Attached files
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8-K - CURRENT REPORT - VIVOS INC | vivos8k.htm |
EX-10.1 - FORM OF SECURITIES PURCHASE AGREEMENT - VIVOS INC | ex10-1.htm |
EX-4.1 - FORM OF WARRANT - VIVOS INC | ex4-1.htm |
Exhibit
3.1
CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES B CONVERTIBLE
PREFERRED STOCK
OF
VIVOS, INC.
The
undersigned, the Chief Executive Officer of Vivos, Inc., a Delaware
corporation (the “Company”), does hereby certify
that, pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Company, the
following resolution creating a series of Series B Convertible
Preferred Stock, was duly adopted on October 8, 2018.
RESOLVED, that pursuant to the authority
expressly granted to and vested in the Board of Directors of the
Company by provisions of the Certificate of Incorporation of the
Company, as amended (the “Certificate of Incorporation”),
there hereby is created out of the shares of Preferred Stock, par
value $0.001 per share (the “Preferred Stock”), of the
Company, as authorized in Article IV of the Company’s
Certificate of Incorporation, a series of Preferred Stock of the
Company, to be named “Series B Convertible Preferred
Stock,” consisting of Five Million (5,000,000) shares, which
series shall have the following designations, powers, preferences
and relative and other special rights and the following
qualifications, limitations and restrictions:
1.
Designation and Rank. The
designation of such series of the Preferred Stock shall be the
Series B Preferred Stock, par value $0.001 per share (the
“Series B
Preferred”). The maximum number of shares of Series B
Preferred shall be Five Million (5,000,000) shares. The Series B
Preferred shall rank senior to the Company’s common stock,
par value $0.001 per share (the “Common Stock”), and to all other
classes and series of equity securities of the Company which by
their terms rank junior to the Series B Preferred
(“Junior
Stock”). The date of original issuance of the Series B
Preferred is referred to herein as the “Issuance Date”.
2.
Voting
Rights.
(a) Subject to the
Beneficial Limitation Ownership, each holder of Series B Preferred
shall be entitled to vote on all matters, together with the holders
of Common Stock, and shall have the equivalent of two (2) votes for
every Conversion Share, as defined below, issuable upon conversion
of such holder’s outstanding shares of Series B
Preferred.
(b) The Common Stock
into which the Series B Preferred is convertible shall, upon
issuance, have all of the same voting rights as other issued and
outstanding Common Stock of the Company, and none of the rights of
the Series B Preferred.
3.
Liquidation, Dissolution;
Winding-Up.
(a) In the event of the
liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, the holders of shares of
the Series B Preferred then outstanding shall be entitled to
receive, out of the assets of the Company available for
distribution to its stockholders, an amount equal to $1.00 per
share (the “Liquidation
Preference Amount”) before any payment shall be made
or any assets distributed to the holders of the Common Stock or any
other Junior Stock. If the assets of the Company are not sufficient
to pay in full the Liquidation Preference Amount payable to the
holders of outstanding shares of the Series B Preferred and any
series of preferred stock or any other class of stock on a parity,
as to rights on liquidation, dissolution or winding up, with the
Series B Preferred, then all of said assets will be distributed
among the holders of the Series B Preferred and the other classes
of stock on a parity with the Series B Preferred, if any, ratably
in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. The
liquidation payment with respect to each outstanding fractional
share of Series B Preferred shall be equal to a ratably
proportionate amount of the liquidation payment with respect to
each outstanding share of Series B Preferred. All payments for
which this Section 3(a) provides shall be in cash, property (valued
at its fair market value as determined reasonably and in good faith
by the Board of Directors of the Company) or a combination thereof;
provided, however, that no cash shall be paid to
holders of Junior Stock unless each holder of the outstanding
shares of Series B Preferred has been paid in cash the full
Liquidation Preference Amount to which such holder is entitled as
provided herein. After payment of the full Liquidation Preference
Amount to which each holder is entitled, such holders of shares of
Series B Preferred will not be entitled to any further
participation as such in any distribution of the assets of the
Company.
-1-
(b) Written notice of
any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, stating a payment date and the place
where the distributable amounts shall be payable, shall, to the
extent possible, be given by mail, postage prepaid, no less than
twenty (20) days prior to the payment date stated therein, to the
holders of record of the Series B Preferred at their respective
addresses as the same shall appear on the books of the
Company.
