Attached files
Exhibit 4.19
DESCRIPTION OF CAPITAL STOCK
The following is a summary of information concerning capital stock
of AzurRx BioPharma, Inc. (“us,” “our,”
“we” or the “Company”) and certain
provisions of our certificate of incorporation, as amended and
restated, and amended and restated bylaws currently in effect. This
summary does not purport to be complete and is qualified in its
entirety by the provisions of our amended and restated certificate
of incorporation, as amended (the “Charter”) and
amended and restated bylaws (the “Bylaws”), each
previously filed with the Securities and Exchange Commission
(“SEC”) and incorporated by reference as an exhibit to
the Annual Report on Form 10-K, as well as to the applicable
provisions of the Delaware General Corporation Law (the
“DGCL”). We encourage you to read our Certificate of
Incorporation, Bylaws and the applicable portions of the DGCL
carefully.
General
Our authorized capital stock consists of:
●
250,000,000
shares of common stock, par value $0.0001 per share;
and
●
10,000,000
shares of preferred stock, par value $0.0001 per
share.
Common Stock
Holders
of our common stock are entitled to one vote for each share held of
record on all matters on which the holders are entitled to vote (or
consent pursuant to written consent). Directors are elected by a
plurality of the votes present in person or represented by proxy
and entitled to vote. Our Charter and Bylaws
do not provide for cumulative voting rights.
Holders
of our common stock are entitled to receive, ratably, dividends
only if, when and as declared by our board of directors out of
funds legally available therefor and after provision is made for
each class of capital stock having preference over the common
stock.
In the
event of our liquidation, dissolution or winding-up, the holders of
common stock are entitled to share, ratably, in all assets
remaining available for distribution after payment of all
liabilities and after provision is made for each class of capital
stock having preference over the common stock.
Holders of our common stock have no preemptive, conversion or
subscription rights, and there are no redemption or sinking fund
provisions applicable to the common stock. The rights, preferences
and privileges of the holders of common stock are subject to, and
may be adversely affected by, the rights of the holders of shares
of any series of our preferred stock that we may designate and
issue in the future.
Preferred Stock
We currently have up to 10,000,000 shares of preferred stock, par
value $0.0001 per share, authorized and available for issuance in
one or more series. Our board of directors is authorized to divide
the preferred stock into any number of series, fix the designation
and number of each such series, and determine or change the
designation, relative rights, preferences, and limitations of any
series of preferred stock. The board of directors may increase or
decrease the number of shares initially fixed for any series, but
no decrease may reduce the number below the shares then outstanding
and duly reserved for issuance. Currently, 5,194.805195 shares have
been initially designated as Series B Convertible Preferred Stock,
par value $0.0001 per share (the “Series B Preferred
Stock”), and 75,000 have been
initially designated as Series C 9.00% Convertible Junior Preferred
Stock, par value $0.0001 per share (the “Series C Preferred
Stock”), of which none are issued and outstanding. This
leaves 9,994,805.1948 shares of preferred stock
authorized but unissued.
Series B Preferred Stock
Under the Series B Certificate of Designations, each share of
Series B Preferred Stock will be convertible, at the holder’s
option at any time, into our common stock at a conversion rate
equal to the quotient of (i) the $7,700 stated value (the
“Series B Stated Value”) divided by (ii) the initial
conversion price of $0.77, subject to specified adjustments for
stock splits, cash or stock dividends, reorganizations,
reclassifications other similar events as set forth in the Series B
Certificate of Designations. In addition, if at any time after
January 16, 2021, the six month anniversary of the date of the
closing of our private placement transaction on July 16, 2020, the
closing sale price per share of our common stock exceeds 250% of
the initial conversion price, or $1.925, for 20 consecutive trading
days, then all of the outstanding shares of Series B Preferred
Stock will automatically convert (the “Automatic
Conversion”) into such number of shares of our common stock
as is obtained by multiplying the number of shares of Series B
Preferred Stock to be so converted, plus the amount of any accrued
and unpaid dividends thereon, by the Series B Stated Value per
share and dividing the result by the then applicable conversion
price.
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The Series B Preferred Stock contains limitations that prevent the
holder thereof from acquiring shares of our common stock upon
conversion (including pursuant to the Automatic Conversion) that
would result in the number of shares beneficially owned by such
holder and its affiliates exceeding 9.99% of the total number of
shares of our common stock outstanding immediately after giving
effect to the conversion, which percentage may be increased or
decreased at the holder’s election not to
exceed 19.99%.
