CERTIFICATE OF DESIGNATIONS
PipeFund™
Form of
Certificate of Designations
This Form of Certificate of Designations is intended for use with PipeFund Standard Transaction Documents.
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This form (PST Form) is intended to facilitate expediency and consistency in transactions involving a private investment in a public company’s equity and/or equity-linked securities (PIPE) or an offering of a public company’s equity and/or equity-linked securities directly to purchasers pursuant to an effective registration statement under the Securities Act (RD). Parties to any PIPE or RD transaction should consult with their legal counsel and any other advisers they deem appropriate prior to using this PST Form or engaging in any such transaction. PipeFund Services Organization, LLC (PSO) is not providing any legal advice or opinion in connection with this PST Form or its use in a particular PIPE or RD transaction, disclaims any warranty, express or implied, concerning the use or license of this PST Form for any particular PIPE or RD transaction, and shall not have any liability arising out of the use or inability to use this PST Form. This PST Form is the copyrighted property of RPITL, LLC and may not be reproduced, distributed or used in any form without a valid license, and any unauthorized use is strictly prohibited. More information concerning the license or permitted use of this PST Form may be obtained at .
CERTIFICATE OF DESIGNATIONS[1]
OF
[SERIES [___] [CUMULATIVE] CONVERTIBLE PREFERRED STOCK][2]
OF
[COMPANY]
[Note: Certificate of Designations (or Amendment to Certificate of Incorporation) must be conformed to requisite format and substance under, and be executed and filed in compliance with, the laws of the Company’s state of incorporation.]
[Company], a corporation organized and existing under the laws of the State of [State] (the “Corporation”), pursuant to the provisions of [Section 151 of the General Corporation Law of the State of Delaware][3], does hereby make this Certificate of Designations and does hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Certificate of Incorporation of the Corporation, the Board of Directors duly adopted the following resolutions [at a meeting of the Board of Directors held on] [by [unanimous] written consent dated as of] [Date], which resolutions remain in full force and effect as of the date hereof:
RESOLVED, that pursuant to [Article ___] of the Certificate of Incorporation of the Corporation, as amended to date, the Board of Directors hereby authorizes the issuance of, and fixes the designations, powers, preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions of, a series of preferred stock of the Corporation, as follows:
Designation and Issuance. There is hereby created out of the authorized and unissued shares of the preferred stock of the Corporation a series of preferred stock designated as the “[Series [___] Convertible Preferred Stock]2.” The number of shares (the “Preferred Shares”) constituting such series which the Corporation is authorized to issue in the aggregate shall be [____________] shares, [par value $____] [no par value] per share. The Preferred Shares shall be issued by the Corporation pursuant to [a] [one or more] securities purchase agreement[s] ([each a] [collectively,] the “Securities Purchase Agreement”) between the Corporation and the subscriber or subscribers for the Preferred Shares thereunder (each such subscriber or subsequent holder of Preferred Shares shall be referred to herein as a “Holder” and collectively as the “Holders”). When Preferred Shares are purchased or otherwise acquired by the Corporation or converted into Common Stock, [no] par value [$_____ per share] (the “Common Stock”), of the Corporation, the Corporation shall take all necessary action to cause the Preferred Shares so purchased or acquired to be canceled and reverted to authorized but unissued shares of preferred stock undesignated as to series. The Corporation shall not issue any Preferred Shares other than pursuant to [a] [the] Securities Purchase Agreement, unless such issuance shall have been approved by the Requisite Holders.
Definitions[4]. For purposes hereof, in addition to the terms defined elsewhere herein (a) each initially capitalized term used herein and not otherwise defined herein shall have the meaning ascribed thereto in the Securities Purchase Agreement (including without limitation definitions incorporated therein by reference to PST Document GTC or by reference indirectly to PST Document DEF, each a PipeFund Standard Transaction Document available and accessible at ), and (b) the following terms shall have the following meanings:
[“Breach Event” means (i) any breach of any material representation or warranty of the Corporation as of the date made in the Securities Purchase Agreement or any document delivered in connection therewith, or (ii) any breach by the Corporation of any material covenant or other provision of the Securities Purchase Agreement, this Certificate of Designations or any document delivered in connection herewith or therewith (including without limitation failure to pay dividends hereunder on the applicable Dividend Payment Date) which breach, if capable of being cured, has not been cured within [twenty (20)] days after notice of such breach has been given to the Corporation by the Holders of a majority of the Preferred Shares then outstanding (or the Holders suffering such breach, if less).]
“Conversion Price” means [$_____] [or insert formula], which Conversion Price shall be subject to adjustment as provided herein.
[“Dividend Conversion Price” means [the lesser of the Conversion Price and] _____% of the Market Price, [in each case] determined as of the applicable Dividend Payment Date for which the Dividend Conversion Price is being determined.]
“Dividend Payment Date” means the [first] [last] day of each calendar [quarter] [month] [beginning on ___________], provided that if any such day is not a Business Day, then such Dividend Payment Date shall mean the next succeeding day which is a Business Day.
"Liquidation" means the liquidation, dissolution or winding up of the Corporation or its Subsidiaries the assets of which constitute all or substantially all the assets of the business of the Corporation and its Subsidiaries taken as a whole, in a single transaction or series of transactions.
"Liquidation Event" means (a) a Liquidation or (b) a Change of Control [, provided that the purchase or redemption by the Corporation of stock of any class, in any manner permitted by law, shall not, for the purposes of this Certificate of Designations, be deemed to be a Liquidation Event].
“Stated Value” means [$1,000.00].
Rank. The Preferred Shares shall, with respect to preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation, whether voluntary or involuntary, rank (a) junior and be subordinate to all indebtedness of the Corporation now or hereafter outstanding[5], (b) senior to all classes of the Corporation’s Common Stock and to all other classes and series of equity securities of the Corporation which by their terms expressly provide that it ranks junior to the Preferred Shares as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (collectively referred to, together with all classes of Common Stock of the Corporation, as “Junior Stock”), and (c) on parity with each other class or series of preferred stock established or issued hereafter by the Board of Directors of the Corporation the terms of which expressly provide that such class or series shall rank on a parity with the Preferred Shares as to preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (collectively referred to as “Parity Stock”). [The Corporation shall be permitted to issue preferred stock that is junior in rank to the Preferred Shares in respect of the preferences as to distributions and payments upon the liquidation, dissolution and winding up of the Corporation, provided that the maturity date (or any other date requiring redemption or repayment of such preferred stock) of any such junior preferred stock is not on or before the [Maturity Date].] [The Corporation shall not issue any capital stock which is senior to [or pari passu with] the Preferred Shares without the prior written consent of the Requisite Holders.] In the event of the merger or consolidation of the Corporation with or into another corporation, the Preferred Shares shall maintain their relative powers, designations and preferences provided for herein. Each Preferred Share shall rank equally in all respects.
