Attached files
| file | filename |
|---|---|
| 8-K - HealthWarehouse.com, Inc. | v202094_8k.htm |
| EX-4.1 - HealthWarehouse.com, Inc. | v202094_ex4-1.htm |
| EX-4.3 - HealthWarehouse.com, Inc. | v202094_ex4-3.htm |
| EX-3.2 - HealthWarehouse.com, Inc. | v202094_ex3-2.htm |
| EX-4.2 - HealthWarehouse.com, Inc. | v202094_ex4-2.htm |
| EX-99.1 - HealthWarehouse.com, Inc. | v202094_ex99-1.htm |
| EX-10.1 - HealthWarehouse.com, Inc. | v202094_ex10-1.htm |
| EX-10.3 - HealthWarehouse.com, Inc. | v202094_ex10-3.htm |
| EX-10.2 - HealthWarehouse.com, Inc. | v202094_ex10-2.htm |
EXHIBIT
3.1
HEALTHWAREHOUSE.COM,
INC.
CERTIFICATE
OF DESIGNATION OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
B PREFERRED STOCK
PURSUANT
TO SECTION 151 OF THE
DELAWARE
GENERAL CORPORATION LAW
The undersigned, Lalit Dhadphale and
Patrick E. Delaney do hereby certify that:
1. They
are the President and Chief Executive Officer, and Chief Financial Officer,
Treasurer and Secretary, respectively, of HealthWarehouse.com, Inc., a Delaware
corporation (the “Company”).
2. The
Company is authorized to issue 1,000,000 shares of preferred stock, $0.001 par
value per share, of which 200,000 shares were previously designated as
“Series A Preferred Stock,” of which no shares are issued and
outstanding.
3. All
of the presently undesignated shares of preferred stock of the Company may be
issued with such rights and powers as the board of directors of the Company (the
“Board”)
may designate.
4. The
following resolutions were duly adopted by the Board:
WHEREAS, the certificate of
incorporation of the Company, as amended, provides for a class of its authorized
stock known as preferred stock, consisting of 1,000,000 shares, $0.001 par value
per share (“Preferred
Stock”), issuable from time to time in one or more series;
WHEREAS, the Board of Directors is
authorized to fix and determine or alter the powers, designations, preferences
and relative, participating, optional and other rights and qualifications,
limitations and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock and to fix the number of shares constituting any such
series and the designations thereof; and
WHEREAS, it is the desire of the Board
of Directors, pursuant to its authority as aforesaid, to fix the rights,
preferences, restrictions and other matters relating to a series of the
Preferred Stock, which shall consist of up to 625,000 shares of the
Preferred Stock which the Company has the authority to issue, as
follows:
NOW, THEREFORE, BE IT RESOLVED, that
the Board of Directors does hereby provide for the issuance of a series of
Preferred Stock for cash or exchange of other securities, rights or property and
does hereby fix and determine the rights, preferences, restrictions and other
matters relating to such series of Preferred Stock as follows:
TERMS
OF SERIES B PREFERRED STOCK
1. Definitions
In
addition to capitalized terms defined elsewhere herein, the following terms
shall have the following meanings:
“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.
“Common
Stock” means the Company’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 Company 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.
“Equity
Valuation” means the product obtained by multiplying (y) the number of
shares of Company Common Stock outstanding on a fully-diluted basis (taking into
account any then outstanding Common Stock Equivalents) and (z) the closing price
of the Company’s Common Stock on its principal Trading Market as reported
by Bloomberg, L.P. or such other reporting source designated by the Board of
Directors.
“Junior
Securities” means the Common Stock, the Series A Preferred Stock and all
other Common Stock Equivalents of the Company other than those securities which
are explicitly senior or pari passu to the
Series B Preferred Stock in dividend rights or redemption or liquidation
preference.
“Major
Exchange” shall mean the NYSE Amex Equities, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or
the New York Stock Exchange (or any successors to any of the
foregoing)
“Preferred
Stock” shall mean the Series A Preferred Stock, $0.001 par value per
share, of the Company and the Series B Preferred Stock.
“Stated
Price” shall mean $1.89.
“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: a Major
Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).
