Attached files
Exhibit 3.1
CERTIFICATE OF DESIGNATION OF RIGHTS, POWERS, PREFERENCES,
PRIVILEGES AND RESTRICTIONS OF THE
0% SERIES M CONVERTIBLE PREFERRED STOCK OF
MABVAX THERAPEUTICS HOLDINGS, INC.
I,
David J. Hansen, hereby certify that I am the Chief Executive
Officer of MabVax Therapeutics Holdings, Inc. (the
“Company”), a
corporation organized and existing under the Delaware General
Corporation Law (the “DGCL”), and further do hereby
certify:
That,
pursuant to the authority expressly conferred upon the Board of
Directors of the Company (the “Board”) by the Company’s
Certificate of Incorporation, as amended (the “Certificate of Incorporation”),
the Board on January 30, 2018 adopted the following resolutions
creating a series of shares of Preferred Stock designated as 0%
Series M Convertible Preferred Stock, none of which shares has been
issued:
RESOLVED, that the
Board designates the 0% Series M Convertible Preferred Stock and
the number of shares constituting such series, and fixes the
rights, powers, preferences, privileges and restrictions relating
to such series in addition to any set forth in the Articles of
Incorporation as follows:
TERMS OF SERIES M CONVERTIBLE PREFERRED STOCK
1. Designation and Number of
Shares. There shall hereby be created and established by
this Certificate of Designation of Rights, Powers, Preferences,
Privileges and Restrictions (this “Certificate of Designation”) a
series of preferred stock of the Company designated as “0%
Series M Convertible Preferred Stock” (the
“Preferred
Shares”). The authorized number of Preferred Shares
shall be Ten Thousand (10,000) shares.
Each Preferred Share shall have $0.01 par value. Capitalized terms
not defined herein shall have the meaning as set forth in
Section 23 below or in the Purchase
Agreement.
2. Ranking. Except to the extent
that the Majority in Interest, including the Lead Investor (the
“Required
Holders”) expressly consent to the creation of Parity
Stock (as defined below) or Senior Preferred Stock (as defined
below) in accordance with Section 12, all shares of capital stock
of the Company, other than outstanding shares of Series I
Convertible Preferred Stock through Series L Convertible Preferred
Stock, shall be junior in rank to all Preferred Shares with respect
to the preferences as to dividends, distributions and payments upon
the liquidation, dissolution and winding-up of the Company (such
junior stock is referred to herein collectively as
“Junior Stock”).
The rights of all such shares of capital stock of the Company shall
be subject to the rights, powers, preferences and privileges of the
Preferred Shares. Without limiting any other provision of this
Certificate of Designation, without the prior express consent of
the Required Holders, voting separate as a single class, the
Company shall not hereafter authorize or issue any additional or
other shares of capital stock that is (i) of senior rank to the
Preferred Shares in respect of the preferences as to dividends,
distributions and payments upon the liquidation, dissolution and
winding-up of the Company (collectively, the “Senior Preferred Stock”), (ii) of
pari passu rank to the Preferred Shares in respect of the
preferences as to dividends, distributions and payments upon the
liquidation, dissolution and winding-up of the Company
(collectively, the “Parity
Stock”) or (iii) any Junior Stock having a maturity
date (or any other date requiring redemption or repayment of such
shares of Junior Stock) that is prior to the date on which any
Preferred Shares remain outstanding. In the event of the merger or
consolidation of the Company with or into another corporation, the
Preferred Shares shall maintain their relative rights, powers,
designations, privileges and preferences provided for herein and no
such merger or consolidation shall result inconsistent
therewith.
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3. Dividends. In addition to
Sections 5(a) and 11 below, from and after the first date of
issuance of any Preferred Shares (the “Initial Issuance Date”), each
holder of a Preferred Share (each, a “Holder” and, collectively, the
“Holders”) shall
be entitled to receive dividends (“Dividends”) when and as declared
by the Board, from time to time, in its sole discretion, which
Dividends shall be paid by the Company out of funds legally
available therefor, payable, subject to the conditions and other
terms hereof, in cash on the Stated Value of such Preferred
Share.
4. Conversion. Each Preferred
Share shall be convertible into validly issued, fully paid and
non-assessable shares of Common Stock (“Conversion Shares”) on the terms
and conditions set forth in this Section 4.
(a) Holder’s Conversion
Right. Subject to the provisions of Section 4(e), at any
time or times on or after the Initial Issuance Date, each Holder
shall be entitled to convert any whole number of Preferred Shares
into validly issued, fully paid and non-assessable shares of Common
Stock in accordance with Section 4(c) at the Conversion Rate (as
defined below).
(b) Conversion Rate. The number of
validly issued, fully paid and non-assessable shares of Common
Stock issuable upon conversion of each Preferred Share pursuant to
Section 4(a) shall be determined according to the following formula
(the “Conversion
Rate”):
Stated Value
Conversion
Price
No
fractional shares of Common Stock are to be issued upon the
conversion of any Preferred Shares. If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up to the
nearest whole share.
(c) Mechanics of Conversion. The
conversion of each Preferred Share shall be conducted in the
following manner:
(i) Holder’s Conversion. To
convert a Preferred Share into validly issued, fully paid and
non-assessable shares of Common Stock on any date (a
“Conversion
Date”), a Holder shall deliver (whether via facsimile,
e-mail or otherwise), for receipt on or prior to 11:59 p.m., New
York time, on such date, a copy of an executed conversion notice of
the share(s) of Preferred Shares subject to such conversion in the
form attached hereto as Exhibit I
(the “Conversion
Notice”) to the Company. If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be
the date that such Notice of Conversion to the Company is deemed
delivered hereunder. If required by Section 4(c)(vi), within five
(5) Trading Days following a conversion of any such Preferred
Shares as aforesaid, such Holder shall surrender to a nationally
recognized overnight delivery service for delivery to the Company
the original certificates representing the share(s) of Preferred
Shares (the “Preferred Share
Certificates”) so converted as aforesaid.