Each holder of shares of Series B Preferred Stock, in preference
and priority to the holders of all other classes or series of our
stock, is entitled to receive dividends, commencing from the date
of issuance. Such dividends may be paid by us only when, as and if
declared by our board of directors, out of assets legally available
therefore, semiannually in arrears on the last day of June and
December in each year, commencing December 31, 2020, at the
dividend rate of 9.0% per year, which is cumulative and continues
to accrue on a daily basis whether or not declared and whether or
not we have assets legally available therefore. We may pay such
dividends at our sole option either in cash or in kind in
additional shares of Series B Preferred Stock (rounded down to the
nearest whole share), provided we must pay in cash the fair value
of any such fractional shares in excess of $100.00. Under the
Series B Certificate of Designations, to the extent that applicable
law or any of our existing contractual restrictions prohibit any
required issuance of additional shares of Series B Preferred Stock
as in-kind dividends or otherwise (“Additional
Shares”), then appropriate adjustment to the conversion price
of the Series B Preferred Stock shall be made so that the resulting
number of conversion shares includes the aggregate number of shares
of our common stock into which such Additional Shares would
otherwise be convertible.
Under the Series B Certificate of Designations, each share of
Series B Preferred Stock carries a liquidation preference equal to
the Series B Stated Value (as adjusted thereunder) plus accrued and
unpaid dividends thereon (the “Series B Liquidation
Preference”).
In the event we effect any issuance of common stock or common stock
equivalents for cash consideration, or a combination of units
thereof (a “Subsequent Financing”), each holder of the
Series B Preferred Stock has the right, subject to certain
exceptions set forth in the Series B Certificate of Designations,
at its option, to exchange (in lieu of cash subscription payments)
all or some of the Series B Preferred Stock then held (with a value
per share of Series B Preferred Stock equal to the Series B
Liquidation Preference) for any securities or units issued in a
Subsequent Financing on dollar-for-dollar basis. As a result, we
may currently be required to issue additional shares of Series C
Preferred Stock to any holders of Series B Preferred Stock who
elect to exercise this right. Any shares of Series C Preferred
Stock to be issued pursuant to this right would, upon issuance, be
immediately converted into underlying shares of our common
stock.
The holders of the Series B Preferred Stock, voting as a separate
class, will have customary consent rights with respect to certain
corporate actions by us. We may not take the following actions
without the prior consent of the holders of at least a majority of
the Series B Preferred Stock then outstanding: (a) authorize,
create, designate, establish, issue or sell an increased number of
shares of Series B Preferred Stock or any other class or series of
capital stock ranking senior to or on parity with the Series B
Preferred Stock as to dividends or upon liquidation; (b) reclassify
any shares of common stock or any other class or series of capital
stock into shares having any preference or priority as to dividends
or upon liquidation superior to or on parity with any such
preference or priority of Series B Preferred Stock; (c) amend,
alter or repeal our Charter or Bylaws and the powers, preferences,
privileges, relative, participating, optional and other special
rights and qualifications, limitations and restrictions thereof,
which would adversely affect any right, preference, privilege or
voting power of the Series B Preferred Stock; (d) issue any
indebtedness or debt security, other than trade accounts payable,
insurance premium financings and/or letters of credit, performance
bonds or other similar credit support incurred in the ordinary
course of business, or amend, renew, increase, or otherwise alter
in any material respect the terms of any such indebtedness existing
as of the date of first issuance of shares of Series B Preferred
Stock; (e) redeem, purchase, or otherwise acquire or pay or declare
any dividend or other distribution on (or pay into or set aside for
a sinking fund for any such purpose) any of our capital stock; (f)
declare bankruptcy, dissolve, liquidate, or wind up our affairs;
(g) effect, or enter into any agreement to effect, a Change of
Control (as defined in the Series B Certificate of Designations);
or (h) materially modify or change the nature of our
business.
Series C Preferred Stock
Under the Series C Certificate of Designations, each share of
Series C Preferred Stock will be convertible, at either the
holder’s option or at our option at any time, into common
stock at a conversion rate equal to the quotient of (i) the Series
C Stated Value of $750 plus all accrued and accumulated and unpaid
dividends on such share of Series C Preferred Stock divided by (ii)
the initial conversion price of $0.75, subject to specified
adjustments for stock splits, cash or stock dividends,
reorganizations, reclassifications other similar events as set
forth in the Series C Certificate of
Designations.
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The Series C Preferred Stock contains limitations that prevent the
holders thereof from acquiring shares of our common stock upon
conversion that would result in the number of shares beneficially
owned by any such holder and its affiliates exceeding 9.99% of the
total number of shares of our common stock outstanding immediately
after giving effect to the conversion. As a result, the Series C
Certificate of Designations provides for the issuance of pre-funded
warrants to purchase shares of our common stock, with an exercise
price of $0.001 per share and with no expiration date, if necessary
to comply with this limitation.