2
2. Designation
The
series of preferred stock established hereunder shall be designated as
Series B Preferred Stock (the “Series B
Preferred Stock”)
and the number of shares so designated shall be up to 625,000 (which shall not
be subject to increase without the written consent of the holders of the Series
B Preferred Stock in accordance with Section 4(b) hereof). Each share
of Series B Preferred Stock shall have a par value of $0.001 per share, and an
original issue price equal to $9.45 per share (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares after the filing date hereof, the “Original Issue
Price”).
3. Dividend
Right
(a) The
holders of Series B Preferred Stock, in preference to the holders of other
Preferred Stock or Common Stock, shall be entitled to receive dividends at the
rate of seven percent (7%) of the Original Issue
Price per annum on each outstanding share of Series B Preferred
Stock. Such dividends shall accrue from day to day, whether or not
declared by the Board and shall be cumulative, measured in each case of each
share on which such dividends are payable from the date each such share was
issued by the Company (the “Accruing
Dividend”). The Company will declare and pay the Accruing
Dividend annually (the “Annual
Dividend”) and (i) upon a Liquidation Event or (ii) upon conversion (as
provided in Section 7) of Series B Preferred Stock into Common
Stock. The Accruing Dividend will be payable in cash or in shares of
Series B Preferred Stock (a “PIK
Dividend”) as set forth below, as determined by the Board.
(i) The
first Annual Dividend will be paid on January 1, 2011, and all subsequent
payments shall be made on January 1 of each succeeding year or, if earlier, (i)
upon a Liquidation Event or (ii) upon conversion (as provided in Section 7) of
Series B Preferred Stock into Common Stock. If any dividend payment
date is not a Trading Day, the applicable payment shall be due on the next
succeeding Trading Day.
(ii) With
respect to the payment of any PIK Dividend, the number of shares of Series B
Preferred Stock to be issued in payment of such PIK Dividend with respect to
each outstanding share of Series B Preferred Stock shall be determined by dividing (x) the
amount of the PIK Dividend (were it paid in cash) by (y) the Original
Issue Price. To the extent that any PIK Dividend would result in the
issuance of a fractional share of Series B Preferred Stock to any holder of
Series B Preferred Stock, then the amount of such fraction multiplied by the
Original Issue Price shall be paid in cash (unless there are no legally
available funds with which to make such cash payment, in which event such cash
payment shall be made as soon as legally possible thereafter).
(b) Dividends
on the Series B Preferred Stock shall be calculated on the basis of a 360-day
year, consisting of twelve 30 calendar day periods, and shall accrue daily
commencing on the Original Issue Date, or, in the case of Series B Preferred
Stock originally issued as a PIK Dividend, on the date such PIK Dividend was
paid, and shall be deemed to accrue from such date whether or not earned or
declared and whether or not there are profits, surplus or other funds of the
Company legally available for the payment of dividends,
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(c) So
long as any shares of Series B Preferred Stock are outstanding, the Company
shall not pay or declare any dividend, whether in cash or property, or make any
other distribution on any Junior Security, or purchase, redeem or otherwise
acquire for value any shares of any Junior Security until all dividends as set
forth in Section 3(a) above on the Series B Preferred Stock shall have been paid
or declared and set apart for payment, except for:
(i) acquisitions
of Common Stock by the Company pursuant to agreements which permit the Company
to repurchase such shares at cost (or the lesser of cost or fair market value)
upon termination of services to the Company;
(ii) acquisitions
of Common Stock in exercise of the Company’s right of first refusal to
repurchase such shares; or
(iii) distributions
to holders of Common Stock in accordance with Sections 5 and 6.
(d) In
the event dividends are paid on any share of Common Stock, the Company shall pay
an additional dividend on all outstanding shares of Series B Preferred Stock in
a per share amount equal (on an as-if-converted to Common Stock basis) to the
amount paid or set aside for each share of Common Stock.
(e) The
provisions of Sections 3(c) and 3(d) shall not apply to a dividend payable
solely in Common Stock to which the provisions of Section 7(f) hereof are
applicable, or any repurchase of any outstanding securities of the Company that
is approved by the Board, including the Series B Director.
4. Voting
Rights.
(a) General
Rights. Each holder of shares of the Series B Preferred Stock
shall be entitled to the number of votes equal to the number of shares of Common
Stock into which such shares of Series B Preferred Stock could be converted
(pursuant to Section 7 hereof) immediately after the close of business on the
record date fixed for such meeting or the effective date of such written consent
and shall have voting rights and powers equal to the voting rights and powers of
the Common Stock and shall be entitled to notice of any stockholders’ meeting in
accordance with the bylaws of the Company. Except as otherwise
provided herein or as required by law, the Series B Preferred Stock shall vote
together with the Common Stock at any annual or special meeting of the
stockholders and not as a separate class, and may act by written consent in the
same manner as the Common Stock.