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(ii) Company’s
Response. On or before the first (1st) Trading Day
following the date of delivery of a Conversion Notice, the Company
shall transmit by facsimile an acknowledgment of confirmation, in
the form attached hereto as Exhibit II,
of receipt of such Conversion Notice to such Holder and the
transfer agent for the Company’s Common Stock (the
“Transfer
Agent”), which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice
in accordance with the terms herein. On or before the second
(2nd)
Trading Day following the date of delivery by the Company of such
Conversion Notice, the Company shall credit such aggregate number
of shares of Common Stock to which such Holder shall be entitled to
such Holder’s or its designee’s balance account with
DTC through its Deposit and Withdrawal at Custodian system. No
ink-original Conversion Notice shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Conversion Notice form be required. The calculations and entries set
forth in the Conversion Notice shall control in the absence of
manifest or mathematical error. If the number of Preferred Shares
represented by the Preferred Share Certificate(s) submitted for
conversion pursuant to Section 4(c)(vi) is greater than the number
of Preferred Shares being converted, then the Company shall, if
requested by such Holder, as soon as practicable and in no event
later than two (2) Trading Days after receipt of the Preferred
Share Certificate(s) and at its own expense, issue and deliver to
such Holder (or its designee) a new Preferred Share Certificate
representing the number of Preferred Shares not
converted.
(iii) Record
Holder. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of Preferred Shares
shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date.
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(iv) Company’s
Failure to Timely Convert. If the Company shall fail, for
any reason or for no reason , to issue to a Holder within two (2)
Trading Days after the Company’s delivery of a Conversion
Notice (whether via facsimile, e-mail or otherwise) (the
“Share Delivery
Deadline”),to credit such Holder’s or its
designee’s balance account with DTC for such number of shares
of Common Stock to which such Holder is entitled upon such
Holder’s conversion of any Preferred Shares (as the case may
be) (a “Conversion
Failure”), then, in addition to all other remedies
available to such Holder, such Holder, upon written notice to the
Company, (x) may void its Conversion Notice with respect to, and
retain or have returned (as the case may be) any Preferred Shares
that have not been converted pursuant to such Holder’s
Conversion Notice, provided that the voiding of a Conversion Notice
shall not affect the Company’s obligations to make any
payments that have accrued prior to the date of such notice
pursuant to the terms of this Certificate of Designation or
otherwise and (y) the Company shall pay in cash to such Holder on
each day after such second (2nd) Trading Day that
the issuance of such shares of Common Stock is not timely effected
an amount equal to 1.0 % of the product of (A) the aggregate number
of shares of Common Stock not issued to such Holder on a timely
basis and to which the Holder is entitled and (B) the Closing Sale
Price of the Common Stock on the Trading Day immediately preceding
the last possible date on which the Company could have issued such
shares of Common Stock to the Holder without violating Section
4(c). In addition to the foregoing, if within two (2) Trading Days
after the Company’s receipt of a Conversion Notice (whether
via facsimile, e-mail or otherwise), the Company shall fail to
credit such Holder’s or its designee’s balance account
with DTC for the number of shares of Common Stock to which such
Holder is entitled upon such Holder’s conversion hereunder
(as the case may be), and, if on or after such second
(2nd)
Trading Day, such Holder (or any other Person in respect, or on
behalf, of such Holder) purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Holder of all or any portion of the number of shares
of Common Stock, or a sale of a number of shares of Common Stock
equal to all or any portion of the number of shares of Common
Stock, issuable upon such conversion that such Holder so
anticipated receiving from the Company, then, in addition to all
other remedies available to such Holder, the Company shall, within
two (2) Business Days after such Holder’s request and in such
Holder’s discretion, either (i) pay cash to such Holder in an
amount equal to such Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for
the shares of Common Stock so purchased (including, without
limitation, by any other Person in respect, or on behalf, of such
Holder) (the “Buy-In
Price”), at which point the Company’s obligation
to credit such Holder’s balance account with DTC for the
number of shares of Common Stock to which such Holder is entitled
upon such Holder’s conversion hereunder (as the case may be)
(and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to credit such Holder’s balance
account with DTC for the number of shares of Common Stock to which
such Holder is entitled upon such Holder’s conversion
hereunder (as the case may be) and pay cash to such Holder in an
amount equal to the excess (if any) of the Buy-In Price over the
product of (A) such number of shares of Common Stock multiplied by
(B) the lowest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date of the
applicable Conversion Notice and ending on the date of such
issuance and payment under this clause (ii).
(v)
Obligation
Absolute. The Company’s obligation to issue and
deliver the Common Stock upon conversion of Preferred Shares in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by a Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by such
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by such Holder or any other
person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to such Holder in
connection with the issuance of such Conversion Shares ;
provided,
however, that such
delivery shall not operate as a waiver by the Company of any such
action that the Company may have against such Holder. In the event
a Holder shall elect to convert any or all of the Stated Value of
its Series M Preferred Stock, the Company may not refuse conversion
based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and/or enjoining conversion
of all or part of the Series M Preferred Stock of such Holder shall
have been sought and obtained, and the Company posts a surety bond
for the benefit of such Holder in the amount of 150% of the Stated
Value of Series M Preferred Stock which is subject to the
injunction, which bond shall remain in effect until the completion
of arbitration/litigation of the underlying dispute and the
proceeds of which shall be payable to such Holder to the extent it
obtains judgment. In the absence of such injunction, the Company
shall issue Preferred Shares and, if applicable, cash, upon a
properly noticed conversion.
(vi) Certificate Surrender.
Notwithstanding anything to the contrary set forth in this Section
4, upon conversion of any Preferred Shares in accordance with the
terms hereof, no Holder thereof shall be required to physically
surrender the certificate representing the Preferred Shares to the
Company following conversion thereof unless (A) the full or
remaining number of Preferred Shares represented by the certificate
are being converted (in which event such certificate(s) shall be
delivered to the Company as contemplated by this Section 4(c)(vi))
or (B) such Holder has provided the Company with prior written
notice (which notice may be included in a Conversion Notice)
requesting reissuance of Preferred Shares upon physical surrender
of any Preferred Shares. Each Holder and the Company shall maintain
records showing the number of Preferred Shares so converted by such
Holder and the dates of such conversions or shall use such other
method, reasonably satisfactory to such Holder and the Company, so
as not to require physical surrender of the certificate
representing the Preferred Shares upon each such conversion. In the
event of any dispute or discrepancy, such records of the Company
establishing the number of Preferred Shares to which the record
holder is entitled shall be controlling and determinative in the
absence of manifest error. A Holder and any transferee or assignee,
by acceptance of a certificate, acknowledge and agree that, by
reason of the provisions of this paragraph, following conversion of
any Preferred Shares, the number of Preferred Shares represented by
such certificate may be less than the number of Preferred Shares
stated on the face thereof.