Liquidation Preference. In the event of any Liquidation [Event], either voluntary or involuntary, each Holder shall be entitled to receive, out of the assets of the Corporation available for distribution to stockholders, whether from capital or from earnings available for distribution to its stockholders (the “Liquidation Funds”), prior and in preference to any distribution of any assets of the Corporation (or any surviving, successor or acquiring entity) to the holders of any Junior Stock, an amount equal to the greater of (a) [[120%] of] the Stated Amount per Preferred Share held by such Holder plus all accrued but unpaid dividends thereon and liquidated damages applicable thereto, and (b) such amount per Preferred Share as would have been payable had each such share been converted into Common Stock pursuant to Section 7 below immediately prior to such Liquidation [Event] (collectively, the “Liquidation Value”), provided that, if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of shares of other classes or series of preferred stock of the Corporation that are of equal rank with the Preferred Shares as to payments of Liquidation Funds, then the Holders and such other holders shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. All payments for which this Section provides shall be in cash, property (valued at its fair market value as determined by an independent appraiser reasonably acceptable to the Holders of a majority of the Preferred Shares) or a combination thereof, provided that no cash shall be paid to holders of Junior Stock unless each Holder has been paid in cash the full Liquidation Value (including any accrued and unpaid dividends and liquidated damages to which such Holder is entitled as provided herein). To the extent necessary, the Corporation 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. All the preferential amounts to be paid to the Holders under this Section 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 Corporation to the holders of shares of Junior Stock in connection with, a Liquidation [Event] as to which this Section applies. After the payment of all preferential amounts required to be paid to the Holders and any other class or series of stock of the Corporation ranking on liquidation senior to or on a parity with the Preferred Shares, upon the Liquidation of the Corporation, the holders of shares of Junior Stock then outstanding shall be entitled to receive the remaining assets and funds of the Corporation available for distribution to its stockholders. After payment of the full Liquidation Value to all Holders, the Holders will not be entitled to any further participation as such in any distribution of the assets of the Corporation except to the extent otherwise set forth herein, provided that nothing contained herein shall affect any rights which Holders may have with respect to any requirement that the Corporation repurchase the Preferred Shares (if any) or for any right to monetary damages. The Corporation shall provide written notice of any Liquidation Event to each record Holder not less than [30] days prior to the payment date or effective date thereof, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holders.
Voting.
1 Class Voting Rights. In addition to all other requirements imposed by [State] law, and all other voting rights granted under the Corporation’s [Certificate] of Incorporation, the affirmative vote or written consent of the Holders of at least [a majority] [______________ percent (___%)] of the Corporation’s outstanding Preferred Shares, given in person or by proxy, either in writing or at a meeting, in which the Holders vote separately as a class, shall be necessary for the Corporation to:
1 amend, modify, alter or repeal this Certificate of Designations or the provisions of the Preferred Shares contained herein (whether by merger, consolidation, reclassification, reorganization or otherwise);
2 amend, modify, alter or repeal the [Certificate] of Incorporation or By-Laws of the Corporation (whether by merger, consolidation, reclassification, reorganization or otherwise) so as to change or [materially and] adversely affect any right, preference, obligation, privilege or voting power of the Preferred Shares [, provided, however, that any creation and issuance of another series of Junior Stock shall not be deemed to adversely affect such rights, preferences, privileges or voting powers];
3 [authorize, create, issue, increase or decrease the authorized or issued amount of any class or series of stock (other than any class or series of Junior Stock), including but not limited to the authorization or issuance of any more shares of Preferred Shares, ranking [pari passu with or] senior to the Preferred Shares, with respect to maturity dates, dividend payments, redemption features, conversion rights, or distribution of assets on liquidation, dissolution or winding up;]
4 [declare or pay dividends or make distributions on shares of Common Stock or any other shares of the Corporation’s Junior Stock (whether in cash, stock or other property);]
5 redeem, purchase or otherwise acquire, directly or indirectly, any shares of capital stock of the Corporation or any of its subsidiaries or any option, warrant or other right to purchase or acquire any such shares, or any other security, other than [(A)] the redemption of Preferred Shares pursuant to the terms hereof, [or (B) the repayment or prepayment of any indebtedness in the ordinary course of business,] [or (C) repurchases from employees of the Corporation not to exceed $_________ in the aggregate amount per fiscal year, or, provided that all dividends have been paid upon the Preferred Shares, repurchases pursuant to Rule 10b-18 under the Exchange Act of up to $__________ per fiscal year and repurchases pursuant to any contractual redemption obligations existing as of the date hereof as disclosed in the Corporation’s public filings with the Securities and Exchange Commission];
6 [reclassify the Corporation’s outstanding securities;]
7 [voluntarily file for bankruptcy, liquidate the Corporation’s assets or make an assignment for the benefit of the Corporation’s creditors;]
8 [increase the authorized number of Preferred Shares;]
9 [change the nature of the Corporation’s business;] or
10 [enter into any agreement with respect to the foregoing;][.]
[provided, however, that Holders of Preferred Shares [(other than the subscribers under the Securities Purchase Agreement and their affiliates)] who are affiliates of the Corporation (and the Corporation itself) shall not participate in such vote and the Preferred Shares of such Holders shall be disregarded and deemed not to be outstanding for purposes of such vote.]
