Attached files
Exhibit 3.5
BRIDGELINE DIGITAL, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND
LIMITATIONS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 151 OF THE
DELAWARE
GENERAL CORPORATION LAW
Bridgeline Digital,
Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of
Incorporation (the "Certificate of Incorporation")
and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the board of directors of
the Corporation (the "Board of Directors") by
unanimous written consent dated October __, 2018 duly approved and
adopted the following resolution which resolution remains in full
force and effect on the date hereof:
RESOLVED, that
pursuant to the authority vested in the Board of Directors by its
Certificate of Incorporation, the Board of Directors does hereby
designate, create, authorize and provide for the issue of Series B
Convertible Preferred Stock, par value $0.001 per share (the
"Preferred Stock"),
consisting of _________ (___) shares, having the voting powers,
preferences and relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof as
follows:
TERMS OF SERIES B PREFERRED STOCK
Section 1. Definitions. For the purposes
hereof, the following terms shall have the following
meanings:
"Affiliate" means any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 of
the Securities Act.
"Alternate Consideration" shall
have the meaning set forth in Section 7(d).
"Beneficial Ownership
Limitation" shall have the meaning set forth in Section
6(d).
"Business Day" means any day
except any Saturday, any Sunday, any day which is 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(c)(iv).
"Commission" means the United
States 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.
"Common Stock Equivalents" means
any securities of the Corporation or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
"Conversion Amount" means the
sum of the Stated Value at issue.
"Conversion Date" shall have the
meaning set forth in Section 6(a).
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"Conversion Price" shall have
the meaning set forth in Section 6(b).
"Conversion Shares" means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Series B Preferred Stock in accordance with the
terms hereof.
"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(d).
"GAAP" means United States
generally accepted accounting principles.
"Holder" shall have the meaning
given such term in Section 2.
"New York Courts" shall have the
meaning set forth in Section 8(d).
"Notice of Conversion" shall
have the meaning set forth in Section 6(a).
"Original Issue Date" means the
date of the first issuance of any shares of the Series B Preferred
Stock regardless of the number of transfers of any particular
shares of Series B Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Series B
Preferred Stock.
"Person" means an 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.
"Representative" means
ThinkEquity, a division of Fordham Financial Management,
Inc.
"Securities Act" means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
"Series B Preferred Stock" shall
have the meaning set forth in Section 2.
"Share Delivery Date" shall have
the meaning set forth in Section 6(c).
"Stated Value" shall have the
meaning set forth in Section 2, as the same may be increased
pursuant to Section 3.
"Subsidiary" means any
subsidiary of the Corporation and shall, where applicable, also
include any direct or indirect subsidiary of the Corporation formed
or acquired after the date hereof.
"Successor Entity" shall have
the meaning set forth in Section 7(d).
"Trading Day" means a day on
which the principal Trading Market is open for
business.
"Trading Market" means any of
the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the NYSE American, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).
"Transfer Agent" means
American Stock Transfer & Trust
Company, LLC, with a mailing address of 6201 15th Avenue, Brooklyn,
NY 11219, and any successor transfer agent of the
Corporation.
Section 2. Designation, Amount and Par
Value. The series of preferred stock shall be designated as
its Series B Convertible Preferred Stock (the "Series B Preferred Stock") and
the number of shares so designated shall be up to _____________
(_____) (which shall not be subject to increase without the written
consent of the holders of a majority of the outstanding Series B
Preferred Stock (each, a "Holder" and collectively, the
"Holders")). Each
share of Series B Preferred Stock shall have a par value of $0.001
per share and a stated value equal to one thousand dollars
($1,000.00) (the "Stated
Value").
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Section 3. Dividends. Except for stock
dividends or distributions for which adjustments are to be made
pursuant to Section 7, Holders shall be entitled to receive, and
the Corporation shall pay, dividends on shares of Series B
Preferred Stock equal (on an as-if-converted-to-Common-Stock basis
(without giving effect to the Beneficial Ownership Limitation)) to
and in the same form as dividends actually paid on shares of the
Common Stock when, as and if such dividends are paid on shares of
the Common Stock. Other than as set forth in the previous sentence,
no other dividends shall be paid on shares of Series B Preferred
Stock, and the Corporation shall pay no dividends (other than
dividends in the form of Common Stock) on shares of the Common
Stock unless it simultaneously complies with the previous
sentence.