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(vii) Transfer
Taxes and Expenses. The issuance of Conversion Shares on
conversion of this Series M Preferred Stock shall be made without
charge to any Holder for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such
Conversion Shares, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares
upon conversion in a name other than that of the Holders of such
shares of Series M Preferred Stock and the Company shall not be
required to issue or deliver such Conversion Shares unless or until
the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has
been paid. The Company shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to
the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.
(d) Limitation on Beneficial
Ownership. Notwithstanding anything to the contrary set
forth in this Certificate of Designation, at no time may all or a
portion of the Series M Preferred Stock be converted 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 the Holder at such time, the number of shares of Common
Stock that would result in the Holder beneficially owning (as
determined in accordance with Section 13(d) of the 1934 Act and the
rules thereunder) more than 4.99% of all of the Common Stock
outstanding at such time (the “4.99% Beneficial Ownership
Limitation”); provided, however, that, upon the Holder
providing the Company with sixty-one (61) days’ advance
notice (the “4.99% Waiver
Notice”) that the Holder would like to waive this
Section 4(e) with regard to any or all shares of Common Stock
issuable upon conversion of the Preferred Shares, this Section 4(e)
will be of no force or effect with regard to all or a portion of
the Series M Preferred Stock referenced in the 4.99% Waiver Notice
but shall in no event waive the 9.99% Beneficial Ownership
Limitation described below. Notwithstanding anything to the
contrary set forth in this Certificate of Designation, at no time
may all or a portion of the Preferred Shares be converted if the
number of shares of Common Stock to be issued pursuant to such
conversion, when aggregated with all other shares of Common Stock
owned by the Holder at such time, would result in the Holder
beneficially owning (as determined in accordance with Section 13(d)
of the 1934 Act and the rules thereunder) in excess of 9.99% of the
then-issued and outstanding shares of Common Stock outstanding at
such time (the “9.99%
Beneficial Ownership Limitation” and the lower of the
9.99% Beneficial Ownership Limitation and the 4.99% Beneficial
Ownership Limitation then in effect, the “Maximum Percentage”)). By written
notice to the Company, a holder of Preferred Shares may from time
to time decrease the Maximum Percentage to any other percentage
specified in such notice. For purposes hereof, in determining the
number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in
(1) the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the Securities and Exchange Commission, as the
case may be, (2) a more recent public announcement by the Company
or (3) any other notice by the Company setting forth the number of
shares of Common Stock outstanding. For any reason at any time,
upon the written or oral request of a holder of Preferred Shares,
the Company shall within two (2) Business Days confirm orally and
in writing to such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including the
Preferred Shares, by the Holder and its Affiliates since the date
as of which such number of outstanding shares of Common Stock was
reported, that in any event are convertible or exercisable, as the
case may be, into shares of the Company’s Common Stock within
61 days’ of such calculation and that are not subject to a
limitation on conversion or exercise analogous to the limitation
contained herein. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 4(e) to correct this
paragraph (or any portion hereof) that may be defective or
inconsistent with the intended beneficial ownership limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation.
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5. Rights Upon Issuance of Purchase
Rights and Other Corporate Events.
(a) Purchase Rights. In addition to
any adjustments pursuant to Section 7 below, if at any time the
Company grants, issues or sells any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the
“Purchase
Rights”), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights that such Holder could have acquired if
such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of all the Preferred Shares
(without taking into account any limitations or restrictions on the
convertibility of the Preferred Shares) held by such Holder
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights; provided, however, to the extent that
such Holder’s right to participate in any such Purchase Right
would result in such Holder exceeding the Maximum Percentage, then
such Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for
such Holder until such time, if ever, as its right thereto would
not result in such Holder exceeding the Maximum
Percentage.
(b) Other Corporate Events. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to ensure that each Holder will
thereafter have the right to receive upon a conversion of all the
Preferred Shares held by such Holder (i) in addition to the shares
of Common Stock receivable upon such conversion, such securities or
other assets to which such Holder would have been entitled with
respect to such shares of Common Stock had such shares of Common
Stock been held by such Holder upon the consummation of such
Corporate Event (without taking into account any limitations or
restrictions on the convertibility of the Preferred Shares
contained in this Certificate of Designation) or (ii) in lieu of
the shares of Common Stock otherwise receivable upon such
conversion, such securities or other assets received by the holders
of shares of Common Stock in connection with the consummation of
such Corporate Event in such amounts as such Holder would have been
entitled to receive had the Preferred Shares held by such Holder
initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a
conversion rate for such consideration commensurate with the
Conversion Rate. The provisions of this Section 5(b) shall apply
similarly and equally to successive Corporate Events and shall be
applied without regard to any limitations on the conversion of the
Preferred Shares contained in this Certificate of
Designation.
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6. Rights Upon Fundamental
Transactions.