(b) Separate Vote of Series B Preferred
Stock. For so long as any shares of Series B
Preferred Stock remain outstanding, in addition to any other vote or consent
required herein or by law, the vote or written consent of the holders of at
least a majority of the outstanding Series B Preferred Stock, voting as a
separate class, shall be necessary for effecting or validating the following
actions (whether by amendment, merger, consolidation, recapitalization or
otherwise):
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(i) Any
amendment, alteration, or repeal of any provision of the Certificate of
Incorporation or the Bylaws of the Company, that
alters or changes the voting or other powers, preferences, or other special
rights, privileges or restrictions of the Series B Preferred Stock or any other
class of the Company’s preferred equity securities; or
(ii) Any
authorization, increase or decrease in the authorized number, or
issuance of (x) any new class or series of stock of the Company ranking senior
to the Series B Preferred Stock in right of redemption, liquidation preference,
voting, conversion or dividend rights or any increase in the authorized number
of any such new class or series, (y) any Series A Preferred Stock, or (z) any
Series B Preferred Stock.
(c) Size and Election of Board of
Directors. For so long as any shares of Series B Preferred
Stock remain outstanding, the Board shall consist of five (5) members, and
holders of Series B Preferred Stock, voting as a separate class, shall be
entitled to elect, as a separate class, one (1) member of the Board (the “Series B
Director”) at each meeting or pursuant to each consent of the Company’s
stockholders for the election of directors, and to remove from office such
director and to fill any vacancy caused by the resignation, death or removal of
such director.
5. Liquidation
Rights.
(a) Upon
any liquidation, dissolution, or winding up of the Company, whether voluntary or
involuntary (a “Liquidation
Event”), before any distribution or payment shall be made to the holders
of any Junior Security, the holders of Series B Preferred Stock shall be
entitled to be paid out of the assets of the Company legally available for
distribution for each share of Series B Preferred Stock held by them, an amount
per share of such series of Series B Preferred Stock equal to the Original Issue
Price plus any Accruing Dividends accrued but unpaid thereon, whether or not
declared together with any other dividends declared but unpaid
thereon. If, upon any such Liquidation Event, the assets of the
Company shall be insufficient to make payment in full to all holders of Series B
Preferred Stock of the liquidation preference set forth in this Section 5(a),
then such assets (or consideration) shall be distributed among the holders of
Series B Preferred Stock at the time outstanding, ratably in proportion to the
full amounts to which they would otherwise be respectively
entitled.
(b) After
the payment of the full liquidation preference of the Series B Preferred Stock
as set forth in Section 5(a) above, the assets of the Company legally available
for distribution in such Liquidation Event (or the consideration received by the
Company or its stockholders in such Acquisition or Asset Transfer), if any,
shall be distributed ratably to the holders of any Junior Securities and Series
B Preferred Stock on an as-if-converted to Common Stock basis.
6. Asset
Transfer
or
Acquisition
Rights.
(a) In
the event that the Company is a party to an Acquisition or Asset Transfer (as
hereinafter defined), then each holder of Series B Preferred Stock shall be
entitled to receive, for each share of Series B Preferred Stock then held, out
of the proceeds of such Acquisition or Asset Transfer, the amount of cash,
securities or other property to which such holder would be entitled to receive
in a Liquidation Event pursuant to Section 5(a) and 5(b) above.
5
(b) For
the purposes of this Section 6, and except as otherwise determined by the
written consent of a majority of the outstanding shares of Series B Preferred
Stock voting separately as a class: (i) “Acquisition”
shall mean (A) any consolidation or merger of the Company with or into any other
corporation or other entity or person, or any other corporate reorganization,
other than any such consolidation, merger or reorganization in which the
stockholders of the Company immediately prior to such consolidation, merger or
reorganization, continue to hold at least a majority of the voting power of the
surviving entity in substantially the same proportions (or, if the surviving
entity is a wholly owned subsidiary, its parent) immediately after such
consolidation, merger or reorganization; or (B) any transaction or series of
related transactions to which the Company is a party in which in excess of fifty
percent (50%) of the Company’s voting power is transferred; provided that an
Acquisition shall not include any transaction or series of transactions
principally for bona fide equity financing purposes in which cash is received by
the Company or any successor or indebtedness of the Company is cancelled or
converted or a combination thereof; and (ii) “Asset
Transfer” shall mean a sale, lease, exclusive license or other
disposition of all or substantially all of the assets of the
Company.