Section 4. Voting Rights. Except as
otherwise expressly provided herein or in the Certificate of
Incorporation, or as provided by the Delaware General Corporation
Law, the holders of shares of Series B Preferred Stock, the holders
of shares of Common Stock and the holders of any other class or
series of shares entitled to vote with the Common Stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation. In any such vote, each share of
Series B Preferred Stock shall entitle the holder thereof to cast
the number of votes equal to the number of votes which could be
cast in such vote by a holder of the number of shares of Common
Stock into which such share of Series B Preferred Stock would then
be convertible; provided, however, that in no event will a holder
of shares of Series B Preferred Stock be entitled to vote a number
of shares in excess of such holder's Beneficial Ownership
Limitation. However, as long as any shares of Series B Preferred
Stock are outstanding, the Corporation shall not, without the
affirmative vote of the Holders of a majority of the then
outstanding shares of the Series B Preferred Stock, (a) alter or
change adversely the powers, preferences or rights given to the
Series B Preferred Stock or alter or amend this Certificate of
Designation, (b) amend its certificate of incorporation or other
charter documents in any manner that adversely affects any rights
of the Holders, (c) increase the number of authorized shares of
Series B Preferred Stock, or (d) enter into any agreement with
respect to any of the foregoing.
Section 5. Liquidation. Upon any
liquidation, dissolution or winding-up of Corporation, whether
voluntary or involuntary (a "Liquidation"), the Holders
shall be entitled to participate on an as-converted-to-Common Stock
basis (without giving effect to the Beneficial Ownership
Limitation) with holders of the Common Stock in any distribution of
assets of the Corporation to the holders of the Common
Stock.
Section 6. Conversion.
a)
Conversions at Option of
Holder. Each share of Series B Preferred Stock shall be
convertible, at any time and from time to time from and after the
Original Issue Date at the option of the Holder thereof, into that
number of shares of Common Stock (subject to the limitations set
forth in Section 6(d)) determined by dividing the Stated Value of
such share of Series B Preferred Stock by the Conversion Price then
in effect. Holders shall effect conversions by providing the
Corporation with the form of conversion notice attached hereto as
Annex A (a
"Notice of
Conversion"). Each Notice of Conversion shall specify the
number of shares of Series B Preferred Stock to be converted, the
number of shares of Series B Preferred Stock owned prior to the
conversion at issue, the number of shares of Series B Preferred
Stock owned subsequent to the conversion at issue and the date on
which such conversion is to be effected, which date may not be
prior to the date the applicable Holder delivers by facsimile or
e-mail such Notice of Conversion to the Corporation (such date, the
"Conversion Date").
Upon delivery of the Notice of Conversion, the Holder shall be
deemed for all corporate purposes to have become the holder of
record of the Conversion Shares with respect to which the shares of
Series B Preferred Stock have been converted irrespective of the
date of delivery of the Conversion Shares. If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be
the date that such Notice of Conversion to the Corporation is
deemed delivered hereunder. No ink original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be
required. The calculations and entries in the Notice of Conversion
shall control in the absence of manifest or mathematical error. To
effect conversion of shares of Series B Preferred Stock, a Holder
shall not be required to surrender the certificate(s) representing
such shares of Series B Preferred Stock to the Corporation unless
and until all shares of Series B Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver
such certificate(s) within five (5) Trading Days after delivery of
the Notice of Conversion relating to the conversion of the last
shares of Series B Preferred Stock. The calculations and entries
set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error. Shares of Series B Preferred
Stock converted into Common Stock or redeemed in accordance with
the terms hereof shall be canceled and shall not be
reissued.
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b)
Conversion Price.
The conversion price for the Series B Preferred Stock shall equal
$_____, subject to adjustment herein (the "Conversion
Price").
c)
Mechanics of
Conversion
i.