2 General Voting Rights. [Except as otherwise provided herein or as otherwise required by applicable law, the Holders of Preferred Shares shall not have the right to vote in connection with any matter voted upon by the holders of Common Stock of the Corporation.] [In addition to any class voting rights set forth above or provided by applicable law or the [Certificate] of Incorporation, the Holders of Preferred Shares shall have the right to vote together with the holders of Common Stock as a single class on any matter on which the holders of Common Stock are entitled to vote, 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 holders of Common Stock. With respect to the voting rights of the Holders pursuant to the preceding sentence, each Holder (i) shall be entitled to one vote for each share of Common Stock that would be issuable to such Holder upon the conversion of all the Preferred Shares held by such Holder on the record date for the determination of shareholders entitled to vote at such meeting or the effective date of such written consent (after taking into account the conversion limitation set forth in Section 7(c)[(i)] below [but disregarding the conversion limitation set forth in Section 7(c)(ii) below][6]), provided that any fractional shares resulting from the above formula shall be rounded to the nearest whole number (after aggregating all shares into which the Preferred Shares held by each Holder could be converted), and (ii) shall have voting rights and powers equal to the voting rights and powers of the Common Stock, voting together with the Common Stock as a single class (except as otherwise expressly provided herein or as required by law). Each Holder shall be entitled to receive (A) the same prior notice of any stockholders’ meeting as is provided to the holders of Common Stock in accordance with the bylaws of the Corporation, and (B) prior notice of all stockholder actions to be taken by legally available means in lieu of a meeting (in each case including without limitation copies of proxy materials and other information sent to stockholders).]
Dividends. The Holders shall be entitled to receive, when, if and as declared by the Corporation’s Board of Directors, out of funds legally available therefor, [cumulative] dividends payable as set forth in this Section [6].
1 Cumulative. Dividends on each Preferred Share Stock shall accrue and shall be cumulative and accumulate from the date of issuance of such share (the “Issuance Date”), whether or not earned or declared by the Board of Directors of the Corporation, at the Dividend Rate (as defined below), until paid, in preference and priority to any payment of any dividend on the Common Stock or any other Junior Stock of the Corporation.
2 Dividend Rate. The dividend rate (the “Dividend Rate”) on each Preferred Share shall be __________ percent (___%) per annum of the Stated Value, accruing daily from the Issuance Date and compounded on each Dividend Payment Date [, provided that in the event that any Breach Event occurs, then the Dividend Rate shall thereafter be equal to __________ percent (___%) per annum so long as such Breach Event continues].
3 Payment.[7] The Corporation shall declare and pay dividends on the Preferred Shares in arrears on each Dividend Payment Date, commencing with the first Dividend Payment Date occurring after [the Issuance Date] [Date]. The amount of dividends payable to each Holder for each dividend period or part thereof (the “Dividend Amount”) shall be computed by multiplying (1) the number of Preferred Shares held by such Holder, by (2) the State Value, by (3) the Dividend Rate applicable for such period, by (4) a fraction, the numerator of which shall be the number of days in the dividend period or part thereof on which such share was outstanding and the denominator of which shall be [365] [360]. The Dividend Amount payable to each Holder as of a Dividend Payment Date shall be made [in cash] [or in shares of Common Stock] [or a combination thereof].[8]
1 Dividend Payment Notice. Prior to each Dividend Payment Date the Corporation shall deliver to each Holder an irrevocable written notice electing to pay the Dividend Amount payable thereon in cash or Common Stock [(or a combination thereof, in which case such notice shall specify the amount payable in cash)]. Such notice shall be delivered at least [ten (10)] Trading Days prior to the applicable Dividend Payment Date but no more than [thirty-one (31)] days prior to such Dividend Payment Date. If such notice is not delivered within the prescribed period set forth in the preceding sentence, then the Dividend Amount shall be paid in cash on such Dividend Payment Date. All Holders of Preferred Shares shall be treated the same with respect to the Corporation’s election to pay any Dividend Amount in cash or stock [(or a combination thereof, in which case the percentage paid in cash shall be the same for all Holders)].
2 Cash Dividend Payment. To the extent the Corporation elects or is required to pay the Dividend Amount in cash on any Dividend Payment Date, then on such date the Corporation shall pay to each Holder in satisfaction of such obligation an amount equal to such Dividend Amount due [(or such portion thereof as may be timely elected to be paid in cash)].
3 Stock Dividend Payment. To the extent the Corporation elects to pay the Dividend Amount in shares of Common Stock on any Dividend Payment Date, the number of such shares to be issued as and for such Dividend Amount shall be equal to (x) [____% of] such Dividend Amount due [(or such portion thereof as may be timely elected to be paid in stock)], divided by (y) the Dividend Conversion Price determined as of such Dividend Payment Date. Such shares shall be issued and delivered within three (3) Trading Days following such Dividend Payment Date and shall be duly authorized, validly issued, fully paid, non-assessable and free and clear of all encumbrances, restrictions and legends[9]. If any Holder does not receive the requisite number of shares of Common Stock in the form required above within such three Trading Day period, such Holder shall have the option of either (a) requiring the Corporation to issue and deliver all or a portion of such shares or (b) canceling such election to pay in Common Stock (in whole or in part), in which case the Corporation shall immediately pay such Dividend Amount due hereunder in cash (or such portion as such Holder specifies is to be paid in cash instead of stock). Any payment of the Dividend Amount in shares of Common Stock pursuant to the terms hereof shall constitute and be deemed a conversion of such dividends for all purposes and such shares shall constitute Conversion Shares and be issued in accordance with the terms below regarding conversion (except that such conversion shall be at the Dividend Conversion Price).
4 Limitations to Dividend Payment in Common Stock. Notwithstanding anything to the contrary contained herein, the Corporation shall be prohibited from exercising its right to pay any Dividend Amount in shares of Common Stock (and must deliver cash in respect thereof) on the applicable Dividend Payment Date with respect to any Holder:
1 if, at any time from the [tenth (10th)] Trading Day immediately preceding the applicable Dividend Payment Date through the date such Holder receives the applicable Common Stock, any of the Equity Conditions fails to be satisfied [or a Breach Event exists or occurs], unless otherwise waived in writing by such Holder in whole or in part at such Holder’s option; and
2 to the extent, and only to the extent, that such issuance of shares of Common Stock would result in such Holder exceeding such Holder’s Beneficial Ownership Limitation or Maximum Share Issuance Allocation, if any, contained in Section herein.