(a) Assumption. The Company shall
not enter into or be party to a Fundamental Transaction unless:
(i) the Successor Entity assumes in writing all of the
obligations of the Company under this Certificate of Designation
and the other Transaction Documents in accordance with the
provisions of this Section 6 pursuant to written agreements in form
and substance satisfactory to the Required Holders and approved by
the Required Holders prior to such Fundamental Transaction,
including agreements to deliver to each holder of Preferred Shares
in exchange for such Preferred Shares a security of the Successor
Entity evidenced by a written instrument substantially similar in
form and substance to this Certificate of Designation, including,
without limitation, having a stated value and dividend rate equal
to the stated value and dividend rate of the Preferred Shares held
by the Holders and having similar ranking to the Preferred Shares,
and reasonably satisfactory to the Required Holders and
(ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose shares of common stock are quoted
on or listed for trading on an Eligible Market. Upon the occurrence
of any Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Certificate of
Designation and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Certificate
of Designation and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company
herein and therein. In addition to the foregoing, upon consummation
of a Fundamental Transaction, the Successor Entity shall deliver to
each Holder confirmation that there shall be issued upon conversion
of the Preferred Shares at any time after the consummation of such
Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 5 and 11, which shall continue to be
receivable thereafter)) issuable upon the conversion of the
Preferred Shares prior to such Fundamental Transaction, such shares
of publicly traded common stock (or their equivalent) of the
Successor Entity (including its Parent Entity) that each Holder
would have been entitled to receive upon the happening of such
Fundamental Transaction had all the Preferred Shares held by each
Holder been converted immediately prior to such Fundamental
Transaction (without regard to any limitations on the conversion of
the Preferred Shares contained in this Certificate of Designation),
as adjusted in accordance with the provisions of this Certificate
of Designation. The provisions of this Section 6 shall apply
similarly and equally to successive Fundamental Transactions and
shall be applied without regard to any limitations on the
conversion of the Preferred Shares.
(a) Intentionally
Omitted.
(b) Adjustment of Conversion Price upon
Subdivision or Combination of Common Stock. Without limiting
any provision of Sections 5 and 11, if the Company at any time on
or after the Purchase Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. Without limiting any
provision of Sections 5 and 11, if the Company at any time on or
after the Purchase Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased. Any adjustment pursuant to this Section
7(b) shall become effective immediately after the effective date of
such subdivision or combination. If any event requiring an
adjustment under this Section 7(b) occurs during the period that a
Conversion Price is calculated hereunder, then the calculation of
such Conversion Price shall be adjusted appropriately to reflect
such event.
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(c) Other Events. In the event that
the Company (or any Subsidiary) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable,
would not operate to protect any Holder from dilution or if any
event occurs of the type contemplated by the provisions of this
Section 7 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features),
then the Board shall in good faith determine and implement an
appropriate adjustment in the Conversion Price so as to protect the
rights of such Holder; provided, however, that no such
adjustment pursuant to this Section 7(c) will increase the
Conversion Price as otherwise determined pursuant to this Section
7; provided,
further, that, if
such Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the
Board and such Holder shall agree, in good faith, upon an
independent investment bank of nationally recognized standing to
make such appropriate adjustments, whose determination shall be
final and binding and whose fees and expenses shall be borne by the
Company.
(d) Calculations. All calculations
under this Section 7 shall be made by rounding to the nearest
one-hundred thousandth of a cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares,
other than a return thereof to the Company’s treasury for
cancellation, shall be considered an issue or sale of Common
Stock.
(a) Reservation. The Company shall
initially reserve out of its authorized and unissued Common Stock a
number of shares of Common Stock equal to 100% of the Conversion
Rate with respect to the Stated Value of each Preferred Share as of
the Initial Issuance Date (assuming for purposes hereof, that all
the Preferred Shares issuable pursuant to the Purchase Agreement
have been issued, such Preferred Shares are convertible at the
Conversion Price and without taking into account any limitations on
the conversion of such Preferred Shares set forth in herein)
issuable pursuant to the terms of this Certificate of Designation
from the Initial Issuance Date through the second anniversary of
the Initial Issuance Date assuming (assuming for purposes hereof,
that all the Preferred Shares issuable pursuant to the Purchase
Agreement have been issued and without taking into account any
limitations on the issuance of securities set forth herein). So
long as any of the Preferred Shares are outstanding, the Company
shall take all action necessary to reserve and keep available out
of its authorized and unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares, as
of any given date, 100% of the number of shares of Common Stock as
shall from time to time be necessary to effect the conversion of
all of the Preferred Shares issued or issuable pursuant to the
Purchase Agreement assuming for purposes hereof, that all the
Preferred Shares issuable pursuant to the Purchase Agreement have
been issued and without taking into account any limitations on the
issuance of securities set forth herein), provided that at no time
shall the number of shares of Common Stock so available be less
than the number of shares required to be reserved by the previous
sentence (without regard to any limitations on conversions
contained in this Certificate of Designation) (the
“Required
Amount”). The initial number of shares of Common Stock
reserved for conversions of the Preferred Shares and each increase
in the number of shares so reserved shall be allocated pro rata
among the Holders based on the number of Preferred Shares held by
each Holder on the Initial Issuance Date or increase in the number
of reserved shares (as the case may be) (the “Authorized Share Allocation”). In
the event a Holder shall sell or otherwise transfer any of such
Holder’s Preferred Shares, each transferee shall be allocated
a pro rata portion of such Holder’s Authorized Share
Allocation. Any shares of Common Stock reserved and allocated to
any Person who ceases to hold any Preferred Shares shall be
allocated to the remaining Holders of Preferred Shares, pro rata
based on the number of Preferred Shares then held by such
Holders.
-8-
(b) Insufficient Authorized Shares.
If, notwithstanding Section 8(a) and not in limitation thereof, at
any time while any of the Preferred Shares remain outstanding, the
Company does not have a sufficient number of authorized and
unissued shares of Common Stock to satisfy its obligation to have
available for issuance upon conversion of the Preferred Shares at
least a number of shares of Common Stock equal to the Required
Amount (an “Authorized Share
Failure”), then the Company shall promptly take all
action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to
reserve and have available the Required Amount for all of the
Preferred Shares then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event
later than ninety (90) days after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its shareholders
or conduct a consent solicitation for the approval of an increase
in the number of authorized shares of Common Stock. In connection
with such meeting or consent solicitation, the Company shall
provide each shareholder with a proxy statement or information
statement, as relevant, and shall use its commercial best efforts
to solicit its shareholders’ approval of such increase in
authorized shares of Common Stock and to cause its Board to
recommend to the shareholders that they approve such proposal.