Delivery of Conversion
Shares Upon Conversion. Promptly after each Conversion Date
but in any case within the earlier of (i) two (2) Trading Days and
(ii) the Standard Settlement Period, thereof (the "Share Delivery Date"), the
Corporation shall deliver, or cause to be delivered, to the
converting Holder the number of Conversion Shares being acquired
upon the conversion of the Series B Preferred Stock, which
Conversion Shares shall be issued free of restrictive legends and
trading restrictions, and a wire transfer of immediately available
funds in the amount of accrued and unpaid dividends, if any.
Conversion Shares issuable hereunder shall be transmitted by the
Transfer Agent to the Holder by crediting the account of the
Holder's or its designee's balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system
("DWAC") if the
Corporation is then a participant in such system, and otherwise by
physical delivery of a certificate, registered in the Corporation's
share register in the name of the Holder or its designee, for the
number of Conversion Shares to which the Holder is entitled
pursuant to such conversion to the address specified by the Holder
in the Notice of Conversion. The Corporation shall deliver (or
cause to be delivered) to the converting Holder (A) a certificate
or certificates for the number of shares of Common Stock issuable
upon conversion, and (B) if less than the number of shares of
Series B Preferred Stock evidenced by the surrendered certificate
or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by
any surrendered Series B Preferred Stock certificate or
certificates (if applicable) less the number of shares converted.
The Corporation agrees to maintain a transfer agent that is a
participant in the FAST program so long as any shares of Series B
Preferred Stock remain outstanding. As used herein, "Standard Settlement Period"
means the standard settlement period, expressed in a number of
Trading Days, on the Corporation's primary Trading Market with
respect to the Common Stock as in effect on the date of delivery of
the Notice of Conversion. Notwithstanding the foregoing, with
respect to any Notice(s) of Conversion delivered by 12:00 p.m. (New
York City time) on the Original Issue Date, the Corporation agrees
to deliver the Conversion Shares subject to such notice(s) by 4:00
p.m. (New York City time) on the Original Issue Date.
ii.
Failure to Deliver
Conversion Shares. If, in the case of any Notice of
Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, in
addition to any other rights herein, the Holder shall be entitled
to elect by written notice to the Corporation at any time on or
before its receipt of such Conversion Shares, to rescind such
Conversion, in which event the Corporation shall promptly return to
the Holder any original Series B Preferred Stock certificate
delivered to the Corporation and the Holder shall promptly return
to the Corporation the Conversion Shares issued to such Holder
pursuant to the rescinded Notice of Conversion.
iii.
Obligation Absolute;
Partial Liquidated Damages. The Corporation's obligation to
issue and deliver the Conversion Shares upon conversion of Series B
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; provided, however, that such delivery
shall not operate as a waiver by the Corporation of any such action
that the Corporation may have against such Holder. In the event a
Holder shall elect to convert any or all of the Stated Value of its
Series B Preferred Stock, the Corporation may not refuse conversion
based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of
law,
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agreement or for
any other reason, unless an injunction from a court, on notice to
Holder, restraining and/or enjoining conversion of all or part of
the Series B Preferred Stock of such Holder shall have been sought
and obtained, and the Corporation posts a surety bond for the
benefit of such Holder in the amount of 150% of the Stated Value of
Series B Preferred Stock which is subject to the 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
issue Conversion Shares and, if applicable, cash, upon a properly
noticed conversion. If the Corporation fails to deliver to a Holder
such Conversion Shares pursuant to Section 6(c)(i) on the Share
Delivery Date applicable to such conversion, the Corporation shall
pay to such Holder, in cash, as liquidated damages and not as a
penalty, for each $1,000 of Stated Value of the Series B Preferred
Stock being converted, $10 per Trading Day (increasing to $20 per
Trading Day on the fifth Trading Day after such damages begin to
accrue) for each Trading Day after the Share Delivery Date until
such Conversion Shares are delivered or Holder rescinds such
conversion. 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. 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.
iv.
Compensation for Buy-In on
Failure to Timely Deliver Conversion Shares Upon Conversion.