4 Manner of Payment. All Dividend Amounts payable [in cash] hereunder shall be made in lawful money of the United States of America to each Holder in whose name the Preferred Shares are registered. Such payments shall be made by wire transfer of immediately available funds to the account such Holder may from time to time designate by written notice to the Corporation or by Corporation check, without any deduction, withholding or offset for any reason whatsoever except to the extent required by law, and the Corporation represents that to its knowledge no deduction, withholding or offset is so required for any tax or any other reason.
5 [Participation.[10] Subject to the rights of the holders, if any, of any shares of preferred stock ranking pari passu with the Preferred Shares, the Holders shall, as holders of Preferred Shares, be entitled to such dividends paid and distributions made to the holders of Common Stock to the same extent as if such Holders had converted the Preferred Shares into 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 Common Stock. [Following the occurrence of a Liquidation Event and the payment in full to a Holder of its applicable liquidation preference, such Holder shall cease to have any rights hereunder to participate in any future dividends or distributions made to the holders of Common Stock.]]
Conversion.
1 Conversion Right.
1 Conversion Notice. Subject to the terms, conditions and provisions contained herein (including without limitation the limitations on conversion set forth in Section 7(c) below), each Holder shall have the right to convert the Preferred Shares into shares of Common Stock in whole or in part at any time and from time to time at such Holder’s option by delivering to the Corporation [(i)] a written notice, in the form attached hereto as Exhibit A (“Conversion Notice”), specifying therein the number of Preferred Shares elected by the Holder to be converted into Conversion Shares [, and (ii) the original stock certificate evidencing the Preferred Shares being converted][11]. The date on which the conversion shall occur (“Conversion Date”) shall be the date such Conversion Notice is delivered to the Corporation or such later date which may be specified in the Conversion Notice as the Conversion Date. Effective as of the Conversion Date, such Holder shall be deemed, to the extent permitted by applicable law, for all corporate purposes to have become the legal and record holder of the Conversion Shares issuable upon conversion of the Preferred Shares pursuant to such Conversion Notice, irrespective of the date on which stock certificate(s) evidencing such Conversion Shares are actually received by such Holder or such Conversion Shares are actually credited to such Holder’s brokerage account, as the case may be.
2 Conversion Rate. The number of Conversion Shares issuable upon a conversion of Preferred Shares shall equal (a) the Stated Value of the Preferred Shares elected to be converted as set forth in the Conversion Notice, plus any accrued but unpaid dividends on such Preferred Shares being converted [(plus any Liquidated Damages payable to the Holder)], divided by (b) the Conversion Price as of the Conversion Date.
3 [Book Entry. The Holders shall not be required to physically surrender and deliver the stock certificate(s) for Preferred Shares to the Corporation in order to effect a conversion of Preferred Shares, and conversions of less than the total amount of Preferred Shares held by a Holder shall have the effect of lowering the outstanding number of Preferred Shares held by such Holder by an amount equal to the number so converted, as if the original stock certificate(s) were cancelled and one or more new stock certificates evidencing the new number of Preferred Shares were issued (“Book Entry”). In connection with Book Entry, each Holder and the Corporation shall maintain records showing the number of Preferred Shares converted and the number of Conversion Shares issued upon each conversion of the Preferred Shares and the date of each such issuance (or use such other method, reasonably satisfactory to such Holder and the Corporation, so as not to require physical surrender of stock certificate(s) evidencing the Preferred Shares upon each conversion thereof). By acceptance of Preferred Shares, each Holder acknowledges that, by reason of Book Entry, following conversion of any Preferred Shares the outstanding number of Preferred Shares held by such Holder may be less than the number set forth on the face of the stock certificate(s) therefor. Upon full conversion of all Preferred Shares held by a Holder, such Holder shall promptly deliver all stock certificate(s) evidencing such Preferred Shares converted to the Corporation.]
2 Delivery of Securities.
1 Delivery in T+3. On or before the third (3rd) Trading Day following the Conversion Date (“Share Delivery Date"), the Corporation shall issue and deliver or cause to be issued and delivered a stock certificate to and in the name of the Holder submitting the Conversion Notice or its designee, dated the applicable Conversion Date (and registered in the Corporation’s share register), for the number of Conversion Shares to which such Holder is entitled pursuant to such conversion (free of restrictive legends and trading restrictions unless a Registration Statement covering the resale of the Conversion Shares and naming the Holder as a selling stockholder thereunder is not then effective and the Conversion Shares are not freely transferable pursuant to Rule 144); provided, however, that if (i) such Conversion Shares are required under the Transaction Documents or otherwise permitted under applicable securities laws to be issued without a restrictive legend, (ii) the Corporation and its Transfer Agent participate in DTC’s DWAC system, and (iii) such Holder has provided the Corporation with the name of its (or its designee’s) broker that participates in DTC’s DWAC system, then the Corporation shall use its best efforts to cause its Transfer Agent to electronically transmit such Conversion Shares to the brokerage account of such Holder (or its designee) by crediting such account through such DWAC system on or prior to the Share Delivery Date.
2 Failure to Timely Deliver Securities. If the Corporation fails to issue and deliver (or cause its Transfer Agent to issue and deliver) stock certificate(s) evidencing the Conversion Shares (or transmit such Conversion Shares via DWAC) to a Holder on or prior to the Share Delivery Date following any conversion of Preferred Shares, such Holder may revoke and withdraw its Conversion Notice, in whole or in part, at any time thereafter prior to the Corporation’s cure of such failure. In addition to any other rights or remedies available to such Holder, [including without limitation any right to receive Liquidated Damages provided for in the Securities Purchase Agreement,] if (i) the Corporation fails to issue and deliver (or cause its Transfer Agent to issue and deliver) stock certificate(s) evidencing the Conversion Shares (or transmit such Conversion Shares via DWAC) to such Holder on or prior to the Share Delivery Date following any conversion of Preferred Shares, and (ii) after the Share Delivery Date but prior to the Corporation’s cure of such failure, such Holder purchases (in an open market transaction or otherwise), or such Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares that such Holder anticipated receiving from the Corporation upon such conversion (a “Buy-In”), then the Corporation shall, within three (3) Trading Days after such Holder’s request, in such Holder’s sole discretion, either (A) pay cash to such Holder in an amount equal to such Holder’s total purchase price (including reasonable brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Corporation’s obligation to deliver such certificate(s) (and to issue such Conversion Shares) shall terminate, or (B) promptly honor its obligation to deliver such Conversion Shares to such Holder and pay cash to such Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of Conversion Shares, multiplied by (y) the VWAP on the applicable Conversion Date. Nothing herein shall limit such Holder’s right to pursue any other rights or remedies available to it hereunder or under the Securities Purchase Agreement, at law or in equity, including without limitation a decree of specific performance with respect to the Corporation’s obligation to timely deliver Conversion Shares upon conversion of Preferred Shares as required pursuant to the terms hereof.