Nothing contained in this Section 8 shall limit any obligations of
the Company under any provision of the Purchase Agreement. In the
event that the Company is prohibited from issuing shares of Common
Stock upon a conversion of any Preferred Share due to the failure
by the Company to have sufficient shares of Common Stock available
out of the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the
“Authorization Failure
Shares”), in lieu of delivering such Authorization
Failure Shares to such Holder of such Preferred Shares, the Company
shall pay cash in exchange for the cancellation of such Preferred
Shares convertible into such Authorized Failure Shares at a price
equal to the sum of (i) the product of (x) such number of
Authorization Failure Shares and (y) the Closing Sale Price on the
Trading Day immediately preceding the date such Holder delivers the
applicable Conversion Notice with respect to such Authorization
Failure Shares to the Company and (ii) to the extent such Holder
purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by such Holder of
Authorization Failure Shares, any brokerage commissions and other
out-of-pocket expenses, if any, of such Holder incurred in
connection therewith.
-9-
9. Voting Rights. Except as
otherwise expressly required by law and subject to the Maximum
Percentage, each holder of Preferred Shares shall be entitled to
vote on all matters submitted to shareholders of the Company and
shall be entitled to the number of votes for each Preferred Share
owned at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is
established, at the date such vote is taken or any written consent
of shareholders is solicited, equal to the number of shares of
Common Stock such Preferred Shares are convertible into (voting as
a class with Common Stock) based on a per share price equal to
$0.75, representing $0.02 over the consolidated closing bid price
of the Common Stock on The NASDAQ Stock Market LLC on the date
prior to execution of the Purchase Agreement; provided, however, in no event shall have
a Holder have the right to vote any shares of Common Stock in
excess of the conversion limitations set forth in Section 4(e)
herein. Except as otherwise required by law, the holders of
Preferred Shares shall vote together with the holders of Common
Stock on all matters and shall not vote as a separate
class.
10. Liquidation, Dissolution,
Winding-Up. In the event of a Liquidation Event, the Holders
shall be entitled to receive in cash out of the assets of the
Company, whether from capital or from earnings available for
distribution to its shareholders (the “Liquidation Funds”), before any
amount shall be paid to the holders of any of shares of Junior
Stock, an amount per Preferred Share equal to the greater of (A)
the Stated Value thereof on the date of such payment and (B) the
amount per share such Holder would receive if such Holder converted
such Preferred Shares into Common Stock immediately prior to the
date of such payment; provided, however, that, if the
Liquidation Funds are insufficient to pay the full amount due to
the Holders and holders of shares of Parity Stock, then each Holder
and each holder of Parity Stock shall receive a percentage of the
Liquidation Funds equal to the full amount of Liquidation Funds
payable to such Holder and such holder of Parity Stock as a
liquidation preference, in accordance with their respective
certificate of designation (or equivalent), as a percentage of the
full amount of Liquidation Funds payable to all holders of
Preferred Shares and all holders of shares of Parity Stock. To the
extent necessary, the Company shall cause such actions to be taken
by each of its Subsidiaries so as to enable, to the maximum extent
permitted by law, the proceeds of a Liquidation Event to be
distributed to the Holders in accordance with this Section 10. All
the preferential amounts to be paid to the Holders under this
Section 10 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the
distribution of any Liquidation Funds of the Company to the holders
of shares of Junior Stock in connection with a Liquidation Event as
to which this Section 10 applies.
11. Participation. In addition to
any adjustments pursuant to Section 7(b), the Holders shall, as
holders of Preferred Shares, be entitled to receive such dividends
paid and distributions made to the holders of shares of Common
Stock to the same extent as if such Holders had converted each
Preferred Share held by each of them into shares of Common Stock
(without regard to any limitations on conversion herein or
elsewhere) and had held such shares of Common Stock on the record
date for such dividends and distributions. Payments under the
preceding sentence shall be made concurrently with the dividend or
distribution to the holders of shares of Common Stock; provided, however, to the extent that a
Holder’s right to participate in any such dividend or
distribution would result in such Holder exceeding the Maximum
Percentage, then such Holder shall not be entitled to participate
in such dividend or distribution to such extent (or the beneficial
ownership of any such shares of Common Stock as a result of such
dividend or distribution to such extent) and such dividend or
distribution to such extent shall be held in abeyance for the
benefit of such Holder until such time, if ever, as its right
thereto would not result in such Holder exceeding the Maximum
Percentage.
-10-
12. Vote to Change the Terms of or Issue
Preferred Shares. In addition to any other rights provided
by law, except where the vote or written consent of the holders of
a greater number of shares is required by law or by another
provision of the Articles of Incorporation, without first obtaining
the affirmative vote at a meeting duly called for such purpose or
the written consent without a meeting of the Required Holders,
voting together as a single class, the Company shall not: (a) amend
or repeal any provision of, or add any provision to, its Articles
of Incorporation or bylaws, or file any certificate of designation
or articles of amendment of any series of shares of preferred
stock, if such action would adversely alter or change in any
respect the preferences, rights, privileges or powers, or
restrictions provided for the benefit, of the Preferred Shares,
regardless of whether any such action shall be by means of
amendment to the Articles of Incorporation or by merger,
consolidation or otherwise; (b) increase or decrease (other than by
conversion) the authorized number of Preferred Shares; (c) without
limiting any provision of Section 2, create or authorize (by
reclassification or otherwise) any new class or series of shares
that has a preference over or is on a parity with the Preferred
Shares with respect to dividends or the distribution of assets on
the liquidation, dissolution or winding-up of the Company; (d)
purchase, repurchase or redeem any shares of capital stock of the
Company junior in rank to the Preferred Shares (other than pursuant
to equity incentive agreements (that have in good faith been
approved by the Board) with employees giving the Company the right
to repurchase shares upon the termination of services); (e) without
limiting any provision of Section 2, pay dividends or make any
other distribution on any shares of any capital stock of the
Company junior in rank to the Preferred Shares; or (f) without
limiting any provision of Section 16, whether or not prohibited by
the terms of the Preferred Shares, circumvent a right of the
Preferred Shares.
13. Intentionally
Omitted.
14. Lost or Stolen Certificates.
Upon receipt by the Company of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any
certificates representing Preferred Shares (as to which a written
certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or
destruction, of an indemnification undertaking by the applicable
Holder to the Company in customary and reasonable form and, in the
case of mutilation, upon surrender and cancellation of the
certificate(s), the Company shall execute and deliver new
certificate(s) of like tenor and date.
15. Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies
provided in this Certificate of Designation shall be cumulative and
in addition to all other remedies available under this Certificate
of Designation and any of the other Transaction Documents, at law
or in equity (including a decree of specific performance and/or
other injunctive relief), and no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to
such remedy. Nothing herein shall limit any Holder’s right to
pursue actual and consequential damages for any failure by the
Company to comply with the terms of this Certificate of
Designation. The Company covenants to each Holder that there shall
be no characterization concerning this instrument other than as
expressly provided herein. 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 a
Holder 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
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
or threatened breach, each Holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any such
breach or any such threatened breach, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall provide all information and
documentation to a Holder that is requested by such Holder to
enable such Holder to confirm the Company’s compliance with
the terms and conditions of this Certificate of
Designation.
-11-
16. Noncircumvention. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Articles of Incorporation, bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, 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 of this Certificate of Designation,
and will at all times in good faith carry out all of the provisions
of this Certificate of Designation and take all action as may be
required to protect the rights of the Holders. Without limiting the
generality of the foregoing or any other provision of this
Certificate of Designation, the Company (i) shall not increase
the par value of any shares of Common Stock receivable upon the
conversion of any Preferred Shares above the Conversion Price then
in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock
upon the conversion of Preferred Shares and (iii) shall, so long as
any Preferred Shares are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, the maximum number of shares of
Common Stock as shall from time to time be necessary to effect the
conversion of the Preferred Shares then outstanding (without regard
to any limitations on conversion contained herein).
17. Failure or Indulgence Not
Waiver. No failure or delay on the part of a Holder 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. No
waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party. This Certificate of
Designation shall be deemed to be jointly drafted by the Company
and all Holders and shall not be construed against any Person as
the drafter hereof.
18. Notices. The Company shall
provide each Holder of Preferred Shares with prompt written notice
of all actions taken pursuant to the terms of this Certificate of
Designation, including in reasonable detail a description of such
action and the reason therefor. Whenever notice is required to be
given under this Certificate of Designation, unless otherwise
provided herein, such notice must be in writing and shall be given
in accordance with the Purchase Agreement. Without limiting the
generality of the foregoing, the Company shall give written notice
to each Holder (i) promptly following any adjustment of the
Conversion Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least
fifteen (15) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any grant,
issuances, or sales of any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property to
all holders of shares of Common Stock as a class or (C) for
determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided, in each case,
that such information shall be made known to the public prior to,
or simultaneously with, such notice being provided to any
Holder.
19. Transfer of Preferred Shares.
Subject to the restrictions set forth in Purchase Agreement, a
Holder may transfer some or all of its Preferred Shares without the
consent of the Company.
20. Preferred Shares Register. The
Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate and
provide notice to the Holders thereof), a register for the
Preferred Shares, in which the Company shall record the name,
address and facsimile number of the Persons in whose name the
Preferred Shares have been issued, as well as the name, address,
facsimile number and tax identification number of each transferee.
The Company may treat the Person in whose name any Preferred Shares
is registered on the register as the owner and holder thereof for
all purposes, notwithstanding any notice to the contrary, but in
all events recognizing any properly made transfers.
-12-
21. Shareholder Matters;
Amendment.
(a) Shareholder Matters. Any
shareholder action, approval or consent required, desired or
otherwise sought by the Company pursuant to the NRS, the Articles
of Incorporation, this Certificate of Designation or otherwise with
respect to the issuance of Preferred Shares may be effected by
written consent of the Company’s shareholders or at a duly
called meeting of the Company’s shareholders, all in
accordance with the applicable rules and regulations of the NRS.
This provision is intended to comply with the applicable sections
of the NRS permitting shareholder action, approval and consent
affected by written consent in lieu of a meeting.
(b) Amendment. This Certificate of
Designation or any provision hereof may be amended by obtaining the
affirmative vote at a meeting duly called for such purpose, or
written consent without a meeting in accordance with the NRS, of
the Required Holders, voting separate as a single class, and with
such other shareholder approval, if any, as may then be required
pursuant to the NRS and the Articles of Incorporation.
(i) In the case of a
dispute relating to a Closing Bid Price, a Closing Sale Price, a
Conversion Price or fair market value (as the case may be)
(including, without limitation, a dispute relating to the
determination of any of the foregoing), the Company or such
applicable Holder (as the case may be) shall submit the dispute via
facsimile (A) within two (2) Business Days after delivery of the
applicable notice giving rise to such dispute to the Company or
such Holder (as the case may be) or (B) if no notice gave rise to
such dispute, at any time after such Holder learned of the
circumstances giving rise to such dispute. If such Holder and the
Company are unable to resolve such dispute relating to such Closing
Bid Price, such Closing Sale Price, such Conversion Price, such
fair market value by 5:00 p.m. (New York time) on the second
(2nd)
Business Day following such delivery by the Company or such Holder
(as the case may be) of such dispute to the Company or such Holder
(as the case may be), then such Holder shall select an independent,
reputable investment bank to resolve such dispute.
(ii) Such
Holder and the Company shall each deliver to such investment bank
(A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 22(a) and (B)
written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by
the fifth (5th) Business Day
immediately following the date on which such Holder selected such
investment bank (the “Dispute
Submission Deadline”) (the documents referred to in
the immediately preceding clauses (A) and (B) are collectively
referred to herein as the “Required Dispute Documentation”)
(it being understood and agreed that, if either such Holder or the
Company fails to so deliver all of the Required Dispute
Documentation by the Dispute Submission Deadline, then the party
who fails to so submit all of the Required Dispute Documentation
shall no longer be entitled to (and hereby waives its right to)
deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such
investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and such Holder
or otherwise requested by such investment bank, neither the Company
nor such Holder shall be entitled to deliver or submit any written
documentation or other support to such investment bank in
connection with such dispute (other than the Required Dispute
Documentation).