4. Conversion. The holder(s) of
Series B Preferred shall have the following conversion rights (the
“Conversion
Rights”):
(a) Voluntary Conversion. Any
holder of shares of Series B Preferred may, at such holder's
option, elect to convert (a “Voluntary Conversion”) all or any
portion of the shares of Series B Preferred held by such person
into Conversion Shares in an amount equal to the quotient of (i)
the Liquidation Preference Amount of the shares of Series B
Preferred being converted divided by (ii) the Conversion Price (as
defined in Section 4(d) below) then in effect as of the date of the
delivery by such holder of its notice of election to convert (the
“Conversion
Shares”) In the event of a notice of redemption of any
shares of Series B Preferred pursuant to Section 8 below, the
Voluntary Conversion of the shares designated for redemption shall
terminate at the close of business on the last full day preceding
the date fixed for redemption, unless the redemption price is not
paid on such redemption date, in which case the Voluntary
Conversion option for such shares shall continue until such price
is paid in full. In the event of a liquidation, dissolution or
winding up of the Company, the Voluntary Conversion option provided
by this Section 4(b) shall terminate at the close of business on
the last full day preceding the date fixed for the payment of any
such amounts distributable on such event to the holders of Series B
Preferred. In the event of such a redemption or liquidation,
dissolution or winding up, the Company shall provide to each holder
of shares of Series B Preferred notice of such redemption or
liquidation, dissolution or winding up, which notice shall (i) be
sent at least fifteen (15) days prior to the termination of the
Voluntary Conversion option and (ii) state the amount per share of
Series B Preferred that will be paid or distributed on such
redemption or liquidation, dissolution or winding up, as the case
may be.
-2-
(b) Mechanics of Conversion. The
conversion of Series B Preferred pursuant to this Section 4 shall
be conducted in the following manner:
(i) Mechanics of a Voluntary
Conversion.
(1) Holder's Delivery Requirements.
To convert shares Series B Preferred into Conversion Shares on any
date (the “Voluntary
Conversion Date”), the holder thereof shall transmit
by e-mail (or otherwise deliver), for receipt on or prior to 5:00
p.m., New York time on such date, a copy of a fully executed notice
of conversion in the form attached hereto as Exhibit A (the
“Voluntary Conversion
Notice”), to the Company. As soon as practicable
following such Voluntary Conversion Date, the holder shall
surrender to a common carrier for delivery to the Company the
electronic shares of Series B Preferred or the original
certificates representing the shares of Series B Preferred being
converted (or an indemnification undertaking with respect to such
shares in the case of their loss, theft or destruction) (the
“Preferred Stock
Certificates”) and the originally executed Voluntary
Conversion Notice.
(2) Company's Response. Upon
receipt by the Company of a copy of the fully executed Voluntary
Conversion Notice, the Company or its designated transfer agent
(the “Transfer
Agent”), as applicable, shall within three (3)
business days following the date of receipt by the Company of a
copy of the fully executed Voluntary Conversion Notice, issue and
deliver to the Depository Trust Company (“DTC”) account on the holder's
behalf via the Deposit Withdrawal Agent Commission System
(“DWAC”) as
specified in the Voluntary Conversion Notice, registered in the
name of the holder or its designee, for the number of Conversion
Shares to which the holder shall be entitled. Notwithstanding the
foregoing to the contrary, the Company or its Transfer Agent shall
only be required to issue and deliver the shares to the DTC on a
holder's behalf via DWAC if (i) the Conversion Shares may be issued
without restrictive legends and (ii) the Company and the Transfer
Agent are participating in DTC through the DWAC system. If all of
the conditions set forth in clauses (i) and (ii) above are not
satisfied, the Company shall deliver physical certificates to the
holder or its designee. If the number of shares of Preferred Stock
represented by the Preferred Stock Certificate(s) submitted for
conversion is greater than the number of shares of Series B
Preferred being converted, then the Company shall, as soon as
practicable and in no event later than three (3) business days
after receipt of the Preferred Stock Certificate(s) and at the
Company's expense, issue and deliver to the holder a new Preferred
Stock Certificate representing the number of shares of Series B
Preferred not converted.
(ii) Dispute
Resolution. In the case of a dispute as to the arithmetic
calculation of the number of Conversion Shares to be issued upon
conversion in accordance with this Section 4, the Company shall
cause its Transfer Agent to promptly issue to the holder the number
of Conversion Shares that is not disputed and shall submit the
arithmetic calculations to the holder via e-mail as soon as
possible, but in no event later than two (2) business days after
receipt of such holder's Voluntary Conversion Notice. If such
holder and the Company are unable to agree upon the arithmetic
calculation of the number of Conversion Shares to be issued upon
such conversion within two (2) business days of such disputed
arithmetic calculation being submitted to the holder, then the
Company shall within two (2) business days submit via e-mail the
disputed arithmetic calculation of the number of Conversion Shares
to be issued upon such conversion to the Company's independent,
outside accountant (the “Accountant”). The Company shall
cause the Accountant to perform the calculations and notify the
Company and the holder of the results no
later than five (5) business days from the time it receives the
disputed calculations. The Accountant's calculation shall be
binding upon all parties absent manifest error. The reasonable
expenses of such Accountant in making such determination shall be
paid by the Company, in the event the holder's calculation was
correct, or by the holder, in the event the Company's calculation
was correct, or equally by the Company and the holder in the event
that neither the Company's or the holder's calculation was correct.