In addition to any other rights available to the Holder, if the
Corporation fails for any reason to deliver to a Holder the
applicable Conversion Shares by the Share Delivery Date pursuant to
Section 6(c)(i), 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, if
any, by which (x) such Holder's total purchase price (including any
brokerage commissions) for the 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 B
Preferred Stock equal to the number of shares of Series B Preferred
Stock submitted for conversion (in which case, such conversion
shall be deemed rescinded) 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(c)(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
B Preferred Stock with respect to which the actual sale price of
the Conversion Shares (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 indicating the amounts
payable to such Holder in respect of the Buy-In and, upon request
of the Corporation, evidence of the amount of such loss. 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
the Conversion Shares upon conversion of the shares of Series B
Preferred Stock as required pursuant to the terms
hereof.
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v.
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 B Preferred Stock as herein
provided, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Holder (and
the other holders of the Series B Preferred Stock), not less than
such aggregate number of shares of the Common Stock as shall be
issuable (taking into account the adjustments and restrictions of
Section 7) upon the conversion of the then outstanding shares of
Series B 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.
vi.
Fractional Shares.
No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of the Series B Preferred Stock. As
to any fraction of a share which the Holder would otherwise be
entitled to purchase 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 to the next whole share, with 0.5 shares
being rounded up to one whole share. Subject to the foregoing,
fractional shares of Series B Preferred Stock may be issued and /
or converted hereunder.
vii.
Transfer Taxes and
Expenses. The issuance of Conversion Shares on conversion of
this Series B 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 Conversion
Shares, 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 Conversion Shares upon
conversion in a name other than that of the Holders of such shares
of Series B Preferred Stock and the Corporation shall not be
required to issue or deliver such Conversion Shares 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. The Corporation shall pay all Transfer Agent fees
required for same-day processing of any Notice of Conversion and
all fees to the Depository Trust Company (or another established
clearing corporation preforming similar functions) required for
same- day electronic delivery of the Conversion
Shares.
d)
Beneficial Ownership
Limitation. The Corporation shall not effect any conversion
of the Series B Preferred Stock, and a Holder shall not have the
right to convert any portion of the Series B Preferred Stock, to
the extent that, after giving effect to the conversion set forth on
the applicable Notice of Conversion, such Holder (together with
such Holder's Affiliates, and any Persons acting as a group
together with such Holder or any of such Holder's Affiliates (such
Persons, "Attribution
Parties")) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by such Holder and its Affiliates and
Attribution Parties shall include the number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock with
respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted Stated Value of
the Series B Preferred Stock beneficially owned by such Holder or
any of its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Corporation subject to a limitation on conversion
or exercise analogous to the limitation contained herein
(including, without limitation, the Series B Preferred Stock or the
Warrants) beneficially owned by such Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 6(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 6(d) applies, the determination of whether the Series B
Preferred Stock is convertible (in relation to other securities
owned by such Holder together with any Affiliates and Attribution
Parties) and of how many shares of Series B Preferred Stock are
convertible shall be in the sole discretion of such Holder, and the
submission of a Notice of Conversion shall be deemed to be such
Holder's determination of whether the shares of Series B Preferred
Stock may be converted (in relation to other securities owned by
such Holder together with any Affiliates and Attribution Parties)
and how many shares of the Series B Preferred Stock are
convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, each Holder
will be deemed
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to
represent to the Corporation each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Corporation shall
have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 6(d), in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) the
Corporation's most recent periodic or annual report filed with the
Commission, as the case may be, (ii) a more recent public
announcement by the Corporation or (iii) a more recent written
notice by the Corporation or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. Upon the written or
oral request of a Holder (which may be via email), the Corporation
shall within three Trading 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 Corporation, including the Series B Preferred
Stock, by such Holder or its Affiliates or Attribution Parties
since the date as of which such number of outstanding shares of
Common Stock was reported. The "Beneficial Ownership
Limitation" shall be 4.99% (or upon the election by a Holder
prior to the issuance of any shares of Series B Preferred Stock,
9.99%) of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of Series B Preferred Stock held by
the applicable Holder. A Holder, upon notice to the Corporation,
may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 6(d) applicable to its Series B
Preferred Stock provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon conversion of this Series B
Preferred Stock held by the Holder and the provisions of this
Section 6(d) shall continue to apply. Any such increase in the
Beneficial Ownership Limitation will not be effective until the
61st day after such notice is delivered to the Corporation and
shall only apply to such Holder and no other Holder. The provisions
of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section
6(d) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of Series B Preferred Stock.