(iii) The
Company and such Holder shall use their respective commercial best
efforts to cause such investment bank to determine the resolution
of such dispute and notify the Company and such Holder of such
resolution no later than ten (10) Business Days immediately
following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne solely by the Company, and such
investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(i) In the case of a
dispute as to the arithmetic calculation of a Conversion Rate, the
Company or such Holder (as the case may be) shall submit the
disputed arithmetic calculation via facsimile (i) within two (2)
Business Days after delivery of the applicable notice giving rise
to such dispute to the Company or such Holder (as the case may be)
or (ii) if no notice gave rise to such dispute, at any time after
such Holder learned of the circumstances giving rise to such
dispute. If such Holder and the Company are unable to resolve such
disputed arithmetic calculation of such Conversion Rate by 5:00
p.m. (New York time) on the second (2nd) Business Day
following such delivery by the Company or such Holder (as the case
may be) of such disputed arithmetic calculation, then such Holder
shall select an independent, reputable accountant or accounting
firm to perform such disputed arithmetic calculation.
-13-
(ii) Such
Holder and the Company shall each deliver to such accountant or
accounting firm (as the case may be) (x) a copy of the initial
dispute submission so delivered in accordance with the first
sentence of this Section 22(a) and (y) written documentation
supporting its position with respect to such disputed arithmetic
calculation, in each case, no later than 5:00 p.m. (New York time)
by the fifth (5th) Business Day
immediately following the date on which such Holder selected such
accountant or accounting firm (as the case may be) (the
“Submission
Deadline”) (the documents referred to in the
immediately preceding clauses (x) and (y) are collectively referred
to herein as the “Required
Documentation”) (it being understood and agreed that
if either such Holder or the Company fails to so deliver all of the
Required Documentation by the Submission Deadline, then the party
who fails to so submit all of the Required Documentation shall no
longer be entitled to (and hereby waives its right to) deliver or
submit any written documentation or other support to such
accountant or accounting firm (as the case may be) with respect to
such disputed arithmetic calculation and such accountant or
accounting firm (as the case may be) shall perform such disputed
arithmetic calculation based solely on the Required Documentation
that was delivered to such accountant or accounting firm (as the
case may be) prior to the Submission Deadline). Unless otherwise
agreed to in writing by both the Company and such Holder or
otherwise requested by such accountant or accounting firm (as the
case may be), neither the Company nor such Holder shall be entitled
to deliver or submit any written documentation or other support to
such accountant or accounting firm (as the case may be) in
connection with such disputed arithmetic calculation of the
Conversion Rate (other than the Required
Documentation).
(iii) The
Company and such Holder shall use their respective commercial best
efforts to cause such accountant or accounting firm (as the case
may be) to perform such disputed arithmetic calculation and notify
the Company and such Holder of the results no later than ten (10)
Business Days immediately following the Submission Deadline. The
fees and expenses of such accountant or accounting firm (as the
case may be) shall be borne solely by the Company, and such
accountant’s or accounting firm’s (as the case may be)
arithmetic calculation shall be final and binding upon all parties
absent manifest error.
(c) Miscellaneous. The Company
expressly acknowledges and agrees that (i) this Section 22
constitutes an agreement to arbitrate between the Company and such
Holder (and constitutes an arbitration agreement) under §
7501, et seq. of the New York Civil Practice Law and Rules
(“CPLR”) and
that each party shall be entitled to compel arbitration pursuant to
CPLR § 7503(a) in order to compel compliance with this Section
22, (ii) a dispute relating to a Conversion Price includes, without
limitation, disputes as to whether an agreement, instrument,
security or the like constitutes and Option or Convertible Security
(iii) the terms of this Certificate of Designation and each other
applicable Transaction Document shall serve as the basis for the
selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby
expressly authorized) to make all findings, determinations and the
like that such investment bank determines are required to be made
by such investment bank in connection with its resolution of such
dispute and in resolving such dispute such investment bank shall
apply such findings, determinations and the like to the terms of
this Certificate of Designation and any other applicable
Transaction Documents, (iv) the terms of this Certificate of
Designation and each other applicable Transaction Document shall
serve as the basis for the selected accountant’s or
accounting firm’s performance of the applicable arithmetic
calculation, (v) for clarification purposes and without implication
that the contrary would otherwise be true, disputes relating to
matters described in Section 22(a) shall be governed by Section
22(a) and not by Section 22(b), (vi) such Holder (and only such
Holder), in its sole discretion, shall have the right to submit any
dispute described in this Section 22 to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of
utilizing the procedures set forth in this Section 22 and (vii)
nothing in this Section 22 shall limit such Holder from obtaining
any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in
Section 22(a) or Section 22(b)).
-14-
23. Certain Defined Terms. For
purposes of this Certificate of Designation, the following terms
shall have the following meanings:
(a) “1934
Act” means the Securities Exchange Act of
1934, as amended.
(b) “Affiliate” as applied to any
Person, means any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For the
purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and
“under common control
with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract
or otherwise. For purposes of this definition, a Person shall be
deemed to be “controlled by” a Person
if such latter Person possesses, directly or indirectly, power to
vote 10% or more of the securities having ordinary voting power for
the election of directors of such former Person.
(c) “Bloomberg” means Bloomberg,
L.P.
(d) “Business Day” means any day other
than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.
(e) “Closing Bid Price” and
“Closing Sale
Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price
or the closing trade price (as the case may be) then the last bid
price or last trade price, respectively, of such security prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or
trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market as
reported by Bloomberg, or, if no closing bid price or last trade
price, respectively, is reported for such security by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported by OTC Markets
Group Inc. If the Closing Bid Price or the Closing Sale Price
cannot be calculated for a security on a particular date on any of
the foregoing bases, the Closing Bid Price or the Closing Sale
Price (as the case may be) of such security on such date shall be
the fair market value as mutually determined by the Company and the
applicable Holder. If the Company and such Holder are unable to
agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in
Section 22. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other
similar transaction during such period.
(f) “Common Stock” means (i) the
Company’s shares of common stock, par value $0.01 per share,
and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification
of such common stock.
(g) “Conversion Price” means, with
respect to each Preferred Share, as of any Conversion Date or other
applicable date of determination, $0.75, subject to adjustment as
provided herein.
-15-
(h) “Convertible Securities” means any
stock or other security (other than Options) that is at any time
and under any circumstances, directly or indirectly, convertible
into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common
Stock.
(i) “Eligible Market” means The New
York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market,
the Nasdaq Global Market, the OTCQX, the OTCQB or the Principal
Market (or any successor thereto).