The period of time in which the Company is required to effect
conversions or redemptions under this Certificate of Designations
shall be tolled with respect to the subject conversion or
redemption pending resolution of any dispute by the Company made in
good faith and in accordance with this Section
4(b)(ii).
-3-
(iii) Record
Holder. The person or persons entitled to receive the
Conversion Shares issuable upon a conversion of the Series B
Preferred shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on the Conversion
Date.
(iv) Company's
Failure to Timely Convert. If within three (3) business days
of the Company's receipt of an executed copy of a Voluntary
Conversion Notice (so long as the applicable Series B Preferred
certificates, if any, and original Voluntary Conversion Notice are
received by the Company on or before such second business day) (the
“Share Delivery
Deadline”), the Transfer Agent shall fail to issue and
deliver to a holder the number of shares of Common Stock to which
such holder is entitled upon such Holder's conversion of the Series
B Preferred or to issue a new Preferred Stock Certificate
representing the number of shares of Series B Preferred to which
such holder is entitled (a “Voluntary Conversion Failure”),
in addition to all other available remedies which such holder may
pursue hereunder, the Company shall pay additional damages to such
holder on each business week after such fifth (5th) business day of
the end of the Shareholder Delivery Deadline (so long as the
applicable Preferred Stock Certificates and original Voluntary
Conversion Notice are received by the Company on or before such
fifth business day) in an amount equal 2.0 of the product of (A)
the sum of the number of shares of Common Stock not issued to such
Holder on or prior to the Share Delivery Deadline and to which such
Holder is entitled, multiplied by (B) any trading price of the
Common Stock selected by such Holder in writing as in effect at any
time during the period beginning on the applicable Conversion Date
and ending on the applicable Share Delivery Deadline, and (Y) such
Holder, upon written notice to the Company, may void its Conversion
Notice with respect to, and retain or have returned, as the case
may be, all, or any portion, of such Series B Preferred that has
not been converted pursuant to such Conversion Notice; provided
that the voiding of an Conversion Notice shall not affect the
Company’s obligations to make any payments which have accrued
prior to the date of such notice pursuant to this Section 4(b)(i)
or otherwise. If the Company fails to pay the additional damages
set forth in this Section 4(b)(i) within seven (7) business days of
the date incurred, then such payment shall bear interest at the
rate of 1.0% per month (pro rated for partial months) until such
payments are made.
(c) Conversion Price/Material Non-Public
Information.
(i) The term
“Conversion Price” shall mean $0.01 per share, subject
to adjustment under Section 4(e) hereof.
(ii) In
addition to any other remedies, if the Company provides any
material, non-public information to the Holder without their prior
written consent, and the Company fails to
immediately (no later than that Business Day) file a Form 8-K
disclosing this material, non-public information, it shall pay the
Holder who is prohibited from trading as a result thereof as
partial liquidated damages and not as a penalty a sum equal to
$1,000 per day beginning with the day the information is disclosed
and ending and including the day the Form 8-K disclosing this
information is filed.
-4-
(d) Adjustments of Conversion
Price.
(i) Adjustments for Stock Splits and
Combinations. If the Company shall at any time or from time
to time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the Conversion Price shall be
proportionately decreased. If the Company shall at any time or from
time to time after the Issuance Date, combine the outstanding
shares of Common Stock, the Conversion Price shall be
proportionately increased. Any adjustments under this Section
4(d)(i) shall be effective at the close of business on the date the
stock split or combination becomes effective.
(ii) Adjustments
for Certain Dividends and Distributions. If the Company
shall at any time or from time to time after the 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 Conversion Price shall be decreased as of the time of
such issuance or, in the event such record date shall have been
fixed, as of the close of business on such record date, by
multiplying the Conversion Price then in effect by a
fraction:
(1) the numerator of
which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or
the close of business on such record date; and
(2) the denominator of
which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or
the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or
distribution; provided,
however, that no such
adjustment shall be made if the holders of Series B Preferred
simultaneously receive (i) a dividend or other distribution of
shares of Common Stock in a number equal to the number of shares of
Common Stock as they would have received if all outstanding shares
of Series B Preferred had been converted into Common Stock on the
date of such event or (ii) a dividend or other distribution of
shares of Series B Preferred which are convertible, as of the date
of such event, into such number of shares of Common Stock as is
equal to the number of additional shares of Common Stock being
issued with respect to each share of Common Stock in such dividend
or distribution.