3 Re-Issuance of Preferred Shares. Upon any surrender or delivery to the Corporation of certificates evidencing Preferred Shares following one or more conversions thereof, the Corporation shall, at its expense and as soon as practicable but in no event later than the Share Delivery Date, issue or cause to be issued one or more new stock certificates evidencing the outstanding number of Preferred Shares (issued in accordance with Section 9(e) below) immediately following such conversion(s).
3 Limitations on Conversion.
1 Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the Corporation shall not effect any conversion of Preferred Shares, and no Holder shall have the right to convert any Preferred Shares (or otherwise acquire Conversion Shares with respect to Preferred Shares), to the extent that after giving effect to the issuance of Common Stock upon such conversion (or other issuance), the Holder Group of such Holder would beneficially own in excess of [the Maximum Ownership Percentage] [4.9%] [9.9%] of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon such conversion (including for such purpose the shares of Common Stock issuable upon such conversion or issuance) (“Beneficial Ownership Limitation”). For purposes of calculating the Beneficial Ownership Limitation, the number of shares of Common Stock beneficially owned by such Holder’s Holder Group shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder (including without limitation Regulation 13D-G), provided, however, that such beneficial ownership shall exclude any shares of Common Stock issuable upon conversion, exchange or conversion of (or purchase of Common Stock under) any Convertible Securities or Options outstanding at the time of determination and beneficially owned by such Holder’s Holder Group which contain a limitation on conversion, exchange, conversion or purchase analogous to the Beneficial Ownership Limitation contained herein. To the extent that the Beneficial Ownership Limitation contained herein applies, the determination of whether and to what extent a Holder’s Preferred Shares are convertible (vis-à-vis other Convertible Securities or Options, including without limitation other Preferred Shares, beneficially owned by such Holder’s Holder Group) shall be on the basis of first submission to the Corporation for conversion, exchange, conversion or purchase, as the case may be, or as otherwise determined in the sole discretion of such Holder, and the submission of a Conversion Notice shall be deemed to be such Holder’s determination of whether and to what extent such Holder’s Preferred Shares are convertible (vis-à-vis such other Convertible Securities or Options), in each case subject to the Beneficial Ownership Limitation. In determining the number of outstanding shares of Common Stock for purposes of calculating the Beneficial Ownership Limitation, the Holders may rely on the number of outstanding shares of Common Stock as reflected in (i) the Corporation’s most recent Periodic Report containing such information, (ii) a more recent public announcement by the Corporation, or (iii) any other notice or disclosure by the Corporation or the Corporation’s Transfer Agent setting forth the number of shares of Common Stock outstanding, and each Holder may rely on knowledge it may have concerning any shares of Common Stock issued which are not reflected in the preceding clauses (i) through (iii) (e.g., issuances to such Holder upon a prior conversion of Preferred Shares since the date as of which such number of outstanding shares of Common Stock was reported). Upon the written or oral request of a Holder, the Corporation shall within two (2) Business Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. Each delivery of a Conversion Notice by a Holder will constitute a representation by such Holder that it has evaluated the limitation set forth in this paragraph and determined, based on this paragraph, that the issuance of the full number of Conversion Shares requested in such Conversion Notice is permitted under this paragraph, and the Corporation shall have no obligation to verify or confirm such determination. No conversion of Preferred Shares in violation of this paragraph but otherwise in accordance herewith shall affect the status of the Conversion Shares as validly issued, fully-paid and nonassessable. [By written notice to the Corporation, a Holder may at any time and from time to time increase or decrease its Maximum Ownership Percentage to any other percentage specified in such notice (or specify that the Beneficial Ownership Limitation shall no longer be applicable to such Holder), provided, however, that (A) any such increase (or inapplicability) shall not be effective until the sixty-first (61st) day after such notice is delivered to the Corporation, (B) any such increase or decrease shall apply only to such Holder and not to any other Holders of Preferred Shares, and (C) the Maximum Ownership Percentage shall not be less than 4.9%.] The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this provision (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The Beneficial Ownership Limitation contained in this paragraph shall apply to a successor Holder of Preferred Shares. If at any time the Beneficial Ownership Limitation makes any Preferred Shares non-convertible in whole or in part, the Corporation shall not by reason thereof be relieved of its obligation to issue shares of Common Stock at any time or from time to time thereafter upon conversion of such Preferred Shares as and when shares of Common Stock may be issued in compliance with such limitation.
2 Principal Market Regulation. If the Preferred Shares are issued in a PIPE Transaction, the Corporation shall not be obligated to issue any Conversion Shares upon conversion of Preferred Shares to the extent the issuance of such Conversion Shares would exceed such Holder’s Maximum Share Issuance Allocation then in effect, if any. The terms of the Securities Purchase Agreement (including without limitation Section 4.15 of PST Document GTC incorporated therein by reference) shall govern with respect to any Maximum Share Issuance in effect, including without limitation the Corporation’s obligation to redeem such number of Preferred Shares which cannot be converted due to such Maximum Share Issuance in accordance with the terms and conditions set forth in the Securities Purchase Agreement, which are incorporated herein by reference.