(j) “Fundamental
Transaction” means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related
transactions, (A) consolidate or merge with or into (whether
or not the Company or any of its Subsidiaries is the surviving
corporation) any other Person, or (B) sell, lease, license, assign,
transfer, convey or otherwise dispose of all or substantially all
of its respective properties or assets to any other Person, or (C)
allow any other Person to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding
shares of Voting Stock of the Company (not including any shares of
Voting Stock of the Company held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or
party to, such purchase, tender or exchange offer), or (D)
consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with any other
Person whereby such other Person acquires more than 50% of the
outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the other Person
or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share
purchase agreement or other business combination), or
(E) reorganize, recapitalize or reclassify the Common Stock,
or (ii) any “person” or “group” (as these
terms are used for purposes of Sections 13(d) and 14(d) of the 1934
Act and the rules and regulations promulgated thereunder) is or
shall become the “beneficial owner” (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the
aggregate ordinary voting power represented by issued and
outstanding Voting Stock of the Company.
(k) “Holder Pro Rata
Amount” means, with
respect to any Holder, a fraction (i) the numerator of which
is the number of Preferred Shares issued to such Holder pursuant to
the Purchase Agreement on the Initial Issuance Date and (ii) the
denominator of which is the number of Preferred Shares issued to
all Holders pursuant to the Purchase Agreement on the Initial
Issuance Date.
(l) “Liquidation Event” means, whether
in a single transaction or series of transactions, the voluntary or
involuntary liquidation, dissolution or winding-up of the Company
or such Subsidiaries the assets of which constitute all or
substantially all of the assets of the business of the Company and
its Subsidiaries, taken as a whole.
(m) “Options” means any rights,
warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
(n) “Parent Entity” of a Person means
an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is
quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with
the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.
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(o) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency
thereof.
(p) “Purchase Agreement” means that
certain Securities Purchase Agreement by and among the Company and
the initial holders of Preferred Shares, dated as of the Purchase
Date, as may be amended from time in accordance with the terms
thereof.
(q) “Purchase Date” means the Closing
Date (as defined in the Purchase Agreement).
(r) “Principal Market” means The NASDAQ
Capital Market.
(s) “Qualified Transaction” means one
or more acquisitions by the Company of any business, assets, stock,
licenses, interests or properties (including, without limitation,
intellectual property rights) approved by the stockholders of the
Company or any acquisition involving assets, shares of capital
stock, any purchase, merger, consolidation, recapitalization, or
reorganization or involving any licensing, royalties, sharing
arrangement or otherwise which requires the filing by the Company of a Current
Report on Form 8-K with the inclusion of audited financial
statements of the target.
(t) “Securities” shall have the meaning ascribed to it in
the Purchase Agreement.
(u) “Stated Value” shall mean $300 per
share, subject to adjustment for stock splits, stock dividends,
recapitalizations, reorganizations, reclassifications,
combinations, subdivisions or other similar events occurring after
the Initial Issuance Date with respect to the Preferred
Shares.
(v) “Subsidiaries”
shall have the meaning as set forth in the Purchase
Agreement.
(w) “Successor Entity” means the Person
(or, if so elected by the Required Holders, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction
or the Person (or, if so elected by the Required Holders, the
Parent Entity) with which such Fundamental Transaction shall have
been entered into.
(x) “Trading Day” means, as applicable,
(i) with respect to all price determinations relating to the Common
Stock, any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading
Day in writing by the Required Holders or (ii) with respect to all
determinations other than price determinations relating to the
Common Stock, any day on which The New York Stock Exchange (or any
successor thereto) is open for trading of securities.
(y) “Transaction Documents” shall have
the meaning ascribed to it in the Purchase Agreement.
(z) “ “Voting Stock” of a Person means
capital stock of such Person of the class or classes pursuant to
which the holders thereof have the general voting power to elect,
or the general power to appoint, at least a majority of the board
of directors, managers, trustees or other similar governing body of
such Person (irrespective of whether or not at the time capital
stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
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24. Disclosure. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Certificate of Designation, unless the Company has in good
faith determined that the matters relating to such notice do not
constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall simultaneously with
any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or
otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to each
Holder contemporaneously with delivery of such notice, and in the
absence of any such indication, each Holder shall be allowed to
presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its
Subsidiaries. Nothing contained in this Section 24 shall limit any
obligations of the Company, or any rights of any Holder, under the
Purchase Agreement.
* * * *
*
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IN
WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series M Convertible Preferred Stock of MabVax
Therapeutics Holdings, Inc. to be signed by its Chief Executive
Officer on this __ day of January 2018.
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MABVAX
THERAPEUTICS HOLDINGS, INC.
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By:
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Name:
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David
J. Hansen
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Title:
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Chief
Executive Officer
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EXHIBIT I
MABVAX THERAPUTICS HOLDINGS, INC.
CONVERSION NOTICE
Reference is made
to the Certificate of Designation of Rights, Powers, Preferences,
Privileges and Restrictions of the 0% Series M Convertible
Preferred Stock of MabVax Therapeutics Holdings, Inc. (the
“Certificate of
Designation”). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to
convert the number of shares of 0% Series M Convertible Preferred
Stock, $0.01 par value per share (the “Preferred Shares”), of MabVax
Therapeutics Holdings, Inc., a Delaware corporation (the
“Company”),
indicated below into shares of common stock, $0.01 par value per
share (the “Common
Stock”), of the Company, as of the date specified
below.
Date of
Conversion:
Number
of Preferred Shares to be
converted:
Share
certificate no(s). of Preferred Shares to be
converted:
Tax ID
Number (If
applicable):
Conversion
Price:_________________________________________________________
Number
of shares of Common Stock to be
issued:
Please
issue the shares of Common Stock into which the Preferred Shares
are being converted in the following name and to the following DTC
Instructions:
Account
Number:
Transaction Code
Number:
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EXHIBIT II
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby
directs __________________ to issue the above indicated number of
shares of Common Stock in accordance with the Irrevocable Transfer
Agent Instructions dated __________, 2018 from the Company and
acknowledged and agreed to by _______________.
MABVAX
THERAPEUTICS HOLDINGS, INC.
By:
Name:
Title:
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