Attached files
Exhibit 3.15
CERTIFICATE OF DESIGNATION
OF
SERIES F CONVERTIBLE PREFERRED STOCK
OF
CORMEDIX INC.
to Section 151 of the
Delaware General Corporation Law
CorMedix Inc., a Delaware corporation
(the “Corporation”),
in accordance with the provisions of Section 103 of the Delaware
General Corporation Law (the “DGCL”)
does hereby certify that, in accordance with Sections 141(c) and
151 of the DGCL, the following resolution was duly adopted by the
Board of Directors of the Corporation at a meeting duly convened on
November 9, 2017:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Corporation in accordance
with the provisions of the Certificate of Incorporation of the
Corporation, as amended (the “Certificate of
Incorporation”), there is hereby established a series
of the Corporation’s authorized preferred stock, par value
$0.001 per share (the “Preferred
Stock”), which series shall be designated as the
Series F Convertible Preferred Stock, par value $0.001 per share,
of the Corporation, with the designation, number of shares, powers,
preferences, rights, qualifications, limitations and restrictions
thereof (in addition to any provisions set forth in the Certificate
of Incorporation which are applicable to the Preferred Stock of all
classes and series) as follows:
SERIES F CONVERTIBLE PREFERRED STOCK
SECTION 1. DEFINITIONS.
For the purposes hereof, the following terms shall have the
following meanings:
“Affiliate”
means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under
common control with a person or entity, as such terms are used in
and construed under Rule 144 under the Securities Act. With respect
to a Holder, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such
Holder will be deemed to be an Affiliate of such
Holder.
“Alternate
Consideration” shall have the meaning set forth in
Section 7(d).
“Bankruptcy
Event” means: the Corporation shall (i) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic), (iv) file a petition seeking to
take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of
creditors’ rights generally, (v) acquiesce in writing to any
petition filed against it in an involuntary case under United
States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (vi)
issue a notice of bankruptcy or winding down of its operations or
issue a press release regarding same, or (vii) take any action
under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing; and/or a proceeding or case shall be
commenced in respect of the Corporation, without its application or
consent, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, moratorium, dissolution, winding up,
or composition or readjustment of its debts, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets in connection with the
liquidation or dissolution of the Corporation or (iii) similar
relief in respect of it under any law providing for the relief of
debtors, and such proceeding or case described in clause (i), (ii)
or (iii) shall continue undismissed, or unstayed and in effect, for
a period of thirty (30) days or any order for relief shall be
entered in an involuntary case under United States Bankruptcy Code
(as now or hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic) against the Corporation or
action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing shall be taken with respect to
the Corporation or any of its subsidiaries and shall continue
undismissed, or unstayed and in effect for a period of sixty (60)
days.
“Beneficial
Ownership Limitation” shall have the meaning set forth
in Section 6(c).
“Bloomberg”
means Bloomberg, L.P.
“Business
Day” means any day except Saturday, Sunday, any day
which shall be a federal legal holiday in the United States or any
day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.
“Buy-In”
shall have the meaning set forth in Section 6(e)(iii).
“Closing Sale
Price” means, for any security as of any date, the
last closing trade price for such security prior to 4:00 p.m., New
York City time, on the principal securities exchange or trading
market where such security is listed or traded, as reported by
Bloomberg (or, to the extent that Bloomberg is unavailable
generally, an equivalent, reliable reporting service mutually
acceptable to and hereafter designated by Holders of a majority of
the then-outstanding Series F Preferred Stock and the Corporation),
or if the foregoing do not apply, the last trade price of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last
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 the OTC Pink Market by OTC Markets Group, Inc. If the
Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value
as determined in good faith by the Board of Directors of the
Corporation.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” means the Corporation’s common stock, par
value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed
into.
“Contingent
Obligation” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with
respect thereto.
“Conversion
Date” shall have the meaning set forth in Section
6(a).
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“Conversion
Price” shall mean (A) if the aggregate cash proceeds
actually received by the Corporation from the sale, other than to
Affiliates of or Persons managed by Elliott Management Corporation,
of its equity or equity-linked securities, in one or more bona fide
transactions consummated on or before March 31, 2018 equals or
exceeds $3,000,000 (a “Triggering
Transaction”), the lesser of (1) $0.6334 and (2) a 10%
discount to the notional price at which such Triggering Transaction
is completed by the Corporation on or before March 31, 2018, (B)
for so long as the aggregate cash proceeds actually received by the
Corporation from the sale, other than to Affiliates of or Persons
managed by Elliott Management Corporation, of its equity or
equity-linked securities, in one or more bona fide transactions
consummated before March 31, 2018 is less than $3,000,000, the
average Closing Sale Price of the Common Stock for the immediately
preceding 20 Trading Days or (C) otherwise, the lesser of (1)
$0.6334 and (2) a 10% discount to the closing price of the
Corporation’s Common Stock on April 2, 2018, as adjusted
hereunder.
“Conversion
Ratio” shall mean, with respect to each share of
Series F Preferred Stock, an amount equal to the aggregate Stated
Value and accrued but unpaid dividends thereon, divided by the
Conversion Price.
“Conversion
Shares” means, collectively, the shares of Common
Stock issuable upon conversion of the shares of Series F Preferred
Stock in accordance with the terms hereof.
“Convertible
Securities” means any stock, note, debenture or other
security (other than Options) that is, or may become, 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.
“Corporate
Event” shall have the meaning set forth in Section
8(b).
“Daily Failure
Amount” means the product of (x) 0.005 multiplied by
(y) the Closing Sale Price of the Common Stock on the applicable
Share Delivery Date.
“DTC”
shall have the meaning set forth in Section 6(a).
“DWAC
Delivery” shall have the meaning set forth in Section
6(a).