(c) In
any Acquisition or Asset Transfer, if the consideration to be received is
securities of a corporation or other property other than cash, its value will be
deemed its fair market value as determined in good faith by the Board, including
the Series B Director, on the date such determination is made.
7. Conversion
Rights.
The
holders of the Series B Preferred Stock shall have the following rights with
respect to the conversion of the Series B Preferred Stock into shares of Common
Stock (the “Conversion
Rights”):
(a) Optional
Conversion. Subject to and in compliance with the provisions
of this Section 7, any shares of Series B Preferred Stock may, at the option of
the holder, be converted at any time into fully-paid and nonassessable shares of
Common Stock. The number of shares of Common Stock to which a holder
of Series B Preferred Stock shall be entitled upon conversion shall be the
product obtained by multiplying the applicable “Series Preferred
Conversion Rate” then in effect (determined as provided in Section 7(b))
by the number of shares of the Series B Preferred Stock being
converted.
(b) Series B Preferred Stock Conversion
Rate. The conversion rate in effect at any time for conversion
of shares of Series B Preferred Stock (the “Series Preferred
Conversion Rate”) shall be the quotient obtained by dividing the Original
Issue Price by the “Series Preferred
Conversion Price”, calculated as provided in Section 7(c).
(c) Series B Preferred Stock Conversion
Price. The conversion price for the Series B Preferred Stock
shall initially be the Stated Price (the “Series Preferred
Conversion Price”). The Series Preferred Conversion Price
shall be adjusted from time to time in accordance with this Section
7.
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(d) Mechanics of
Conversion. Each holder of Series B Preferred Stock who
desires to convert the same into shares of Common Stock pursuant to this Section
7 shall surrender the certificate or certificates therefor, duly endorsed, at
the office of the Company or any transfer agent for the Series B Preferred
Stock, and shall give written notice to the Company at such office that such
holder elects to convert the same. Such notice shall state the number
of shares of each series of Series B Preferred Stock being
converted. Thereupon, the Company shall promptly issue and deliver at
such office to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled and shall promptly pay
(i) in cash or in shares of Common Stock as a PIK Dividend pursuant to the
provisions of Section 3(a)(ii), as determined by the Board, any Accruing
Dividends accrued but unpaid thereon, whether or not declared, (ii) in cash, any
other cash dividends declared but unpaid on the shares of Series B Preferred
Stock being converted and (iii) in cash (at the Common Stock’s fair market value
determined by the Board as of the date of conversion) the value of any
fractional share of Common Stock otherwise issuable to any holder of Series B
Preferred Stock. Such conversion shall be deemed to have been made at
the close of business on the date of such surrender of the certificates
representing the shares of Series B Preferred Stock to be converted, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.
(e) Adjustment for Stock Splits and
Combinations. If at any time or from time to time on or after
the date that the first share of Series B Preferred Stock is issued (the “Original Issue
Date”) the Company effects a subdivision of the outstanding Common Stock
without a corresponding subdivision of the Series B Preferred Stock, the Series
Preferred Conversion Price in effect immediately before such subdivision shall
be proportionately decreased. Conversely, if at any time or from time
to time after the Original Issue Date the Company combines the outstanding
shares of Common Stock into a smaller number of shares without a corresponding
combination of the Series B Preferred Stock, the Series Preferred Conversion
Price in effect immediately before the combination shall be proportionately
increased. Any adjustment under this Section 7(e) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(f) Adjustment for Common Stock Dividends
and Distributions. If at any time or from time to time on or
after the Original Issue Date the Company pays to holders of any class or series
of Company’s stock a dividend or other distribution in additional shares of
Common Stock without a corresponding dividend or other distribution to the
holders of Series B Preferred Stock, the then-effective Series Preferred
Conversion Price shall be decreased as of the time of such issuance, as provided
below:
(i) The
Series Preferred Conversion Price shall be adjusted by multiplying such Series
Preferred Conversion Price then in effect by a fraction equal to:
(A) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance, and
7
(B) the
denominator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance plus the number of
shares of Common Stock issuable to the holders of such class or series of the
Company’s stock in payment of such dividend or distribution;
(ii) If
the Company fixes a record date to determine which holders of such class or
series of the Company’s stock are entitled to receive such dividend or other
distribution, the applicable Series Preferred Conversion Price shall be fixed as
of the close of business on such record date and the number of shares of Common
Stock shall be calculated immediately prior to the close of business on such
record date; and
(iii) If
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Series Preferred
Conversion Price shall be recomputed accordingly as of the close of business on
such record date and thereafter such Series Preferred Conversion Price shall be
adjusted pursuant to this Section 7(f) to reflect the actual payment of such
dividend or distribution.