4 No Fractional Shares or Scrip. No fractional Conversion Shares or scrip representing fractional Conversion Shares shall be issued upon any conversion of Preferred Shares. As to any fraction of a share which a Holder would otherwise be entitled to receive upon such conversion, the Corporation shall, at its election, either pay a cash adjustment in respect of such fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
5 Charges, Taxes and Expenses. Issuance and delivery of Conversion Shares upon any conversion of Preferred Shares shall be made without charge to the Holder effecting such conversion for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance thereof, all of which taxes and expenses shall be paid by the Corporation; provided, however, that if the Conversion Shares are to be issued in a name other than the name of such Holder, then (a) the Conversion Notice (and Preferred Shares, if required) when delivered to the Corporation upon conversion shall be accompanied by a copy of the assignment pursuant to which such Conversion Shares were transferred, and (b) the Corporation may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
6 Authorization, Issuance and Reservation of Conversion Shares.
1 Valid Issuance. All Conversion Shares issued upon conversion of any Preferred Shares shall be duly authorized, validly issued, fully paid and nonassessable and free and clear of all Liens, charges, preemptive or similar rights of stockholders, and taxes (other than taxes in respect of any transfer occurring contemporaneously with such issue). Each officer of the Corporation who is charged with the duty of executing stock certificates has full authority to execute and issue the necessary certificates for the Conversion Shares upon any conversion of Preferred Shares. The Corporation shall take all such reasonable action as may be necessary or appropriate to assure that such Conversion Shares may be issued as provided herein without violation of any applicable law or regulation or any requirements of the Principal Market.
2 Reservation. So long as any Preferred Shares are outstanding, the Corporation shall take any and all actions 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 Preferred Shares, at least the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all Preferred Shares in full (without regard to any limitations or restrictions on conversion or acquisition of Conversion Shares (e.g., Section 7(c) above) and whether or not the Preferred Shares are then convertible). Without limiting the foregoing, the terms of the Securities Purchase Agreement [(including without limitation Section 5.5 of PST Document GTC or Section 5.1 of PST Document GTC-RD)] shall govern with respect to the Corporation’s obligation to reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of all Conversion Shares upon the full conversion of all Preferred Shares, including without limitation the Corporation’s obligation to compensate the Holders for failure to do so in accordance with the terms and conditions set forth in such Securities Purchase Agreement, which are incorporated herein by reference.
3 Obligation to Issue Conversion Shares Absolute. The Corporation’s obligations to issue and deliver Conversion Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by any Holder to enforce the same, any waiver or consent with respect to any provision of any Transaction Document, 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 any Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by any Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligations of the Corporation to any Holder in connection with the issuance and delivery of Conversion Shares, provided, however, that such issuance and delivery shall not operate as a waiver by the Corporation of any claims it may have against any Holder or such other Person. [Without in any way limiting the foregoing or anything else contained herein, in the event the Corporation seeks and/or obtains an order from a court of competent jurisdiction enjoining and/or restraining conversion of all or some of the Preferred Shares or issuance of any Conversion Shares, based on a claim that a Holder or any Person affiliated with such Holder has been engaged in any violation of law or agreement or for any other reason, the Corporation shall as a condition thereto post a surety bond for the benefit of such Holder in the amount of [120%] of the Stated Amount of such Preferred Shares held by such Holder. Such bond shall remain in effect until the completion of the applicable arbitration or litigation of the underlying dispute, and the proceeds of such bond shall be payable to such Holder to the extent such Holder prevails in any such arbitration or litigation.]
4 Pro Rata Conversions. Without limiting anything contained herein or in the Transaction Documents, in the event that the Corporation receives a Conversion Notice from more than one Holder for the same Conversion Date and the Corporation can convert some, but not all, of such Preferred Shares submitted for conversion, the Corporation shall, subject to any limitations contained herein, convert from each Holder electing to have Preferred Shares converted on such date a pro rata amount of such Holder’s portion of its Preferred Shares submitted for conversion based on the number of Preferred Shares submitted for conversion on such date by such Holder relative to the aggregate number of all Preferred Shares submitted for conversion on such date. In the event of a dispute as to the number of Conversion Shares issuable to a Holder in connection with a conversion of Preferred Shares pursuant to this paragraph, the Corporation shall issue to such Holder the number of Conversion Shares not in dispute and resolve such dispute in accordance with Section 8(c)(ii) below.
Adjustments to Conversion Price; Fundamental Transactions.
1 Certain Adjustments. The Conversion Price and the number and kind of securities issuable upon conversion of Preferred Shares shall be subject to adjustment from time to time as set forth in this Section 8 and as may otherwise be set forth herein.
1 Stock Dividends and Splits. If at any time the Corporation (i) declares or pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock (or securities convertible into or exercisable or exchangeable for capital stock) that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including without limitation by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Corporation (including without limitation in connection with any merger or consolidation), then in each such case the Conversion Price then in effect shall be adjusted by multiplying such Conversion Price by a fraction of which (A) the numerator shall be the number of shares of Common Stock outstanding immediately before such event, and (B) the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the Record Date for such dividend or distribution, and any adjustment made pursuant to clause (ii), (iii) or (iv) of this paragraph shall become effective immediately after the effective date of such subdivision, combination or reclassification.
2 Pro Rata Distributions. Subject to Section 8(a)(iii) below, if at any time the Corporation declares or pays any dividend or otherwise distributes any of its assets (including without limitation cash, properties, evidences of indebtedness, securities (including any Options or Convertible Securities but excluding a distribution of Common Stock covered by Section 8(a)(i) above or Purchase Rights covered by Section 8(a)(iii)) below) or options or rights to acquire any such assets) (in each case, “Distributed Property”) to all holders of Common Stock pro rata (and not to all Holders in their capacity as holders of Preferred Shares), whether by way of dividend, return of capital, spin-off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, then in each such case the Conversion Price in effect immediately prior to the close of business on the Record Date for such dividend or distribution shall be reduced, effective as of the close of business on such Record Date, to a price determined by multiplying such Conversion Price by a fraction of which (A) the denominator shall be the Market Price on such Record Date, and (B) the numerator shall be such Market Price minus the value of the Distributed Property on such date applicable to one outstanding share of Common Stock, as determined by the Corporation’s independent certified public accounting firm that regularly examines the financial statements of the Corporation, subject to dispute resolution as set forth in Section 8(c)(ii) below.