Section 7. Certain
Adjustments.
a)
Stock Dividends and Stock
Splits. If the Corporation, at any time while this Series B
Preferred Stock is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares
of Common Stock on shares of Common Stock or any other Common Stock
Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Corporation upon conversion
of, or payment of a dividend on, this Series B Preferred Stock),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Corporation, then the Conversion Price shall
be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of
the Corporation) outstanding immediately before such event, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section 7(a) shall become effective immediately
after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
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b)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 7(a) above, if at any time the Corporation grants, issues
or sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares 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 such
Holder's Series B Preferred Stock (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) 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 shares 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).
c)
Pro Rata
Distributions. During such time as this Series B Preferred
Stock is outstanding, if the Corporation declares or makes any
dividend or other distribution of its assets (or rights to acquire
its assets) to holders of shares of Common Stock, by way of return
of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"),
at any time after the issuance of this Series B Preferred Stock,
then, in each such case, the Holder shall be entitled to
participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number
of shares of Common Stock acquirable upon complete conversion of
this Series B Preferred Stock (without regard to any limitations on
conversion hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record
is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are
to be determined for the participation in such Distribution
(provided,
however, to the
extent that the Holder's right to participate in any such
Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of
such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation).
d)
Fundamental
Transaction. If, at any time while this Series B Preferred
Stock is outstanding, (i) the Corporation, directly or indirectly,
in one or more related transactions effects any merger or
consolidation of the Corporation with or into another Person, (ii)
the Corporation, directly or indirectly, effects any sale, lease,
exclusive license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect,
purchase offer, tender offer or exchange offer (whether by the
Corporation or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been
accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Corporation, directly or indirectly, in one or more
related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Corporation, directly or indirectly, in one or more
related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock 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) (each a
"Fundamental
Transaction"), then, upon any subsequent conversion of this
Series B Preferred Stock, the Holder shall have the right to
receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in
Section 6(d) on the conversion of this Series B Preferred Stock),
the number of shares of Common Stock of the successor or acquiring
corporation or of the
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Corporation, if it
is the surviving corporation, and any additional consideration (the
"Alternate
Consideration") receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for
which this Series B Preferred Stock is convertible immediately
prior to such Fundamental Transaction (without regard to any
limitation in Section 6(d) on the conversion of this Series B
Preferred Stock). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the
Corporation shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Series B Preferred Stock following such Fundamental Transaction. 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 Corporation shall cause any successor
entity in a Fundamental Transaction in which the Corporation is not
the survivor (the "Successor Entity") to assume in
writing all of the obligations of the Corporation under this
Certificate of Designation in accordance with the provisions of
this Section 7(d) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the holder of this Series B
Preferred Stock, deliver to the Holder in exchange for this Series
B Preferred Stock a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to
this Series B Preferred Stock which is convertible for a
corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Series B
Preferred Stock (without regard to any limitations on the
conversion of this Series B Preferred Stock) prior to such
Fundamental Transaction, and with a conversion price which applies
the conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Series B Preferred Stock immediately
prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such 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 Designation referring to the
"Corporation" shall refer instead to the Successor Entity), and may
exercise every right and power of the Corporation and shall assume
all of the obligations of the Corporation under this Certificate of
Designation with the same effect as if such Successor Entity had
been named as the Corporation herein.
e)
Calculations. All
calculations under this Section 7 shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 7, the number of shares of Common Stock deemed to
be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding any treasury shares
of the Corporation) issued and outstanding.
f)
Notice to the
Holders.
i.
Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 7, the Corporation shall promptly
deliver to each Holder by facsimile or email a notice setting forth
the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such
adjustment.
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ii.