“Equity
Condition” means,
with respect to any given date
of determination, each of the following:
(i) on
each day during such thirty (30) day period (the “Equity
Conditions Measuring Period”), the Common Stock (including
all Underlying Securities) is listed or designated for quotation on
an eligible market and, subject to limited exceptions, shall not
have been suspended from trading on an eligible market nor shall
delisting or suspension by an eligible market have been threatened
or reasonably likely to occur or pending;
(ii) during
the Equity Conditions Measuring Period, the Corporation shall have
delivered all shares of Common Stock issuable upon conversion of
the Preferred Stock on a timely basis and all other shares of
capital stock required to be delivered by the Corporation on a
timely basis as set forth in the other transaction
documents;
(iii) any
shares of Common Stock to be issued in connection with the event
requiring determination (or otherwise issuable pursuant to the
terms of the Preferred Stock) may be issued in full without
violating the rules or regulations of the eligible market on which
the Common Stock is then listed or designated for quotation (as
applicable);
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(iv) on
each day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Fundamental
Transaction shall have occurred which has not been abandoned,
terminated or consummated;
(v) the
holder of any Preferred Stock shall not be possession of any
material, non-public information provided to any of them by the
Corporation, any of its subsidiaries or any of their respective
affiliates, employees, officers, representatives, agents or the
like;
(vi) on
each day during the Equity Conditions Measuring Period, the
Corporation otherwise shall have been in compliance with each, and
shall not have breached any representation or warranty in any
material respect (other than representations or warranties subject
to material adverse effect or materiality, which may not be
breached in any respect) or any covenant or other term or condition
of any transaction document, including, without limitation, the
Corporation shall not have failed to timely make any payment
pursuant to any transaction document;
(vii) as
of such applicable date of determination, (A) the aggregate daily
dollar trading volume of the Common Stock on at least fifteen (15)
trading days during the twenty (20) trading day period ending on
the trading day immediately preceding such date of determination
and on each of the last three (3) trading days in such period (the
“Equity
Conditions Ending Period”), is not less than
$200,000.
(viii) on
the applicable date of determination (A) while any of the
Preferred Stock remain outstanding the Corporation has a sufficient
number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon conversion of
the Preferred Stock a number of shares of Common Stock equal to at
least 125% 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 Stock then outstanding (the “Required Reserve
Amount”), and all shares of Common Stock to be issued in
connection with the event requiring this determination are
available under the certificate of incorporation of the Corporation
and reserved by the Corporation to be issued pursuant to the terms
hereof and (B) all shares of Common Stock to be issued in
connection with the event requiring this determination may be
issued in full without resulting in the Corporation’s failure
to maintain the Required Reserve Amount;
(ix) the
Series F Preferred Stock is senior in rank (as to dividends,
distributions of assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntarily or
involuntarily) to each and all series
of capital stock issued by the Corporation prior to the date
hereof;
(x) any
meeting of stockholders of the Corporation required to waive the
Exchange Cap or to authorize the Corporation to issue Conversion
Shares notwithstanding the Exchange Cap has been held and such
waiver or authorization has been obtained; and
(xi) the
shares of Common Stock issuable pursuant to the event requiring the
satisfaction of the Equity Conditions are duly authorized and
listed and eligible for trading without restriction on an eligible
market.
“Eligible
Market” means The New York Stock Exchange, the NYSE
American, the Nasdaq Global Select Market, the Nasdaq Global Market
or the Principal Market.
“Encumbrance”
means any security interest, pledge, hypothecation, mortgage,
assignment, Taxes, lien (statutory or other, and including
environmental and tax liens), deposit arrangement, violation,
charge, lease, license, encumbrance, servient easement, adverse
claim, reversion, reverter, preference, priority, other security
agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention
agreement and any capital lease or any synthetic or other financing
lease having substantially the same economic effect as any of the
foregoing), restrictive covenant, condition or restriction of any
kind, including any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of
ownership.
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“Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
“Fundamental
Transaction” shall have the meaning set forth in
Section 7(e).
“Holder”
means any holder of Series F Preferred Stock.
“Indebtedness”
of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with
generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all
reimbursement or payment obligations with respect to letters of
credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in
either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F)
all monetary obligations under any leasing or similar arrangement
which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, claim, lien, tax, right of first refusal,
encumbrance, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract
rights) owned by any Person, even though the Person which owns such
assets or property has not assumed or become liable for the payment
of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to
in clauses (A) through (G) above.
“Initial Issue
Date” shall mean the date that shares of Preferred
Stock are first issued by the Corporation.
“Junior
Securities” shall have the meaning set forth in
Section 5(a).
“Liquidation
Event” shall have the meaning set forth in Section
5(b).
“Liquidation
Preference” shall have the meaning set forth in
Section 5(b).
“Material Adverse
Effect” means any material adverse effect on the
business, operations, properties, or financial condition of the
Corporation and/or any condition, circumstance, or situation that
would prohibit or otherwise materially interfere with the ability
of the Corporation to perform any of its obligations under the
Series F Preferred Stock in any material respect.
“New
Subsidiary” means, as of any date of determination,
any Person in which the Corporation after the Initial Issuance
Date, directly or indirectly, (i) owns or acquires 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, and all of
the foregoing, collectively, “New
Subsidiaries.”
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“Notice of
Conversion” shall have the meaning set forth in
Section 6(a).
“Options”
means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
“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.
“Parity
Securities” shall have the meaning set forth in
Section 5(a).
“Permitted
Distributions” means dividends by Subsidiaries of the
Corporation to the Corporation or other Subsidiaries of the
Corporation and dividends required to be paid on the Parity
Securities and pursuant to Section 3 hereof.
“Person”
means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Principal
Market” means the NYSE American.