(g) Adjustment for Reclassification,
Exchange, Substitution, Reorganization, Merger or
Consolidation. If at any time or from time to time on or after
the Original Issue Date the Common Stock issuable upon the conversion of the
Series B Preferred Stock is changed into the same or a different number of
shares of any class or classes of stock, whether by recapitalization,
reclassification, merger, consolidation or otherwise (other than an Acquisition
or Asset Transfer as defined in Section 6 or a subdivision or combination of
shares or stock dividend provided for elsewhere in this Section 7), in any such
event each holder of Series B Preferred Stock shall then have the right to
convert such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification, merger,
consolidation or other change by holders of the maximum number of shares of
Common Stock into which such shares of Series B Preferred Stock could have been
converted immediately prior to such recapitalization, reclassification, merger,
consolidation or change, all subject to further adjustment as provided herein or
with respect to such other securities or property by the terms
thereof. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 7 with respect to the rights
of the holders of Series B Preferred Stock after the capital reorganization to
the end that the provisions of this Section 7 (including adjustment of the
Series Preferred Conversion Price then in effect and the number of shares
issuable upon conversion of the Series B Preferred Stock) shall be applicable
after that event and be as nearly equivalent as practicable.
(h) Sale
of Shares Below Series Preferred Conversion Price.
(i) If
at any time or from time to time on or after the Original Issue Date the Company
issues or sells, or is deemed by the express provisions of this Section 7(h) to
have issued or sold, Additional Shares of Common Stock (as defined below), other
than as provided in Section 7(e), 7(f) or 7(g) above, for an Effective Price (as
defined below) less than the then effective Series Preferred Conversion Price (a
“Qualifying
Dilutive Issuance”), then and in each such case, the then effective
Series Preferred Conversion Price shall be reduced, as of the opening of
business on the date of such issue or sale, to a price determined by multiplying
the Series Preferred Conversion Price in effect immediately prior to such
issuance or sale by a fraction equal to:
8
(A) the
numerator of which shall be (A) the number of shares of Common Stock deemed
outstanding (as determined below) immediately prior to such issue or sale, plus
(B) the number of shares of Common Stock which the Aggregate Consideration (as
defined below) received or deemed received by the Company for the total number
of Additional Shares of Common Stock so issued would purchase at such
then-effective Series Preferred Conversion Price, and
(B) the
denominator of which shall be the number of shares of Common Stock deemed
outstanding (as determined below) immediately prior to such issue or sale plus
the total number of Additional Shares of Common Stock so issued.
For the
purposes of the preceding sentence, the number of shares of Common Stock deemed
to be outstanding as of a given date shall be the sum of (A) the number of
shares of Common Stock outstanding, (B) the number of shares of Common Stock
into which the then outstanding shares of Series B Preferred Stock could be
converted if fully converted on the day immediately preceding the given date,
and (C) the number of shares of Common Stock which are issuable upon the
exercise or conversion of all other rights, options and convertible securities
outstanding on the day immediately preceding the given date.
(ii) No
adjustment shall be made to the Series Preferred Conversion Price in an amount
less than one cent per share. Any adjustment required by this Section
7(h) shall be rounded to the nearest one cent $0.01 per share. Any
adjustment otherwise required by this Section 7(h) that is not required to be
made due to the preceding two sentences shall be included in any subsequent
adjustment to the Series Preferred Conversion Price.