(iii) Adjustment
for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the 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 securities of the Company other than shares of Common
Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be
made (by adjustments of the Conversion Price or otherwise) so that
the holders of Series B Preferred shall receive upon conversions
thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which
they would have received had their Series B Preferred been
converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together
with any distributions payable thereon during such period), giving
application to all adjustments called for during such period under
this Section 4(d)(iii) with respect to the rights of the holders of
the Series B Preferred; 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.
-5-
(iv) Adjustments
for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of the Series B Preferred at
any time or from time to time after the Issuance Date shall be
changed to the same or different number of shares of any class or
classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections
4(d)(i), (ii) and (iii), or a reorganization, merger,
consolidation, or sale of assets provided for in Section 4(d)(v)),
then, and in each event, an appropriate revision to the Conversion
Price shall be made and provisions shall be made (by adjustments of
the Conversion Price or otherwise) so that the holder of each share
of Series B Preferred shall have the right thereafter to convert
such share of Series B Preferred into the kind and amount of shares
of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of
shares of Common Stock into which such share of Series B Preferred
might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all
subject to further adjustment as provided herein.
(v) Adjustments for Reorganization,
Merger, Consolidation or Sales of Assets. If at any time or from
time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions
provided for in Section 4(d)(i), (ii) and (iii), or a
reclassification, exchange or substitution of shares provided for
in Section 4(d)(iv)), or a merger or consolidation of the Company
with or into another corporation where the holders of outstanding
voting securities prior to such merger or consolidation do not own
over fifty percent (50%) of the outstanding voting securities of
the merged or consolidated entity, immediately after such merger or
consolidation, or the sale of all or substantially all of the
Company's properties or assets to any other person (an
“Organic
Change”), then as a part of such Organic Change an
appropriate revision to the Conversion Price shall be made if
necessary and provision shall be made if necessary (by adjustments
of the Conversion Price or otherwise) so that the holder of each
share of Series B Preferred shall have the right thereafter to
convert such share of Series B Preferred into the kind and amount
of shares of stock and other securities or property which such
holder would have had the right to receive had such holder
converted its shares of Series B Preferred immediately prior to the
consummation of such Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of
this Section 4(d)(v) with respect to the rights of the holders of
the Series B Preferred after the Organic Change to the end that the
provisions of this Section 4(d)(v) (including any adjustment in the
Conversion Price then in effect and the number of shares of stock
or other securities deliverable upon conversion of the Series B
Preferred) shall be applied after that event in as nearly an
equivalent manner as may be practicable.
-6-
(vi) Consideration
for Stock. In case any shares of Common Stock or any
securities convertible into or exchangeable for, directly or
indirectly, Common Stock (“Convertible Securities”), other
than the Series B Preferred, or any rights or warrants or options
to purchase any such Common Stock or Convertible Securities, shall
be issued or sold:
(1) in connection with
any merger or consolidation in which the Company is the surviving
corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall
be changed to or exchanged for the stock or other securities of
another corporation), the amount of consideration therefore shall
be deemed to be the fair value, as determined reasonably and in
good faith by the Board of Directors of the Company, of such
portion of the assets and business of the non-surviving corporation
as such Board may determine to be attributable to such shares of
Common Stock, Convertible
Securities, rights or warrants or options, as the case may be;
or
(2) in the event of any
consolidation or merger of the Company in which the Company is not
the surviving corporation or in which the previously outstanding
shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another corporation,
or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any
corporation, the Company shall be deemed to have issued a number of
shares of its Common Stock for stock or securities or other
property of the other corporation computed on the basis of the
actual exchange ratio on which the transaction was predicated, and
for a consideration equal to the fair market value on the date of
such transaction of all such stock or securities or other property
of the other corporation. If any such calculation results in
adjustment of the applicable Conversion Price, or the number of
shares of Common Stock issuable upon conversion of the Series B
Preferred, the determination of the applicable Conversion Price or
the number of shares of Common Stock issuable upon conversion of
the Series B Preferred immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon
conversion of the Series B Preferred. In the event any
consideration received by the Company for any securities consists
of property other than cash, the fair market value thereof at the
time of issuance or as otherwise applicable shall be as determined
in good faith by the Board of Directors of the Company. In the
event Common Stock is issued with other shares or securities or
other assets of the Company for consideration which covers both,
the consideration computed as provided in this Section 4(d)(vi)
shall be allocated among such securities and assets as determined
in good faith by the Board of Directors of the
Company.
(vii) Record
Date. In case the Company shall take record of the holders
of its Common Stock or any other Preferred Stock for the purpose of
entitling them to subscribe for or purchase Common Stock or
Convertible Securities, then the date of the issue or sale of the
shares of Common Stock shall be deemed to be such record
date.