Each holder of shares of Series C Preferred Stock, subject to the
preference and priority to the holders of our Series B Preferred
Stock, is entitled to receive dividends, commencing from the date
of issuance of the Series C Preferred Stock. Such dividends may be
paid only when, as and if declared by our board of directors, out
of assets legally available therefore, quarterly in arrears on the
last day of March, June, September and December in each year,
commencing on the date of issuance, at the dividend rate of 9.0%
per year. Such dividends are cumulative and continue to accrue on a
daily basis whether or not declared and whether or not we have
assets legally available therefore.
Under the Series C Certificate of Designations, each share of
Series C Preferred Stock carries a liquidation preference equal to
the Series C Stated Value plus accrued and unpaid dividends thereon
and any other fees or liquidated damages then due and owing
thereon.
The holders of the Series C Preferred Stock have no voting rights.
We may not take the following actions without the prior consent of
the holders of at least a majority of the Series C Preferred Stock
then outstanding: (a) alter or change adversely the powers,
preferences or rights given to the Series C Preferred Stock or
alter or amend the Series C Certificate of Designations, (b)
authorize or create any class of stock ranking as to dividends,
redemption or distribution of assets upon a Liquidation (as defined
in the Series C Certificate of Designations) senior to, or
otherwise pari passu with,
the Series C Preferred Stock, (c) amend our certificate of
incorporation or other charter documents in any manner that
adversely affects any rights of the holders of the Series C
Preferred Stock, (d) increase the number of authorized shares of
Series C Preferred Stock, or (e) enter into any agreement with
respect to any of the foregoing.
Listing
Our
Common Stock is listed on the Nasdaq Capital Market under the
symbol “AZRX”
Transfer Agent and Registrar
The
transfer agent and registrar for our Common Stock is Colonial Stock
Transfer, 66 Exchange Place, 1st Floor, Salt Lake City, Utah 84111,
Tel: (801) 355-5740.
Anti-takeover Effects of Delaware Law and our Certificate of
Incorporation and Bylaws
Certain
provisions of Delaware law, our Charter and Bylaws discussed below
may have the effect of making more difficult or discouraging a
tender offer, proxy contest or other takeover attempt. These
provisions are expected to encourage persons seeking to acquire
control of our company to first negotiate with our board of
directors. We believe that the benefits of increasing our ability
to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure our company outweigh the
disadvantages of discouraging these proposals because negotiation
of these proposals could result in an improvement of their
terms.
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Delaware Anti-Takeover Law
We are
subject to Section 203 of the DGCL. Section 203 generally prohibits
a public Delaware corporation from engaging in a “business
combination” with an “interested stockholder” for
a period of three years after the date of the transaction in which
the person became an interested stockholder, unless:
●
prior to the date
of the transaction, the Board of Directors of the corporation
approved either the business combination or the transaction which
resulted in the stockholder becoming an interested
stockholder;
●
upon consummation
of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding specified shares;
or
●
at or subsequent to
the date of the transaction, the business combination is approved
by the Board of Directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested
stockholder.
Section
203 defines a “business combination” to
include:
●
any merger or
consolidation involving the corporation and the interested
stockholder;
●
any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 10% or
more of the assets of the corporation to or with the interested
stockholder;
●
subject to
exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder;
●
subject to
exceptions, any transaction involving the corporation that has the
effect of increasing the proportionate share of the stock of any
class or series of the corporation beneficially owned by the
interested stockholder; or
●
the receipt by the
interested stockholder of the benefit of any loans, advances,
guarantees, pledges or other financial benefits provided by or
through the corporation.
In
general, Section 203 defines an “interested
stockholder” as any person that is:
●
the owner of 15% or
more of the outstanding voting stock of the
corporation;
●
an affiliate or
associate of the corporation who was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within
three years immediately prior to the relevant date; or
●
the affiliates and
associates of the above.
Under
specific circumstances, Section 203 makes it more difficult for an
“interested stockholder” to effect various business
combinations with a corporation for a three-year period, although
the stockholders may, by adopting an amendment to the
corporation’s certificate of incorporation or bylaws, elect
not to be governed by this section, effective 12 months after
adoption.
Our
Charter and Bylaws do not exclude us from the restrictions of
Section 203. We anticipate that the provisions of Section 203 might
encourage companies interested in acquiring us to negotiate in
advance with our Board of Directors since the stockholder approval
requirement would be avoided if a majority of the directors then in
office approve either the business combination or the transaction
that resulted in the stockholder becoming an interested
stockholder.
Charter and Bylaws
Provisions
of our Charter and Bylaws may delay or discourage transactions
involving an actual or potential change of control or change in our
management, including transactions in which stockholders might
otherwise receive a premium for their shares, or transactions that
our stockholders might otherwise deem to be in their best
interests. Therefore, these provisions could adversely affect the
price of our common stock.
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