(iii) For
the purpose of making any adjustment required under this Section 7(h), the
aggregate consideration received by the Company for any issue or sale of
securities (the “Aggregate
Consideration”) shall be defined as: (A) to the extent it consists of
cash, be computed at the gross amount of cash received by the Company before
deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Company in connection with such issue or sale
and without deduction of any expenses payable by the Company, (B) to the extent
it consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board, and (C) if Additional Shares
of Common Stock, Convertible Securities (as defined below) or rights or options
to purchase either Additional Shares of Common Stock or Convertible Securities
are issued or sold together with other stock or securities or other assets of
the Company for a consideration which covers both, be computed as the portion of
the consideration so received that may be reasonably determined in good faith by
the Board to be allocable to such Additional Shares of Common Stock, Convertible
Securities or rights or options.
9
(iv) For
the purpose of the adjustment required under this Section 7(h), if the Company
issues or sells (x) Preferred Stock or other stock, options, warrants, purchase
rights or other securities convertible into Additional Shares of Common Stock
(such convertible stock or securities being herein referred to as “Convertible
Securities”) or (y) rights or options for the purchase of Additional
Shares of Common Stock or Convertible Securities and if the Effective Price of
such Additional Shares of Common Stock is less than the Series Preferred
Conversion Price, then the Company shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
Company for the issuance of such rights or options or Convertible Securities
plus:
(A) in
the case of such rights or options, the minimum amounts of consideration, if
any, payable to the Company upon the exercise of such rights or options;
and
(B) in
the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Company upon the conversion thereof (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities); provided
that if the minimum amounts of such consideration cannot be ascertained, but are
a function of antidilution or similar protective clauses, the Company shall be
deemed to have received the minimum amounts of consideration without reference
to such clauses.
(C) If
the minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; provided further, that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities is subsequently
increased, the Effective Price shall be again recalculated using the increased
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities.
(D) No
further adjustment of the Series Preferred Conversion Price, as adjusted upon
the issuance of such rights, options or Convertible Securities, shall be made as
a result of the actual issuance of Additional Shares of Common Stock or the
exercise of any such rights or options or the conversion of any such Convertible
Securities. If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been
exercised, the Series Preferred Conversion Price as adjusted upon the issuance
of such rights, options or Convertible Securities shall be readjusted to the
Series Preferred Conversion Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided that such
readjustment shall not apply to prior conversions of Series B Preferred
Stock.
10
(v) For
the purpose of making any adjustment to the Conversion Price required under this
Section 7(h), “Additional Shares
of Common Stock” shall mean all shares of Common Stock issued by the
Company or deemed to be issued pursuant to this Section 7(h) (including shares
of Common Stock subsequently reacquired or retired by the Company), other
than:
(A) shares
of Common Stock issued upon conversion of the Series B Preferred Stock or shares
of Series B Preferred Stock issued as a PIK Dividend on the Series B Preferred
Stock;
(B) shares
of Common Stock or Convertible Securities issued after the Original Issue Date
to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or
other arrangements (“Plans”) when (i) such Plans have been approved by the Board
on or prior to the Original Issue Date, or (ii) are approved by the Board after
the Original Issue Date, including the Series B Director;
(C) shares
of Common Stock issued pursuant to the exercise of Convertible Securities
outstanding as of or issued on the Original Issue Date, or issued as a result of
any anti-dilution provision in any Convertible Security outstanding as of or
issued on the Original Issue Date;
(D) shares
of Common Stock or Convertible Securities issued for consideration other than
cash pursuant to a bona fide merger, consolidation, acquisition, strategic
alliance or similar business combination approved by the Board, which shall
include, in the case of any such issuance to an Affiliate or Related Person of
the Company, approval by the Series B Director;
(E) shares
of Common Stock or Convertible Securities issued pursuant to any bonafide
equipment loan or leasing arrangement, real property leasing arrangement or debt
financing from a bank or similar financial institution approved by the Board,
which shall include, in the case of any such issuance to an Affiliate or Related
Person of the Company, approval by the Series B Director;
(F) shares
of Common Stock or Convertible Securities issued in connection with strategic
transactions involving the Company and other entities, including (i) joint
ventures, manufacturing, marketing or distribution arrangements or (ii)
technology transfer or development arrangements; provided that the issuance of
shares therein (a) has been approved by the Company’s Board, which shall
include, in the case of any such issuance to an Affiliate or Related Person of
the Company, approval by the Series B Director, and (b) is not primarily for
equity financing purposes; or
(G) shares
of Common Stock or Convertible Securities issued to suppliers or third party
service providers in connection with the provision of goods or services; provided that such
transaction is not primarily for equity financing purposes and is approved by
the Board of Directors, which shall include, in the case of any such issuance to
an Affiliate or Related Person of the Company, approval by the Series B
Director.