-7-
(e) No Impairment. The Company
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 any other
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith,
assist in the carrying out of all the provisions of this Section 4
and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the
holders of the Series B Preferred against impairment. In the event
a holder shall elect to convert any shares of Series B Preferred as
provided herein, the Company cannot 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, unless (i) an
order from the Securities and Exchange Commission prohibiting such
conversion or (ii) an injunction from a court, on notice,
restraining and/or adjoining conversion of all or of said shares of
Series B Preferred shall have been issued and the Company posts a
surety bond for the benefit of such holder in an amount equal to
100% of the Liquidation Preference Amount of the Series B Preferred
such holder has elected to convert, which bond shall remain in
effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such holder
in the event it obtains judgment. If the Company is the prevailing
party in any legal action or other legal proceeding relating to the
Conversion Rights of the holders of the Series B Preferred, then
the Company shall be entitled to recover from the holders of Series
B Preferred reasonable attorneys’ fees, costs and
disbursements (in addition to any other relief to which the Company
may be entitled).
(f) Certificates as to Adjustments.
Upon occurrence of each adjustment or readjustment of the
Conversion Price or number of shares of Common Stock issuable upon
conversion of the Series B Preferred pursuant to this Section 4,
the Company at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to
each holder of such Series B Preferred a certificate setting forth
such adjustment and readjustment, showing in detail the facts upon
which such adjustment or readjustment is based. The Company shall,
upon written request of the holder of such affected Series B
Preferred, at any time, furnish or cause to be furnished to such
holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the time, and the
number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon the
conversion of a share of such Series B Preferred. Notwithstanding
the foregoing, the Company shall not be obligated to deliver a
certificate unless such certificate would reflect an increase or
decrease of at least one percent of such adjusted
amount.
(g) Issue Taxes. The Company shall
pay any and all issue and other taxes, excluding federal, state or
local income taxes, that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of
Series B Preferred pursuant thereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting
from any transfer requested by any holder in connection with any
such conversion.
(h) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally or by e-mail or three (3) business
days following being mailed by certified or registered mail,
postage prepaid, return-receipt requested, addressed to the holder
of record at its address appearing on the books of the Company. The
Company will give written notice to each holder of Series B
Preferred at least twenty (20) days prior to the date on which the
Company closes its books or takes a record (i) with respect to any
dividend or distribution upon the Common Stock, (ii) with respect
to any pro rata subscription offer to holders of Common Stock or
(iii) for determining rights to vote with respect to any Organic
Change, dissolution, liquidation or winding-up and in no event
shall such notice be provided to such holder prior to such
information being made known to the public. The Company will also
give written notice to each holder of Series B Preferred at least
twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no
event shall such notice be provided to such holder prior to such
information being made known to the public.
-8-
(i) Fractional Shares. No
fractional shares of Common Stock shall be issued upon conversion
of the Series B Preferred. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Company shall pay
cash equal to the product of such fraction multiplied by the
average of the Closing Bid and Ask Prices of the Common Stock for
the five (5) consecutive trading immediately preceding the
Voluntary Conversion Date.
(j) Reservation of Common Stock.
The Company shall, so long as any shares of Series B Preferred are
outstanding, reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the
conversion of the Series B Preferred, such number of shares of
Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Series B Preferred then outstanding;
provided that the number of shares of Common Stock so reserved
shall at no time be less than 100% of the number of shares of
Common Stock for which the shares of Series B Preferred are at any
time convertible. The initial number of shares of Common Stock
reserved for conversions of the Series B Preferred and each
increase in the number of shares so reserved shall be allocated pro
rata among the holders of the Series B Preferred based on the
number of shares of Series B Preferred held by each holder of
record at the time of issuance of the Series B Preferred or
increase in the number of reserved shares, as the case may be. In
the event a holder shall sell or otherwise transfer any of such
holder's shares of Series B Preferred, each transferee shall be
allocated a pro rata portion of the number of reserved shares of
Common Stock reserved for such transferor. Any shares of Common
Stock reserved and which remain allocated to any person or entity
which does not hold any shares of Series B Preferred shall be
allocated to the remaining holders of Series B Preferred, pro rata
based on the number of shares of Series B Preferred then held by
such holder.
(k) Retirement of Series B
Preferred. Conversion of Series B Preferred shall be deemed
to have been completed on the applicable Voluntary Conversion. Upon
conversion of only a portion of the number of shares of Series B
Preferred represented by a certificate surrendered for conversion,
the Company shall issue and deliver to such holder at the expense
of the Company, a new certificate covering the number of shares of
Series B Preferred representing the unconverted portion of the
certificate so surrendered.