Notice to Allow Conversion
by Holder. If (A) the Corporation shall declare a dividend
(or any other distribution in whatever form) on the Common Stock,
(B) the Corporation shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the
Corporation shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the
Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E)
the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation, then, in each case, the Corporation shall cause to be
filed at each office or agency maintained for the purpose of
conversion of this Series B Preferred Stock, and shall cause to be
delivered by facsimile or email to each Holder at its last
facsimile number or email address as it shall appear upon the stock
books of the Corporation, at least twenty (20) calendar days prior
to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Corporation or any of the Subsidiaries, the
Corporation shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder
shall remain entitled to convert the Conversion Amount of this
Series B Preferred Stock (or any part hereof) during the 20-day
period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 8. 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 e-mail
or sent by a nationally recognized overnight courier service,
addressed to the Corporation at 80 Blanchard Road, Burlington, MA
01803, Attention: Chief Executive Officer, email address:
akahn@bridgeline.com, or such other e-mail address or address as
the Corporation may specify for such purposes by notice to the
Holders delivered in accordance with this Section 8. 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, by e-mail or sent by a nationally recognized
overnight courier service 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 e-mail at the e-mail address set forth in this
Section prior to 5:30 p.m. (New York City time) on any date, (ii)
the next Trading Day after the date of transmission, if such notice
or communication is delivered via e-mail at the e-mail address set
forth in this Section on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (iii) the
second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be
given. To the extent that any notice provided pursuant to this
Certificate of Designation constitutes, or contains, material,
non-public information regarding the Corporation or any
Subsidiaries, the Corporation shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form
8-K.
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b)
Absolute
Obligation. Except as expressly provided herein, no
provision of this Certificate of Designation shall alter or impair
the obligation of the Corporation, which is absolute and
unconditional, to pay liquidated damages and accrued dividends, as
applicable, on the shares of Series B Preferred Stock at the time,
place, and rate, and in the coin or currency, herein
prescribed.
c)
Lost or Mutilated Series B
Preferred Stock Certificate. If a Holder's Series B
Preferred Stock certificate shall be mutilated, lost, stolen or
destroyed, the Corporation shall execute and deliver, or cause to
be executed and delivered, 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 B 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 hereof reasonably satisfactory to the
Corporation with the actual third-party costs of the replacement of
such certificate to be borne by the Holder (but without any
requirement to post an indemnity bond).
d)
Governing Law. All
questions concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by this Certificate of Designation
(whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the
City of New York, Borough of Manhattan (the "New York Courts"). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of
the New York Courts for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such New
York Courts, or such New York Courts are improper or inconvenient
venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Certificate of Designation and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted
by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right
to trial by jury in any legal proceeding arising out of or relating
to this Certificate of Designation or the transactions contemplated
hereby. If any party shall commence an action or proceeding to
enforce any provisions of this Certificate of Designation, then the
prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys' fees and other costs and
expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.
e)
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 on any other
occasion. Any waiver by the Corporation or a Holder must be in
writing.
f)
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.
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g)
Next Business Day.
Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
h)
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.
i)
Status of Converted or
Redeemed Series B Preferred Stock. If any shares of Series B
Preferred Stock shall be converted, redeemed 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 B Convertible Preferred Stock.
IN
WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed this __th day of October, 2018.
BRIDGELINE DIGITAL,
INC.
By:_______________________
Name:
Roger Kahn
Title:
Chief Executive Officer
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ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
SERIES B PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series
B Convertible Preferred Stock indicated below into shares of common
stock, no par value per share (the "Common Stock"), of Bridgeline
Digital, Inc., a Delaware corporation (the "Corporation"), according to the
conditions hereof, as of the date written below. If shares of
Common Stock 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. No fee will be charged to the Holders
for any conversion, except for any such transfer
taxes.
Conversion
calculations:
Date to
Effect Conversion:
____________________________________________________________
Number
of shares of Series B Preferred Stock owned prior to Conversion:
______________________
Number
of shares of Series B Preferred Stock to be Converted:
_______________________________
Stated
Value of shares of Series B Preferred Stock to be Converted:
____________________________
Number
of shares of Common Stock to be Issued:
__________________________________________
Applicable
Conversion Price:
__________________________________________________________
Number
of shares of Series B Preferred Stock subsequent to Conversion:
________________________
Address
for Delivery:
_________________________________________________________________
Or
DWAC
Instructions:
Broker
no:
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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