance with and pursuant to the Certificate of Designations,
the undersigned hereby elects to convert the number of shares of
Series J Convertible Preferred Stock, $0.01 par value per share
(the “Preferred
Shares”), of MabVax Therapeutics Holdings, Inc., a
Delaware corporation (the “Company”), indicated below into
shares of common stock, $0.01 par value per share (the
“Common Stock”),
of the Company, as of the date specified below.
Date of
Conversion:
Number
of Preferred Shares to be
converted:
Share
certificate no(s). of Preferred Shares to be
converted:
Tax ID
Number (If
applicable):
Conversion
Price:_________________________________________________________
Number
of shares of Common Stock to be
issued:
Please
issue the shares of Common Stock into which the Preferred Shares
are being converted in the following name and to the following
address:
Issue
to:
Address:
_________________________________________
Telephone Number:
________________________________
Facsimile
Number:
Holder:
By:
Title:
Dated:_____________________________
Account
Number (if electronic book entry
transfer):
Transaction Code
Number (if electronic book entry
transfer):
-17-
EXHIBIT II
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby
directs
[ ]
to issue the above indicated number of shares of Common Stock in
accordance with the Irrevocable Transfer Agent Instructions dated
__________, 201_ from the Company and acknowledged and agreed to by
[ ].
MABVAX
THERAPEUTICS HOLDINGS, INC.
By:
Name:
Title:
-18-