(l) Regulatory Compliance. If any
shares of Common Stock to be reserved for the purpose of conversion
of Series B Preferred require registration or listing with or
approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or
otherwise before such shares may be validly issued or delivered
upon conversion, the Company shall, at its sole cost and expense,
in good faith and as expeditiously as possible, endeavor to secure
such registration, listing or approval, as the case may
be.
-9-
5. Beneficial Ownership.
Notwithstanding anything to the contrary set forth in this
Certificate of Designations, at no time, other than in a bona fide
Change of Control (as defined below) transaction, may a holder of
shares of Series B Preferred convert shares of the Series B
Preferred if the number of shares of Common Stock to be issued
pursuant to such conversion would exceed, when aggregated with all
other shares of Common Stock owned by such holder and its
affiliates at such time, the number of shares of Common Stock which
would result in such holder and its affiliates
beneficially owning (as determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules
thereunder) in excess of 4.99% of all of the Common Stock
outstanding at such time (“Beneficial Ownership
Limitation”); provided, however, that upon a holder of Series B
Preferred providing the Company with sixty-one (61) days’
notice (a “Waiver
Notice”) that such holder would like to waive Section
5 of this Certificate of Designations with regard to any or all
shares of Common Stock issuable upon conversion of Series B
Preferred, this Section 5 shall be of no force or effect with
regard to those shares of Series B Preferred referenced in the
Waiver Notice provided. Further, in the event of a Waiver Notice
for conversions in excess of 4.99%, the Beneficial Ownership
Limitation shall not exceed 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 the Series B
held by the holder, unless the holder provides a separate Waiver
Notice for conversions in excess of 9.99%. In the event a holder is
unable to fully convert its shares of Series B Preferred in
connection with a conversion election following the delivery of a
Company's Redemption Notice pursuant to Section 6 hereof due to the
restrictions set forth in this Section 5, such holder may elect to
receive a new series of preferred stock of the Company in lieu of
shares of Common Stock convertible into the number of shares of
Common Stock that would have been delivered to such holder but for
the limitations set forth in this Section 5. The foregoing sentence
shall not preclude a holder from waiving at any time its rights to
limit its ownership to 9.99% of all of the Common Stock issued and
outstanding at such time in accordance with this Section
5.
6. Inability to Fully
Convert.
(a) Holder's Option if Company Cannot
Fully Convert. If, upon the Company's receipt of a Voluntary
Conversion Notice, the Company cannot issue shares of Common Stock
issuable pursuant to such Voluntary Conversion Notice because the
Company (x) does not have a sufficient number of shares of Common
Stock authorized and available or (y) is otherwise prohibited by
applicable law or by the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or its securities
from issuing all of the Common Stock which is to be issued to a
holder of Series B Preferred pursuant to a Voluntary Conversion
Notice, then the Company shall issue as many Conversion Shares as
it is able to issue in accordance with such holder's Voluntary
Conversion Notice and pursuant to Section 4(c)(i) above and, with
respect to the unconverted Series B Preferred, the Holder, solely
at such Holder's option, can elect, within five (5) business days
after receipt of notice from the Company thereof to:
(i) if the Company's
inability to fully convert Series B Preferred is pursuant to
Section 6(a)(y) above, require the Company to issue restricted
shares of Common Stock in accordance with such Holder's Voluntary
Conversion Notice and pursuant to Section 4(c)(i) above;
or
(ii) void
its Voluntary Conversion Notice and retain or have returned, as the
case may be, the shares of Series B Preferred that were to be
converted pursuant to such holder's Voluntary Conversion Notice
(provided that a holder's voiding its Voluntary Conversion Notice
shall not impact the Company's obligations to make any payments
which have accrued prior to the date of such notice).
-10-
(b) Mechanics of Fulfilling Holder's
Election. The Company shall promptly send via e-mail or
otherwise to a holder of Series B Preferred, upon receipt of an
e-mail or otherwise copy of a Voluntary Conversion Notice from such
holder which cannot be fully satisfied as described in Section 6(a)
above, a notice of the Company's inability to fully satisfy such
holder's Conversion Notice (the “Inability to Fully Convert
Notice”). Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Company is unable to fully satisfy
such holder's Conversion Notice, and (ii) the number of Series B
Preferred which cannot be converted. Such holder shall notify the
Company of its election above by delivering written notice via
e-mail to the Company (“Notice in Response to Inability to
Convert”). If there is an Inability to Fully Convert
Notice, Section 4(b)(iv) shall apply and the Company shall make
such payments to the Holder until such time as the Inability to
Fully Convert Notice is withdrawn, and the shares of Common Stock
are issued to the Holder.