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References
to Common Stock in the subsections of this clause (v) above shall mean all
shares of Common Stock issued by the Company or deemed to be issued pursuant to
this Section 7(h). The “Effective
Price” of Additional Shares of Common Stock shall mean the quotient
determined by dividing the total number of Additional Shares of Common Stock
issued or sold, or deemed to have been issued or sold by the Company under this
Section 7(h), into the Aggregate Consideration received, or deemed to have been
received by the Company for such issue under this Section 7(h), for such
Additional Shares of Common Stock. In the event that the number of
shares of Additional Shares of Common Stock or the Effective Price cannot be
ascertained at the time of issuance, such Additional Shares of Common Stock
shall be deemed issued immediately upon the occurrence of the first event that
makes such number of shares or the Effective Price, as applicable,
ascertainable.
For
purposes hereof, the terms “Affiliate”
and “Related
Person” shall have the same meanings ascribed to such terms in Rule 12b-2
promulgated pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and
Rule 404 of Regulation S-K promulgated pursuant to the Exchange Act,
respectively, and, in each case, any successor provisions
(vi) In
the event that the Company issues or sells, or is deemed to have issued or sold,
Additional Shares of Common Stock in a Qualifying Dilutive Issuance (the “First Dilutive
Issuance”), then in the event that the Company issues or sells, or is
deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying
Dilutive Issuance other than the First Dilutive Issuance as a part of the same
transaction or series of related transactions as the First Dilutive Issuance (a
“Subsequent
Dilutive Issuance”), then and in each such case upon a Subsequent
Dilutive Issuance the Series Preferred Conversion Price shall be reduced to the
Series Preferred Conversion Price that would have been in effect had the First
Dilutive Issuance and each Subsequent Dilutive Issuance all occurred on the
closing date of the First Dilutive Issuance.
(i) Waiver of Anti-dilution
Protection. Notwithstanding anything to the contrary, any
provision of Section 7(h) and any adjustments made or required to be made to the
Series Preferred Conversion Price pursuant hereto may be waived on behalf of all
shares of Series B Preferred Stock by the vote or written consent of the holders
of at least a majority of the outstanding shares of Series B Preferred
Stock.
(j) Certificate of
Adjustment. In each case of an adjustment or readjustment of
the Series Preferred Conversion Price for the number of shares of Common Stock
or other securities issuable upon conversion, the Company, at its expense, shall
compute such adjustment or readjustment in accordance with the provisions hereof
and shall, upon request, prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to each registered holder of Series B Preferred Stock so requesting at
the holder’s address as shown in the Company’s books. The certificate
shall set forth such adjustment or readjustment, showing in detail the facts
upon which such adjustment or readjustment is based, including a statement of
(i) the consideration received or deemed to be received by the Company for any
Additional Shares of Common Stock issued or sold or deemed to have been issued
or sold, (ii) the Series Preferred Conversion Price at the time in effect, (iii)
the number of Additional Shares of Common Stock and (iv) the type and amount, if
any, of other property which at the time would be received upon conversion of
Series B Preferred Stock. Failure to request or provide such notice
shall have no effect on any such adjustment.
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(k) Notices of Record
Date. Upon (i) any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or (ii)
any Acquisition (as defined in Section 6) or other capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company, any merger or consolidation of the Company with or into any other
corporation, or any Asset Transfer (as defined in Section 6), or any voluntary
or involuntary dissolution, liquidation or winding up of the Company, the
Company shall mail to each holder of Series B Preferred Stock at least ten (10)
days prior to (x) the record date, if any, specified therein; or (y) if no
record date is specified, the date upon which such action is to take effect (or,
in either case, such shorter period approved by the holders of a majority of the outstanding
Series B Preferred Stock) a notice specifying (A) the date on which any such
record is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up.
(l) Automatic
Conversion.