“Purchase
Rights” shall have the meaning set forth in Section
8(a) below.
“Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
“Series F Preferred
Stock Register” shall have the meaning set forth in
Section 2(b).
“Share Delivery
Date” shall have the meaning set forth in Section
6(e)(i).
“Stated
Value” shall mean $1,000.
“Trading
Day” means a day on which the Common Stock is traded
for any period on the Principal Market or if the Common Stock is
not traded on the Principal Market, on a day that the Common Stock
is traded on another securities market on which the Common Stock is
then being traded.
SECTION 2. DESIGNATION, AMOUNT AND PAR VALUE;
ASSIGNMENT.
(a) The
series of preferred stock designated by this Certificate shall be
designated as the Corporation’s “Series F Convertible
Preferred Stock” (the “Series F Preferred
Stock”) and the number of shares so designated shall
be 5,000. Each share of Series F Preferred Stock shall have a par
value of $0.001 per share.
(b) The
Corporation shall register shares of the Series F Preferred Stock,
upon records to be maintained by the Corporation for that purpose
(the “Series F Preferred
Stock Register”), in the name of the Holders thereof
from time to time. The Corporation may deem and treat the
registered Holder of shares of Series F Preferred Stock as the
absolute owner thereof for the purpose of any conversion thereof
and for all other purposes. The Corporation shall register the
transfer of any shares of Series F Preferred Stock in the Series F
Preferred Stock Register, upon surrender of the certificates
evidencing such shares to be transferred, duly endorsed by the
Holder thereof, to the Corporation at its principal place of
business or such other office of the Corporation as may be
designated by the Corporation. Upon any such registration or
transfer, a new certificate evidencing the shares of Series F
Preferred Stock so transferred shall be issued to the transferee
and a new certificate evidencing the remaining portion of the
shares not so transferred, if any, shall be issued to the
transferring Holder, in each case, within three (3) Business Days.
The provisions of this Certificate are intended to be for the
benefit of all Holders from time to time and shall be enforceable
by any such Holder.
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SECTION 3. DIVIDENDS.
Holders shall be entitled to receive, and the Corporation shall
pay, dividends on shares of the Series F Preferred Stock equal (on
an as-if-converted-to-Common-Stock basis without giving effect for
such purposes to the Beneficial Ownership Limitation set forth in
Section 6(c) hereof) to and in the same form as dividends (other
than dividends in the form of Common Stock) actually paid on shares
of the Common Stock when, as and if such dividends (other than
dividends in the form of Common Stock) are paid on shares of the
Common Stock.
SECTION 4. VOTING
RIGHTS. Except as
otherwise provided herein or as otherwise required by the DGCL, the
Series F Preferred Stock shall have no voting rights. However, as
long as any shares of Series F Preferred Stock are outstanding, the
Corporation shall not, whether by merger, consolidation or
otherwise, without the affirmative vote of the Holders of a
majority of the then outstanding shares of the Series F Preferred
Stock: (a) alter or change the powers, preferences or rights given
to the Series F Preferred Stock as set forth herein or alter or
amend this Certificate of Designation, (b) increase the number of
authorized shares of Series F Preferred Stock, or (c) enter into
any agreement with respect to any of the foregoing; provided,
however, that the foregoing shall not preclude the Corporation from
designating or issuing any Junior Securities. The Corporation shall
not pay or cause to be paid, directly or indirectly, to any Holder
or any of its Affiliates any consideration of any type in
connection with a vote of Holders relating to Sections 4(a), (b) or
(c). The Corporation shall not, directly or indirectly, redeem or
repurchase any Series F Preferred Stock unless such offer of
redemption or repurchase is made pro rata to all Holders on
identical terms.
SECTION 5. RANK;
LIQUIDATION.
(a) The
Series F Preferred Stock shall rank: (i) senior to all of the
Common Stock and the Series C-2, Series C-3 Convertible Preferred
Stock (subject to the Corporation obtaining any consent, waiver or
other authorization from the holders of the Series C-3 Convertible
Preferred Stock necessary for the subordination of the Series C-3
Convertible Preferred Stock to the Series F Preferred Stock),
Series D Non-Voting Convertible Preferred Stock, Series E
Non-Voting Convertible Stock; and (ii) senior to any class or
series of capital stock of the Corporation hereafter created
(clauses (i) and (ii), “Junior
Securities”), in each case, as to dividends,
distributions of assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntarily or involuntarily. The
foregoing shall not preclude the Corporation from designating or
issuing any Junior Securities. Without the prior express written
consent of Holders representing a majority of the outstanding
shares of Series F Preferred Stock, the Corporation shall not
hereafter authorize or issue additional or other capital stock that
is of senior or pari-passu rank to the Series F Preferred Stock in
respect of the preferences as to dividends and other distributions,
amortization and/or redemption payments, and/or payments upon a
Liquidation Event.
(b) Upon
liquidation, dissolution or winding up of the Corporation or a
Bankruptcy Event, whether voluntary or involuntary (each, a
“Liquidation
Event”), each holder of shares of Series F Preferred
Stock shall be entitled to receive, in preference to any
distributions of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock and Junior
Securities, an amount equal to the Stated Value per share of Series
F Preferred Stock, plus an additional amount equal to any dividend
declared but unpaid on such shares (the “Liquidation
Preference”), before any payments shall be made or any
assets distributed to holders of any class of Common Stock or
Junior Securities. If, upon any such Liquidation Event, the assets
of the Corporation shall be insufficient to pay the holders of
shares of the Series F Preferred Stock the Liquidation Preference,
then all remaining assets of the Corporation shall be distributed
ratably to holders of the shares of the Series F Preferred Stock
and Parity Securities.