3 Rights Offerings Below Market. Notwithstanding Section 8(a)(ii) above, if at any time the Corporation grants, issues or sells pro rata to all holders of its outstanding shares of Common Stock (and not to all Holders in their capacity as holders of Preferred Shares) any Options, Convertible Securities or other rights (the “Purchase Rights”) entitling them to directly or indirectly subscribe for or purchase shares of Common Stock at an effective price per share less than the Market Price on the Record Date of such grant, issuance or sale, then in each such case the Conversion Price in effect immediately prior to the close of business on such Record Date shall be reduced, effective as of the close of business on such Record Date, to a price determined by multiplying such Conversion Price by a fraction of which (A) the numerator shall be the number of shares of Common Stock outstanding as of the close of business on such Record Date plus the number of shares of Common Stock which the aggregate offering price of the total number of shares so offered for subscription or purchase (including and assuming receipt by the Corporation in full of all consideration payable upon both issuance and exercise of such Purchase Rights) would purchase at such Market Price, and (B) the denominator shall be the number of shares of Common Stock outstanding as of the close of business on such Record Date plus the total number of additional shares of Common Stock so offered for subscription or purchase; provided, that in lieu of receiving such adjustment to the Conversion Price, each Holder shall have the option, upon written notice to the Corporation within 30 days following its receipt of the notice of such adjustment, to elect to acquire, upon any conversion of Preferred Shares and in accordance with the terms applicable to the issuance of such Purchase Rights, the aggregate Purchase Rights which such Holder would have acquired if such Holder had converted such number of the Preferred Shares being converted (without regard to any limitations on ownership or conversion and regardless of whether the Preferred Shares were then convertible) immediately prior to such Record Date. To the extent that shares of Common Stock have not been delivered pursuant to such Purchase Rights specified in this Section 8(a)(iii) upon the expiration or termination of such Purchase Rights, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustment made upon the issuance of such Purchase Rights been made on the basis of delivery of only the number of shares of Common Stock actually delivered. In determining whether any Purchase Rights entitle the holder thereof to subscribe for or purchase shares of Common Stock at less than such Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such Purchase Rights, the value of such consideration (if other than cash) to be determined in good faith by the Corporation’s Board of Directors.
4 Fundamental Transactions. If a Fundamental Transaction occurs, then each Holder shall have the right thereafter to receive, upon any conversion of Preferred Shares, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same amount and kind of securities, cash and property as such Holder would have been entitled to receive upon the occurrence of such Fundamental Transaction if such Holder had been the record holder of one Conversion Share immediately prior to such Fundamental Transaction (without regard to any limitations or restrictions on conversion or acquisition of Conversion Shares (e.g., Section 7(c) above) and whether or not the Preferred Shares were then convertible) (the “Alternate Consideration”), and the Conversion Price shall be appropriately and equitably adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction relative to the then Conversion Price. The Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then each Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of Preferred Shares following such Fundamental Transaction. In case of any such Fundamental Transaction, any successor to the Corporation, acquirer or surviving entity (if other than the Corporation) shall expressly assume the due and punctual observance and performance of each and every covenant, obligation, liability and condition hereunder and other Transaction Documents to be performed and observed by the Corporation (including without limitation any registration rights), subject to such modifications as may be reasonably deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Corporation) in order to provide for adjustments of the number and kind of Conversion Shares for which the Preferred Shares are convertible which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 8. Such assumption shall be pursuant to a written agreement in form and substance reasonably satisfactory to the Requisite Holders. Notwithstanding anything to the contrary contained herein, if a Fundamental Transaction (A) is an all cash transaction, (B) constitutes or results in a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act (going private transaction), or (C) otherwise results in the successor, surviving or acquiring entity not being traded on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, then upon the written request of any Holder, delivered before the [sixtieth (60th)] day after such Fundamental Transaction, the Corporation (or any such successor, acquirer or surviving entity) shall redeem such Holder’s Preferred Shares for a redemption price, payable in cash within [five (5)] Business Days after such request (or, if later, on the effective date of such Fundamental Transaction), equal to the value of the Preferred Shares as determined using the Black-Scholes Option Pricing Model via Bloomberg. The provisions of this Section 8(a)(iv) shall similarly apply to successive Fundamental Transactions and shall be applied without regard to any limitations hereunder.
5 [Securities Issuances. [insert any applicable anti-dilution adjustments]]
6 Other Events. If (i) any event occurs of the type contemplated by the provisions of this Section 8 or (ii) the Corporation otherwise takes any action affecting the Common Stock that would be covered by this Section 8 but for the manner in which such action is taken or structured, in each case which event or action may in any way diminish the value of the Preferred Shares but is not expressly provided for by the provisions of this Section 8 (including without limitation the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Corporation’s Board of Directors shall in good faith make an appropriate and equitable adjustment to the Conversion Price so as to protect the rights of the Holders in the manner contemplated hereunder, provided that no such adjustment pursuant to this Section 8(a)(vi) shall increase the Conversion Price (except to the extent such event or action is analogous to the type contemplated by Section 8(a)(i) and such adjustment is appropriate thereunder).
7 Voluntary Reduction by Corporation. The Corporation may at any time reduce the Conversion Price hereunder to any amount and for any period of time deemed appropriate by the Board of Directors of the Corporation.
8 Adjustment Not Required. If the Corporation undertakes a transaction contemplated under this Section 8(a) and as a result takes a record of the holders of Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights or other benefits contemplated under this Section 8(a) and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights or other benefits contemplated under this Section 8(a), then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. No adjustment need be made under this Section 8(a) for a change in the par value of the Common Stock or from par value to no par value or from no par value to par value.
9 Variable Conversion Price. If the Conversion Price, [Dividend Conversion Price], or [other applicable conversion price] hereunder is based on a formula, then for purposes of this Section 8 the Conversion Price shall refer to any fixed price, ceiling price or floor price contained therein and each reported VWAP, Closing Price, Closing Bid Price or other applicable stock market price occurring on any Trading Day included in any period used for determining any Market Price, Conversion Price, [Dividend Conversion Price], or [other applicable conversion price] hereunder, as the case may be, which Trading Day occurred before the applicable Record Date or effective date, as the case may be.
2 Regulatory Approval. Prior to engaging in any transaction or taking any other action which would result in an adjustment in the Conversion Price or in the number or kind of securities for which the Preferred Shares are convertible, the Corporation shall obtain all such authorizations, exemptions or consents of and/or from any applicable public regulatory body or bodies having jurisdiction thereof as may be necessary.
3 Calculations.
1 Rounding. All calculations under this Section 8 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable [, provided that if the Market Price at the time of the calculation is less than (i) $1.00, such calculation shall be made to three decimal places, or (ii) $0.10, such calculation shall be made to four decimal places]. For purposes of this Section 8, 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 Corporation (e.g., treasury shares) and the disposition of any such shares shall be considered an issue or sale of Common Stock.