(i) For
a period of time beginning on the Original Issue Date and ending on the three
year anniversary thereof (the “Initial
Conversion Period”), each share of Series B Preferred Stock shall
automatically be converted into shares of Common Stock, based on the
then-effective Series Preferred Conversion Price, (A) at any time upon the
affirmative election of the holders of at least a majority of the outstanding
shares of the Series B Preferred Stock, or (B) if (w) the Equity Valuation of
the Company, on a fully diluted basis, reaches or exceeds $100,000,000 for ten
(10) consecutive Trading Days and the closing price of the Common Stock is not
less than $8.00 for such ten (10) consecutive Trading Days, (x) the closing
price of the Common Stock as reported by the Trading Market exceeds $8.00 (as
adjusted) for such ten (10) days consecutive Trading Days, (y) the average daily
trading volume of Common Stock for such ten (10) consecutive Trading Days
exceeds 20,000 shares per day (as adjusted), and (z) the Common Stock is listed
on a Major Exchange. After the Initial Conversion Period, each share
of Series B Preferred Stock shall automatically be converted into shares of
Common Stock, based on the then-effective Series Preferred Conversion Price, (I)
at any time upon the affirmative election of the holders of at least a majority
of the outstanding shares of the Series B Preferred Stock, or if (II) the Equity
Valuation of the Company, on a fully diluted basis, reaches or exceeds
$100,000,000 for thirty (30) consecutive Trading Days and the closing price of
the Common Stock as reported by the Trading Market exceeds $8.00 (as adjusted)
for such thirty (30) consecutive Trading Days. Upon such automatic
conversion, any Accruing Dividends accrued but unpaid, whether or not declared,
together with any other dividends declared but unpaid shall be paid in
accordance with the provisions of Section 7(d).
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(ii) Upon
the occurrence of either of the events specified in Section 7(l)(i) above, the
outstanding shares of Series B Preferred Stock shall be converted automatically
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Company or its
transfer agent; provided,
however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series B Preferred Stock are either
delivered to the Company or its transfer agent as provided below, or the holder
notifies the Company or its transfer agent that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the Company
to indemnify the Company from any loss incurred by it in connection with such
certificates. Upon the occurrence of such automatic conversion of the
Series B Preferred Stock, the holders of Series B Preferred Stock shall
surrender the certificates representing such shares at the office of the Company
or any transfer agent for the Series B Preferred Stock. Thereupon,
there shall be issued and delivered to such holder promptly at such office and
in its name as shown on such surrendered certificate or certificates, a
certificate or certificates for the number of shares of Common Stock into which
the shares of such series of Series B Preferred Stock surrendered were
convertible on the date on which such automatic conversion occurred, and any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 7(d).
(m) Fractional
Shares. No fractional shares of Common Stock shall be issued
upon conversion of Series B Preferred Stock. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series B Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of any fractional share, the Company
shall, in lieu of issuing any fractional share, pay cash equal to the product of
such fraction multiplied by the fair market value of one share of Common Stock
(as determined by the Board) on the date of conversion.
(n) Reservation of Stock Issuable Upon
Conversion. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the Series B Preferred
Stock, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series B
Preferred Stock. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series B Preferred Stock, the Company will take
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(o) Notices. Any notice
required by the provisions of this Section 7 shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed facsimile if sent during normal business
hours of the recipient; if not, then on the next Business Day, (iii) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with verification of
receipt. All notices shall be addressed to each holder of record at
the address of such holder appearing on the books of the Company.
14
(p) Payment of
Taxes. The Company will pay all taxes (other than taxes based
upon income) and other governmental charges that may be imposed with respect to
the issue or delivery of shares of Common Stock upon conversion of shares of
Series B Preferred Stock, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series B Preferred
Stock so converted were registered.
8. No
Reissuance Of Series B Preferred Stock. No share or shares of
Series B Preferred Stock acquired by the Company by reason of redemption,
purchase, conversion or otherwise shall be reissued.
**********
RESOLVED, FURTHER, that the Chairman,
the president or any vice-president, and the secretary or any assistant
secretary, of the Company be and they hereby are authorized and directed to
prepare and file this Certificate of Designation of Preferences, Rights and
Limitations in accordance with the foregoing resolution and the provisions of
Delaware law.
[remainder of page intentionally left
blank; signature page follows]
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IN WITNESS WHEREOF, the undersigned
have executed this Certificate this 8th day of
November, 2010.
|
/s/
Lalit Dhadphale
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/s/
Patrick E. Delaney
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|
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Name:
Lalit Dhadphale
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Name:
Patrick E. Delaney
|
|
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Title: President
& CEO
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Title: Chief
Financial Officer,
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Treasurer
and Secretary
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Certificate
of Designation – Series B Preferred Stock
Signature
Page