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(c) After
payment to the holders of shares of the Series F Preferred Stock of
the amount required under Section 5(b), the remaining assets or
surplus funds of the Corporation, if any, available for
distribution to stockholders shall be distributed ratably among the
holders of the Series F Preferred Stock, any other class or series
of capital stock that participates with the Common Stock in the
distribution of assets upon any Liquidation Event and the Common
Stock, with the holders of the Series F Preferred Stock deemed to
hold that number of shares of Common Stock into which such shares
of Series F Preferred Stock are then convertible (without giving
effect for such purposes to the Beneficial Ownership Limitation set
forth in Section 6(c) hereof).
SECTION 6. CONVERSION.
(a) Conversions
at Option of Holder. Each share of Series F Preferred Stock
along with the aggregate accrued but unpaid dividends thereon shall
be convertible, at any time and from time to time from and after
the date of the issuance thereof, at the option of the Holder
thereof, into a number of shares of Common Stock equal to the
Conversion Ratio in effect at the time of such conversion. A Holder
shall effect a conversion by providing the Corporation with the
form of conversion notice (via overnight courier, facsimile or
email) attached hereto as Annex A (a
“Notice of
Conversion”), duly completed and executed. For
purposes of clarification, the Corporation or its transfer agent
shall not require a Holder to obtain a medallion guaranty, notary
attestation or any similar deliverable in order to effectuate the
conversion of all or a portion of such Holder’s shares of
Series F Preferred Stock. Other than a conversion following a
Fundamental Transaction, the Notice of Conversion must specify at
least a number of shares of Series F Preferred Stock to be
converted equal to the lesser of (x) 10,000 shares (such number
subject to appropriate adjustment following the occurrence of an
event specified in Section 7(a), 7(b), 7(c) and 7(d) hereof) and
(y) the number of shares of Series F Preferred Stock then held by
the Holder. Provided the Corporation’s Common Stock transfer
agent is participating in the Depository Trust Company
(“DTC”)
Fast Automated Securities Transfer program, the Notice of
Conversion may specify, at the Holder’s election, whether the
applicable Conversion Shares shall be credited to the account of
the Holder’s prime broker with DTC through its
Deposit/Withdrawal at Custodian system (a “DWAC
Delivery”). The date on which a conversion of Series F
Preferred Stock shall be deemed effective (the “Conversion
Date”) shall be defined as the Trading Day that the
Notice of Conversion, completed and executed, and a copy of the
original certificate(s) representing such shares of Series F
Preferred Stock being converted, is sent (via overnight courier,
facsimile or email) to, and received during regular business hours
by, the Corporation. The calculations set forth in the Notice of
Conversion shall control in the absence of manifest or mathematical
error.
(b) Mandatory
Conversion. Provided that each Equity Condition has been
satisfied, each share of Series F Preferred Stock along with the
aggregate accrued but unpaid dividends thereon shall be
automatically converted on or after March 31, 2018 into a number of
shares of Common Stock equal to the Conversion Ratio in effect at
the time of such conversion
(c) Beneficial
Ownership Limitation. Notwithstanding anything herein to the
contrary, the Corporation shall not effect any conversion of the
Series F Preferred Stock, and a Holder shall not have the right to
convert any portion of its Series F Preferred Stock, to the extent
that, after giving effect to an attempted conversion set forth on
an applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any other Person whose beneficial
ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act
and the applicable rules and regulations of the Commission,
including any “group” of which the Holder is a member)
would beneficially own a number of shares of Common Stock in excess
of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the aggregate number of shares
of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock
issuable upon conversion of the Series F Preferred Stock subject to
the Notice of Conversion with respect to which the determination of
such sentence is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (A) conversion of the
remaining, unconverted shares of Series F Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B)
exercise or conversion of the unexercised or unconverted portion of
any other securities of the Corporation beneficially owned by such
Holder or any of its Affiliates (including, without limitation, any
convertible notes, convertible stock or warrants) that are subject
to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this Section 6(c), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the applicable rules and regulations of the
Commission. In addition, for purposes hereof, “group”
has the meaning set forth in Section 13(d) of the Exchange Act and
the applicable rules and regulations of the Commission. For
purposes of this Section 6(c), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Corporation’s most recent Form 10-K, Form 10-Q, Current
Report on Form 8-K or other public filing with the Commission, as
the case may be, (B) a more recent public announcement by the
Corporation or (C) a more recent notice by the Corporation or the
Corporation’s transfer agent to the Holder setting forth the
number of shares of Common Stock then outstanding. For any reason
at any time, upon the written or oral request of a Holder (which
may be by email), the Corporation shall, within two (2) Business
Days of such request, confirm orally and in writing to such Holder
(which may be via email) 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 any actual
conversion or exercise of securities of the Corporation, including
shares of Series F Preferred Stock, by such Holder or its
Affiliates since the date as of which such number of outstanding
shares of Common Stock was last publicly reported or confirmed to
the Holder. The “Beneficial
Ownership Limitation” shall be 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock pursuant to such
Notice of Conversion (to the extent permitted pursuant to this
Section 6(c)). The Corporation shall be entitled to rely on
representations made to it by the Holder in any Notice of
Conversion regarding its Beneficial Ownership Limitation. The
provisions of this Section 6(c) shall be construed, corrected and
implemented in a manner so as to effectuate the intended beneficial
ownership limitation herein contained and the shares of Common
Stock underlying the Series F Preferred Stock in excess of the
Beneficial Ownership Limitation shall not be deemed to be
beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
By written notice to the Corporation, any Holder may increase or
decrease the Beneficial Ownership Limitation to any other
percentage specified in such notice, provided, (i) any increase
will not be effective until the 61st day after such notice is
delivered to the Corporation and (ii) any such increase or decrease
will only apply to the Holder sending such notice and not to any
other Holder.