7. Pro-Rata Conversion and
Redemption. In the event the Company receives a Voluntary
Conversion Notice from more than one holder of Series B Preferred
on the same day and the Company can convert and redeem some, but
not all, of the Series B Preferred pursuant to this Section 7, the
Company shall convert and redeem from each holder of Series B
Preferred electing to have Series B Preferred converted and
redeemed at such time an amount equal to such holder's pro-rata
amount (based on the number shares of Series B Preferred held by
such holder relative to the number shares of Series B Preferred
outstanding) of all shares of Series B Preferred being converted
and redeemed at such time.
8. Redemption.
(a) Redemption Option Upon Change of
Control. In addition to any other rights of the Company or
the holders of Series B Preferred contained herein, simultaneous
with the occurrence of a Change of Control (as defined below), the
Company, at its option, shall have the right to redeem all or a
portion of the outstanding Series B Preferred in cash at a price
per share of Series B Preferred equal to 100% of the Liquidation
Preference amount thereof (the “Change of Control Redemption
Price”). Notwithstanding the foregoing to the
contrary, the Company may effect a redemption pursuant to this
Section 8(a) only if the Company is in material compliance with the
terms and conditions of this Certificate of
Designations.
(b) “Change of
Control”. A “Change of Control” shall be
deemed to have occurred at such time as a third party not
affiliated with the Company or any holders of the Series B
Preferred shall have acquired, in one or a series of related
transactions, equity securities of the Company representing more
than fifty percent 50% of the outstanding voting securities of the
Company.
(c) Mechanics of Redemption Option Upon
Change of Control. At any time within ten (10) days prior to
a Change of Control transaction, the Company may redeem, effective
immediately prior to the consummation of such Change of Control,
all of the holder's Series B Preferred then outstanding by
delivering written notice thereof via e-mail and overnight courier
(“Notice of Redemption at
Option of Company Upon Change of Control”) to each
holder of Series B Preferred, which Notice of Redemption at Option
of Company Upon Change of Control shall indicate (i) the number of
shares of Series B Preferred that the Company is electing to
redeem
-11-
and
(ii) the Change of Control Redemption Price, as calculated pursuant
to Section 8(a) above. The Change of Control
Redemption Price shall be paid in cash in accordance with Section
8(a) of this Certificate of Designations. On or prior to the Change
of Control, the holders of Series B Preferred shall surrender to
the Company the certificate or certificates representing such
shares, in the manner and at the place designated in the Notice of
Redemption at Option of Company Upon Change of Control. The Company
shall deliver the Change of Control Redemption Price immediately
prior to or simultaneously with the consummation of the Change of
Control; provided that a holder's Preferred Stock Certificates
shall have been so delivered to the Company (or an indemnification
undertaking with respect to such Preferred Stock Certificates in
the event of their loss, theft or destruction). From and after the
Change of Control transaction, unless there shall have been a
default in payment of the Change of Control Redemption Price, all
rights of the holders of Series B Preferred as a holder of such
Series B Preferred (except the right to receive the Change of
Control Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to any
redeemed shares of Series B Preferred, and such shares shall not
thereafter be transferred on the books of the Company or be deemed
to be outstanding for any purpose whatsoever. Notwithstanding the
foregoing to the contrary, nothing contained herein shall limit a
holder’s ability to convert its shares of Series B Preferred
following the receipt of the Notice of Redemption at Option of
Company Upon Change of Control and prior to the consummation of the
Change of Control transaction.
(d) Company's Redemption Option.
Any time after the six-month period following the Issuance Date,
the Company may redeem all or a portion of the Series B Preferred
outstanding upon thirty (30) calendar days prior written notice
(the “Company's Redemption
Notice”) in cash at a price per share of Series B
Preferred equal to 100% of the Liquidation Preference amount
thereof (the “Company’s Redemption
Price”); provided, that if a holder has delivered a
Voluntary Conversion Notice to the Company for all or a portion of
the shares of Series B Preferred, such shares of Series B Preferred
designated to be redeemed may be converted by such
holder.
(e) Mechanics of Company’s
Redemption Option. The Company's Redemption Notice shall
state the date of redemption which date shall be thirty (30)
calendar days after the Company has delivered the Company's
Redemption Notice (the “Company's Redemption Date”), the
Company's Redemption Price and the number of shares to be redeemed
by the Company. The Company shall deliver the Company's Redemption
Price to the holder(s) within five (5) business days after the
Company has delivered the Company's Redemption Notice, provided,
that if the holder(s) delivers a Conversion Notice before the
Company's Redemption Date, then the portion of the Company's
Redemption Price which would be paid to redeem the shares of Series
B Preferred covered by such Conversion Notice shall be returned to
the Company upon delivery of the Common Stock issuable in
connection with such Conversion Notice to the holder(s). On the
Redemption Date, the Company shall pay the Company's Redemption
Price, subject to any adjustment pursuant to the immediately
preceding sentence, to the holder(s) on a pro rata basis, provided,
however, that upon receipt by the Company of the Preferred Stock
Certificates to be redeemed pursuant to this Section 8(e), the
Company shall, on the next business day following the date of
receipt by the Company of such Preferred Stock Certificates, pay
the Company's Redemption Price, subject to any adjustment pursuant
to the immediately preceding sentence, to the holder(s) on a pro
rata basis. Notwithstanding the foregoing to the contrary, the
Company may effect a redemption pursuant to this Section 8(e) only
if (A) trading in the Common Stock shall not have been suspended by
the Securities and Exchange Commission or the OTC Bulletin
Board (or other exchange
or market on which the Common Stock is trading), (B) the Company is
in material compliance with the terms and conditions of this
Certificate of Designations, and (C) the Company is not in
possession of any material non-public information. Nothing
contained herein shall limit a holder’s ability to convert
its shares of Series B Preferred following the receipt of the
Company’s Redemption Notice and prior to the Company's
Redemption Date.
-12-
9. No Preemptive Rights. No holder
of the Series B Preferred shall be entitled to rights to subscribe
for, purchase or receive any part of any new or additional shares
of any class, whether now or hereinafter authorized, or of bonds or
debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or
additional shares of any class, or any bond, debentures or other
evidences of indebtedness convertible into or exchangeable for
shares, may be issued and disposed of by the Board of Directors on
such terms and for such consideration (to the extent permitted by
law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.
10. Amendments. The affirmative
vote at a meeting duly called for such purpose, or the written
consent without a meeting, of the holders of a majority of the then
outstanding shares of Series B Preferred shall be required for any
change, amendment or otherwise to this Certificate of Designations
or the Company's Certificate of Incorporation which would amend,
alter, change or repeal, or otherwise adversely affect, any of the
powers, designations, preferences and rights of the Series B
Preferred.
11. Lost or Stolen Certificates.
Upon receipt by the Company of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of any Preferred
Stock Certificates representing the shares of Series B Preferred,
and, in the case of loss, theft or destruction, of an
indemnification undertaking by the holder to the Company (in form
and substance satisfactory to the Company) and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new Preferred
Stock Certificate(s) of like tenor and date; provided, however, the
Company shall not be obligated to re-issue Preferred Stock
Certificates if the holder contemporaneously requests the Company
to convert such shares of Series B Preferred into Common
Stock.
12. Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies
provided in this Certificate of Designations shall be cumulative
and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a
decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall
limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of this Certificate of
Designations. Amounts set forth or provided for herein with respect
to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the holder thereof and shall
not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holders of the Series B Preferred and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach, the
holders of the Series B Preferred shall be entitled, in addition to
all other available remedies, to an injunction restraining any
breach or the Series B Preferred holders' reasonable perception of
a threatened breach by the Company of the provisions of
this Certificate of Designations, without the necessity of showing
economic loss and without any bond or other security being
required.
-13-
13. Specific Shall Not Limit General;
Construction. No specific provision contained in this
Certificate of Designations shall limit or modify any more general
provision contained herein. This Certificate of Designation shall
be deemed to be jointly drafted by the Company and all initial
purchasers of the Series B Preferred and shall not be construed
against any person as the drafter hereof.
14. Failure or Indulgence Not
Waiver. No failure or delay on the part of a holder of
Series B Preferred in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or
privilege.
IN
WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this
9th day of October,
2018.
By:
/s/ Mike
Korenko
Chief Executive
Officer
-14-
VIVOS
INC.
CONVERSION
NOTICE
Reference is made
to the Certificate of Designations, Preferences and Rights of the
Series B Convertible Preferred Stock (“Series B Preferred”) of Vivos,
Inc. (the “Certificate of
Designations”). In accordance with and pursuant to the
Certificate of Designations, the undersigned hereby elects to
convert the number of shares of Series B Preferred, par value
$0.001 per share (the “Preferred Shares”), of Vivos,
Inc., a Delaware corporation (the “Company”), indicated below into
shares of Common Stock, par value
$0.001
per share (the “Common
Stock”), of the Company, by tendering the stock
certificate(s) representing the share(s) of Preferred Shares
specified below as of the date specified below.
Date of
Conversion:
Number of Preferred
Shares to be converted:
Stock certificate
no(s). of Preferred Shares to be converted:
Please
confirm the following information: Conversion Price:
Number of shares of
Common Stock to be issued:
Number
of shares of Common Stock beneficially owned or deemed
beneficially owned
by the Holder on the Date of Conversion:
Please
issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the
Company in the following name and to the following
address:
Issue
to:
E-mail
Address:
Name of bank/broker
due to receive the underlying Common Stock:
Bank/broker's four
digit “DTC” participant number
(obtained from the
receiving bank/broker):
Authorization:
By:
Title:
Dated:
-15-