8
(d) Principal
Market Regulation. The Corporation shall not effect any conversion
of the Series F Preferred Stock, and the Holder shall not have the
right to convert any portion of its Series F Preferred Stock if the
issuance of shares of Common Stock upon such conversion would
exceed the aggregate number of shares of Common Stock which the
Corporation may issue upon conversion of the Series F Preferred
Stock, together with the exercise of any warrants to purchase
Common Stock, without breaching the Corporation’s obligations
under the rules or regulations of the Principal Market (the
“Exchange
Cap”), except that such limitation shall not apply in
the event that the Corporation obtains the approval of its
stockholders as required by the applicable rules of the Principal
Market for issuances of shares of Common Stock in excess of such
amount. Until such approval is obtained, no Holder shall be issued
in the aggregate, upon conversion or exercise (as the case may be)
of any Series F Preferred Stock, or any of the warrants to purchase
Common Stock, shares of Common Stock in an amount greater than the
product of (i) the Exchange Cap multiplied by (ii) the quotient of
(1) the number of shares of Series F Preferred Stock beneficially
owned by such Holder divided by (2) all outstanding shares of
Series F Preferred Stock.
(e) Mechanics
of Conversion.
(i) Delivery
of Certificate or Electronic Issuance Upon Conversion. Not
later than two (2) Trading Days after the applicable Conversion
Date (the “Share Delivery
Date”), the Corporation shall: (a) deliver, or cause
to be delivered, to the converting Holder a physical certificate or
certificates representing the number of Conversion Shares being
acquired upon the conversion of shares of Series F Preferred Stock
(which certificate or certificates shall not have any legends on
it) or (b) in the case of a DWAC Delivery, electronically transfer
such Conversion Shares by crediting the account of the
Holder’s prime broker with DTC through its DWAC system. If in
the case of any Notice of Conversion such certificate or
certificates are not delivered to or as directed by or, in the case
of a DWAC Delivery, such shares are not electronically delivered to
or as directed by, the applicable Holder by the Share Delivery
Date, the applicable Holder shall be entitled to elect to rescind
such Conversion Notice by written notice to the Corporation at any
time on or before its receipt of such certificate or certificates
for Conversion Shares or electronic receipt of such shares, as
applicable, in which event the Corporation shall promptly return to
such Holder any original Series F Preferred Stock certificate
delivered to the Corporation and such Holder shall promptly return
to the Corporation any Common Stock certificates or otherwise
direct the return of any shares of Common Stock delivered to the
Holder through the DWAC system, representing the shares of Series F
Preferred Stock unsuccessfully tendered for conversion to the
Corporation.
(ii) Obligation
Absolute. Subject to any limitations on the beneficial
ownership of Series F Preferred Stock to which a Holder may be
subject and subject to such Holder’s right to rescind a
Conversion Notice pursuant to Section 6(e)(i) above, the
Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of Series F Preferred Stock in accordance
with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by a Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by such
Holder or any other Person of any obligation to the Corporation or
any violation or alleged violation of law by such Holder or any
other Person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Corporation to such
Holder in connection with the issuance of such Conversion Shares.
Subject to any limitations on the beneficial ownership of Series F
Preferred Stock to which a Holder may be subject and subject to
such Holder’s right to rescind a Conversion Notice pursuant
to Section 6(e)(i) above, in the event a Holder shall elect to
convert any or all of its Series F Preferred Stock, the Corporation
may not 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, agreement or for any other reason, unless
an injunction from a court, on notice to such Holder, restraining
and/or enjoining conversion of all or part of the Series F
Preferred Stock of such Holder shall have been sought and obtained
by the Corporation, and the Corporation posts a surety bond for the
benefit of such Holder in the amount of 150% of the value of the
Conversion Shares into which would be converted the Series F
Preferred Stock which is subject to such injunction, which bond
shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of such injunction, the Corporation shall,
subject to any limitations on the beneficial ownership of Series F
Preferred Stock to which a Holder may be subject and subject to
such Holder’s right to rescind a Conversion Notice pursuant
to Section 6(e)(i) above, issue Conversion Shares upon a properly
noticed conversion. If the Corporation fails to deliver to a Holder
such certificate or certificates, or electronically deliver (or
cause its transfer agent to electronically deliver) such shares in
the case of a DWAC Delivery, pursuant to Section 6(e)(i) on or
prior to the third (3rd) Trading Day after the Share Delivery Date
applicable to such conversion (other than a failure caused by
incorrect or incomplete information provided by such Holder to the
Corporation), then, unless the Holder has rescinded the applicable
Conversion Notice pursuant to Section 6(e)(i) above, the
Corporation shall pay (as liquidated damages and not as a penalty)
to such Holder an amount payable in cash equal to the product of
(x) the number of Conversion Shares required to have been issued by
the Corporation on such Share Delivery Date, (y) an amount equal to
the Daily Failure Amount and (z) the number of Trading Days
actually lapsed after such third (3rd) Trading Day after the Share
Delivery Date during which such certificates have not been
delivered, or, in the case of a DWAC Delivery, such shares have not
been electronically delivered. The foregoing liquidated damages is
not intended to be, and is not, an exclusive remedy. Nothing herein
shall limit a Holder’s right to pursue actual damages for the
Corporation’s failure to deliver Conversion Shares within the
period specified herein and such Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief; provided that Holder shall not receive
duplicate damages for the Corporation’s failure to deliver
Conversion Shares within the period specified herein. The exercise
of any such rights shall not prohibit a Holder from seeking to
enforce damages pursuant to any other Section hereof or under
applicable law.
9
(iii)
Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Conversion. If
the Corporation fails to deliver to a Holder the applicable
certificate or certificates or to effect a DWAC Delivery, as
applicable, by the Share Delivery Date pursuant to Section 6(e)(i)
(other than a failure caused by incorrect or incomplete information
provided by such Holder to the Corporation) (a “Conversion
Failure”), and if after such Share Delivery Date such
Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”),
then the Corporation shall (A) pay in cash to such Holder (in
addition to any other remedies available to or elected by such
Holder) the amount by which (x) such Holder’s total purchase
price (including any brokerage commissions) for the shares of
Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder was
entitled to receive from the conversion at issue multiplied by (2)
the actual sale price at which the sell order giving rise to such
purchase obligation was executed (including any brokerage
commissions) and (B) at the option of such Holder, either reissue
(if surrendered) the shares of Series F Preferred Stock equal to
the number of shares of Series F Preferred Stock submitted for
conversion or deliver to such Holder the number of shares of Common
Stock that would have been issued if the Corporation had timely
complied with its delivery requirements under Section 6(e)(i). For
example, if a Holder purchases shares of Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of shares of Series F Preferred Stock with
respect to which the actual sale price (including any brokerage
commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the
Corporation shall be required to pay such Holder $1,000. The Holder
shall provide the Corporation written notice, within three (3)
Trading Days after the occurrence of a Buy-In, indicating the
amounts payable to such Holder in respect of such Buy-In together
with applicable confirmations and other evidence reasonably
requested by the Corporation. 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 Corporation’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of
the shares of Series F Preferred Stock as required pursuant to the
terms hereof; provided, however, that the Holder shall not be
entitled to both (i) require the reissuance of the shares of Series
F Preferred Stock submitted for conversion for which such
conversion was not timely honored and (ii) receive the number of
shares of Common Stock that would have been issued if the
Corporation had timely complied with its delivery requirements
under Section 6(e)(i).
(iv)
Reservation
of Shares Issuable Upon Conversion. The Corporation
covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock for the sole
purpose of issuance upon conversion of the Series F Preferred
Stock, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holders of the Series F
Preferred Stock, not less than 125% of such aggregate number of
shares of the Common Stock as shall be issuable (taking into
account the adjustments of Section 7) upon the conversion of all
outstanding shares of Series F Preferred Stock. The Corporation
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable.
(v) Fractional
Shares. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon the
conversion of the Series F Preferred Stock. As to any fraction of a
share which a Holder would otherwise be entitled to receive upon
such conversion, the Corporation shall at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round
up to the next whole share.
(vi) Transfer
Taxes. The issuance of certificates for shares of the Common
Stock upon conversion of the Series F Preferred Stock shall be made
without charge to any Holder for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of
such certificates, provided that the Corporation shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the
registered Holder(s) of such shares of Series F Preferred Stock and
the Corporation shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Corporation the amount of
such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
(f) Status
as Stockholder. Upon each Conversion Date: (i) the shares of
Series F Preferred Stock being converted shall be deemed converted
into shares of Common Stock and (ii) the Holder’s rights as a
holder of such converted shares of Series F Preferred Stock shall
cease and terminate, excepting only the right to receive
certificates for or electronic delivery of such shares of Common
Stock and to any remedies provided herein or otherwise available at
law or in equity to such Holder because of a failure by the
Corporation to comply with the terms of this Certificate of
Designation. In all cases, the holder shall retain all of its
rights and remedies for the Corporation’s failure to convert
Series F Preferred Stock.
10
SECTION 7. CERTAIN
ADJUSTMENTS.
(a) Adjustments
for Stock Splits and Combinations. If the Corporation shall
at any time or from time to time after the Initial Issuance Date
effect a stock split of the outstanding Common Stock, the
applicable Conversion Price in effect immediately prior to the
stock split shall be proportionately decreased. If the Corporation
shall at any time or from time to time after the Initial Issuance
Date, combine the outstanding shares of Common Stock, the
applicable Conversion Price in effect immediately prior to the
combination shall be proportionately increased. Any adjustments
under this Section 7(a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments
for Certain Dividends and Distributions. If the Corporation
shall at any time or from time to time after the Initial Issuance
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 applicable Conversion Price in effect immediately prior
to such event 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
applicable Conversion Price then in effect by a
fraction:
(i) 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
(ii)
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.
(c) Adjustment
for Other Dividends and Distributions. Subject to Sections 3
and 5 hereof, if the Corporation shall at any time or from time to
time after the Initial Issuance 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 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 shall receive upon conversions
thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Corporation or
other issuer (as applicable) or other property that they would have
received had the shares of Series F 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) or assets, giving
application to all adjustments called for during such period under
this Section 7(c) with respect to the rights of each Holder;
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.
(d) Adjustments
for Reclassification, Exchange or Substitution. If the
Common Stock at any time or from time to time after the Initial
Issuance Date shall be changed to the same or different number of
shares or other securities of any class or classes of stock or
other property, 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 Section 7(a), Section
7(b), and Section 7(c), or a reorganization, merger, consolidation,
or sale of assets provided for in Section 7(e)), 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 each Holder shall have the right
thereafter to convert shares of Series F Preferred Stock into the
kind and amount of shares of stock or other securities or other
property receivable upon reclassification, exchange, substitution
or other change, by holders of the number of shares of Common Stock
into which such shares of Series F Preferred Stock might have been
converted immediately prior to such reclassification, exchange,
substitution or other change, all subject to further adjustment as
provided herein.
11
(e) Adjustments
for Reorganization, Merger, Consolidation or Sales of
Assets. In case of any reorganization of the Corporation (or
any other corporation the stock or other securities of which are at
the time receivable on the conversion of the shares of Series F
Preferred Stock) after the Issuance Date, or in case, after such
date, the Corporation (or any such other corporation) shall
consolidate with or merge into another corporation or entity or
convey all or substantially all its assets to another corporation
or entity (any such reorganization or other event hereafter being
referred to as a “Fundamental
Transaction”), then and in each such case the shares
of Series F Preferred Stock, upon conversion, as and at any time
after the consummation of such Fundamental Transaction, shall be
converted into, in lieu of the stock or other securities and
property into which the shares of Series F Preferred Stock would
have been convertible prior to such Fundamental Transaction, such
stock or other securities or property to which the shares of Series
F Preferred Stock would have converted if the shares of Series F
Preferred Stock had been converted immediately prior to any such
Fundamental Transaction (the “Alternate Consideration”), subject
to further adjustment as provided in Section 7(a), Section 7(b),
Section 7(c) and Section 7(d) in each such case. To the extent
necessary to effectuate the foregoing provisions, any successor to
the Corporation or surviving entity in such Fundamental Transaction
shall file a new Certificate of Designation with the same terms and
conditions and issue to the Holders new preferred stock consistent
with the foregoing provisions and evidencing the Holders’
right to convert such preferred stock into Alternate Consideration.
The terms of any agreement to which the Corporation is a party and
pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to
comply with the provisions of this Section 7(e) and ensuring that
the Series F Preferred Stock (or any such replacement security)
will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction. In the event of the merger
or consolidation of the Corporation with or into another
corporation, the Series F Preferred Stock shall maintain their
relative rank, powers, designations and preferences provided for
herein (for the avoidance of doubt, the Series F Preferred Stock
shall be senior to all other classes of capital stock of the
successor entity) and no merger shall have a result inconsistent
therewith. The Corporation shall cause to be delivered (via
overnight courier, facsimile or email) to each Holder, at its last
address as it shall appear upon the books and records of the
Corporation, written notice of any Fundamental Transaction at least
ten (10) calendar days prior to the date on which such Fundamental
Transaction is expected to become effective or close.
(f) Other
Adjustments. In the event that (A) the Corporation may not
effect the conversion of Series F Preferred Stock as a result of
the Exchange Cap or clause (ix) of the definition of Equity
Conditions is not satisfied and (B) the Corporation, at any time
after the date hereof, issues or sells any class of equity or
equity-linked securities (other than at-the-market equity offerings
through a broker-dealer), in one or more transactions, at a
notional price less than the Conversion Price, the Conversion Price
then in effect shall be reduced to the lowest notional price per
share at which any such share of Common Stock has been issued or
sold.
(g)
Record Date. In
case the Corporation shall take record of the holders of its Common
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.
(h) No
Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or other Fundamental Transaction 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 Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 7
and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of each
Holder against impairment.
12
(i) 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 shares of Series F Preferred
Stock pursuant to this Section 7, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Holder a
certificate setting forth such adjustment and readjustment, showing
in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon written request of a Holder, at
any time, furnish or cause to be furnished to such Holder a like
certificate setting forth such adjustments and readjustments, the
applicable 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 the shares of Series F Preferred Stock.
SECTION 8. RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE
EVENTS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Section 7
above, if at any time the Corporation grants, issues or sells any
Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to all or
substantially all of the record holders of any class of Common
Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete conversion of the Holder’s shares of Preferred Stock
(without taking into account any limitations or restrictions on the
convertibility of the Preferred Shares) 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 the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the 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 the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
(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 Corporation shall make appropriate
provision to insure that the Holder will thereafter have the right
to receive upon a conversion of the Holder’s shares of
Preferred Stock (i) in addition to the shares of Common Stock
receivable upon such conversion, such securities or other assets to
which the Holder would have been entitled with respect to such
shares of Common Stock had such shares of Common Stock been held by
the Holder upon the consummation of such Corporate Event (without
taking into account any limitations or restrictions on the
convertibility of the Preferred Stock) 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 the Holder would have been
entitled to receive had the Holder’s shares of Preferred
Stock 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. Provision made pursuant to the preceding sentence
shall be in a form and substance reasonably satisfactory to the
Holder. The provisions of this Section 8(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 Stock.
13
SECTION 9. COVENANTS.
So long as any shares of the Series F Preferred Stock are
outstanding, without the prior express written consent of Holders
representing 66 2/3% of the outstanding shares of Series F
Preferred Stock, the Corporation shall not, and shall not permit
any Subsidiary, to, directly or indirectly:
(i)
create, incur, guarantee, assume or suffer to exist
any Indebtedness, other than trade payables incurred in the
ordinary course of business consistent with past practice and
letters of credit not in excess of $3.0 million in the aggregate at
any point in time;
(ii)
create, incur, assume or suffer to exist any
Encumbrances on any of its assets or property now owned or
hereafter acquired;
(iii) redeem,
repurchase or pay any cash dividend or distribution on any of its
capital stock (other than Permitted Distributions);
(iv) redeem,
repurchase or prepay any Indebtedness;
(v)
engage in any material line of business substantially
different from those lines of business conducted by the Corporation
and each of its Subsidiaries on the Initial Issue Date or any
business substantially related or incidental thereto. The
Corporation shall not, and the Corporation shall cause each of its
Subsidiaries to not, directly or indirectly, modify its or their
corporate structure or purpose;
(vi)
acquire or form any New Subsidiary if such New
Subsidiary would not be wholly-owned, directly or indirectly, by
the Corporation;
(vii)
fail to maintain and preserve all of its properties which are
necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted, and
fail to comply at all times with the provisions of all leases to
which it is a party as lessee or under which it occupies property,
so as to prevent any loss or forfeiture thereof or
thereunder;
(viii)
fail to maintain insurance with responsible and reputable insurance
companies or associations (including, without limitation,
comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including
all real properties leased or owned by it) and business, in such
amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried
generally in accordance with sound business practice by companies
in similar businesses similarly situated;
(ix)
lend money or credit (by way of guarantee or
otherwise) or make advances to any Subsidiary, or purchase or
acquire any stock, bonds, notes, debentures or other obligations or
securities of, or any other interest in, or make any capital
contribution to, any Subsidiary, other than capital contributions
in amounts consistent with prior practices of the Corporation to
its wholly-owned subsidiary CorMedix Europe GmbH; or
14
(x) sell,
lease, license, assign, transfer, convey or otherwise dispose of
any assets or rights of the Corporation or any Subsidiary owned or
hereafter acquired whether in a single transaction or a series of
related transactions, other than (i) sales, leases, licenses,
assignments, transfers, conveyances and other dispositions of such
assets or rights by the Corporation and its Subsidiaries that are
in the ordinary course of their respective businesses and, after
giving effect thereto, would not result in a Material Adverse
Effect and (ii) sales of product, inventory or receivables in the
ordinary course of business.
SECTION 10. MISCELLANEOUS.
(a) Notices.
Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered
personally, by email, facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Corporation, at 400
Connell Drive, 5th Floor, Suite 5000, Berkeley Heights, NJ 07922,
facsimile number (908) 429-4307, or such other facsimile number or
address or email address as the Corporation may specify for such
purposes by notice to the Holders delivered in accordance with this
Section. Any and all notices or other communications or deliveries
to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service or email addressed to each
Holder at the facsimile number or address of such Holder appearing
on the books of the Corporation, or if no such facsimile number or
address appears on the books of the Corporation, at the principal
place of business of such Holder. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile or email at the facsimile
number or email address specified in or pursuant to this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the date
immediately following the date of transmission, if such notice or
communication is delivered via facsimile or mail at the facsimile
number or email address specified in or pursuant to this Section
between 5:30 p.m. and 11:59 p.m. (New York City time) on any date,
(iii) the second (2nd) Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to
be given.
(b) Lost
or Mutilated Series F Preferred Stock Certificate. If a
Holder’s Series F Preferred Stock certificate shall be
mutilated, lost, stolen or destroyed, the Corporation shall execute
and deliver, in exchange and substitution for and upon cancellation
of a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the
shares of Series F Preferred Stock so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership thereof,
reasonably satisfactory to the Corporation and, in each case,
customary and reasonable indemnity, if requested. Applicants for a
new certificate under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other
reasonable third-party costs as the Corporation may
prescribe.
(c) Waiver.
Any waiver by the Corporation or a Holder of a breach of any
provision of this Certificate of Designation shall not operate as
or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this
Certificate of Designation or a waiver by any other Holders. The
failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or
more occasions shall not be considered a waiver or deprive that
party (or any other Holder) of the right thereafter to insist upon
strict adherence to that term or any other term of this Certificate
of Designation. Any waiver by the Corporation or a Holder must be
in writing.
(d) Severability.
If any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law.
15
(e) Next
Business or Trading Day. Whenever any payment or other
obligation hereunder shall be due on a day other than a Business
Day or a Trading Day, such payment shall be made on the next
succeeding Business Day or Trading Day, as the case may
be.
(f) Headings.
The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions
hereof.
(g)
Status of Converted Series
F Preferred Stock. If any shares of Series F Preferred Stock
shall be converted or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of
preferred stock and shall no longer be designated as Series F
Preferred Stock.
IN WITNESS WHEREOF, the Corporation has
caused this Certificate of Designation to be signed by its duly
authorized officer this 9th day of November,
2017.
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CORMEDIX INC.
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By:
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/s/ Khoso
Baluch
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Name:
Khoso
Baluch
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Title:
Chief
Executive Officer
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16
ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO
CONVERT
SHARES OF SERIES F PREFERRED STOCK)
The
undersigned Holder hereby irrevocably elects to convert the number
of shares of Series F Convertible Preferred Stock indicated below,
represented by stock certificate No(s). _______________ (the
“Preferred Stock
Certificates”), into shares of common stock, par value
$0.001 per share (the “Common Stock”), of
CorMedix Inc., a Delaware corporation (the “Corporation”), as of the
date written below. If securities are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Capitalized terms
utilized but not defined herein shall have the meaning ascribed to
such terms in that certain Certificate of Designation (the
“Certificate of
Designation”) of Series F Convertible Preferred Stock
(the “Series F
Preferred Stock”) filed by the Corporation on November
__, 2017.
As of
the date hereof, the number of shares of Common Stock beneficially
owned by the undersigned Holder (together with such Holder’s
Affiliates, and any other Person whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act and the applicable
regulations of the Commission, including any “group” of
which the Holder is a member), including the number of shares of
Common Stock issuable upon conversion of the Series F Preferred
Stock subject to this Notice of Conversion, but excluding the
number of shares of Common Stock which are issuable upon (A)
conversion of the remaining, unconverted Series F Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B)
exercise or conversion of the unexercised or unconverted portion of
any other securities of the Corporation (including any warrants)
beneficially owned by such Holder or any of its Affiliates that are
subject to a limitation on conversion or exercise analogous to the
limitation contained in Section 6(c) of the Certificate of
Designation, is _______________. For purposes hereof, beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the applicable regulations of the Commission.
In addition, for purposes hereof, “group” has the
meaning set forth in Section 13(d) of the Exchange Act and the
applicable regulations of the Commission.
CONVERSION
CALCULATIONS:
Date to
Effect Conversion:
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Number
of shares of Series F Preferred Stock owned prior to
Conversion:
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Number
of shares of Series F Preferred Stock to be Converted:
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Number
of shares of Common Stock to be Issued:
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Address
for delivery of physical certificates:
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For
DWAC Delivery, please provide the following:
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Broker
no:
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Account
no:
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[HOLDER]
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By:
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Name:
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Title:
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Date:
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17