2 Disputes. In the case of any dispute with respect to the determination of the Conversion Price or the arithmetic calculation of the number of Conversion Shares to be issued upon conversion of any Preferred Shares, the Corporation shall promptly issue or cause to be issued such number of Conversion Shares that is not disputed and shall transmit an explanation of the disputed determinations or arithmetic calculations to the applicable Holder via email or facsimile as soon as possible, but in no event later than two (2) Business Days after receipt of such Holder’s Conversion Notice or other date of determination. If such Holder and the Corporation are unable to agree upon the determination of the Conversion Price or arithmetic calculation of the Conversion Shares within two (2) Business Days of such disputed determination or arithmetic calculation being transmitted to such Holder, then the Corporation shall promptly submit (via email or facsimile) such disputed determination or calculation to a reputable accounting firm to perform the applicable determination or calculation, provided that to the extent that such dispute concerns the determination of fair market value of a security or property, such disputed determination shall be submitted to a reputable investment bank or valuation company, in each case such accounting firm, investment bank or valuation company to be independent of the Corporation and all Holders and selected jointly by the Corporation and a Majority-in-Interest of the Holders of all Preferred Shares. The determination or calculation of such accounting firm, investment bank and/or valuation company, as the case may be, shall be final and binding upon the Corporation and all Holders absent manifest error. The Corporation shall then on the next Business Day issue certificate(s) representing the appropriate number of Conversion Shares in accordance with such accounting firm’s, investment bank’s and/or valuation company’s determination or calculation. The expenses of such accounting firm, investment bank and/or valuation company in making such determination or calculation shall be paid by the Corporation, unless the Corporation was correct in its determination or calculation, in which case such expenses shall be paid by the Holders (pro rata among the Holders based on the Current Allocation Percentage).
3 Deemed Changes Mutatis Mutandis. In the event that at any time, as a result of an adjustment made pursuant to this Section 8, the Holders shall, upon conversion of Preferred Shares, become entitled to receive securities or assets other than Common Stock, then wherever appropriate (a) all references herein to Conversion Shares shall be deemed to refer to and include such Conversion Shares and/or other securities or assets, as applicable, (b) all references to the Corporation shall be deemed to refer to any successor, acquirer or surviving entity, as applicable, and (c) thereafter the Conversion Price and the number and kind of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 8.
4 Notice to Holder.
1 Certificate of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price, the number or kind of Conversion Shares, or the securities, assets or other property issuable upon conversion of Preferred Shares, whether pursuant to this Section 8, the other provisions hereunder or other Transaction Documents, applicable law or otherwise, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and deliver to the Holders a certificate specifically setting forth such adjustment or readjustment, including (i) a statement of the adjusted Conversion Price and/or the adjusted number or kind of Conversion Shares and/or other securities, assets or other property issuable upon conversion of Preferred Shares (as applicable), (ii) a description of the transactions giving rise to such adjustment or readjustment, (iii) the facts upon which such adjustment or readjustment is based, in reasonable detail, and (iv) the computations by which such adjustment or readjustment was made, provided that the Corporation shall not include any material non-public information concerning the Corporation to a Holder without the prior written consent of such Holder. Any failure to deliver such certificate shall not affect the legality or validity of any such adjustment or readjustment. Upon written request, the Corporation shall promptly deliver a copy of each such certificate to the Holders and to the Corporation’s Transfer Agent.
2 Notice of Corporate Events. If at any time while any Preferred Shares are outstanding:
1 the Corporation declares (or otherwise takes a record of the holders of its Common Stock for purposes of granting) a dividend or other distribution on its Common Stock (including without limitation any Distributed Property and any special nonrecurring cash dividend but excluding a cash dividend payable out of earnings or earned surplus legally available for the payment of dividends under the laws of the jurisdiction of incorporation of the Corporation which is consistent with prior cash dividends of the Corporation, if any), or the Corporation declares any redemption of its Common Stock;
2 the Corporation grants (or authorizes the granting) to all holders of its Common Stock rights, options or warrants to subscribe for or purchase any evidences of its indebtedness, any shares of capital stock of any class or any other securities or property or rights to receive or purchase any other right;
3 there shall be, or the Corporation’s Board of Directors authorizes, any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any consolidation, merger or other business combination of the Corporation with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Corporation to, another Person (including without limitation any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property);
4 the Corporation authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for, or otherwise becomes subject to, any Fundamental Transaction; or
5 there shall be pending the voluntary or involuntary, or the Corporation otherwise authorizes, a dissolution, liquidation or winding up of the affairs of the Corporation;
then, in each case, the Corporation shall deliver or cause to be delivered to the Holders, at least 15 calendar days prior to the applicable record or effective date hereinafter specified, a written notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights, options or warrants or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, business combination, sale, transfer, disposition, dissolution, liquidation or winding up, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights, options or warrants are to be determined, and/or (B) the date on which such reorganization, reclassification, merger, consolidation, business combination, sale, transfer, disposition, share exchange, dissolution, liquidation or winding up is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, business combination, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action or event required to be specified in such notice. Such notice shall describe the material terms and conditions of such transaction or corporate event, provided that the Corporation shall not include any material non-public information concerning the Corporation to a Holder without the prior written consent of such Holder. The Corporation shall take all steps reasonably necessary in order to ensure that the Holders are given the practical opportunity to convert any Preferred Shares prior to the applicable time so as to participate in or vote with respect to such transaction or event.
4 [Notices to Stockholders. The Corporation shall provide the Holders with copies of the same notices and other information given to the stockholders of the Corporation generally, contemporaneously with the giving thereof to the stockholders.]
Registration, Issuance and Transfer of Preferred Shares and Conversion Shares.
1 Register. The Corporation shall maintain, or cause to be maintained, books and records for the registration and transfer of the Preferred Shares (collectively, the “Preferred Shares Register”). The Preferred Shares shall be registered in the Preferred Shares Register, initially in the name and with the address of the initial Holders and thereafter in the name and with the address of the then record Holders. The Corporation may deem and treat each registered Holder of Preferred Shares as the absolute owner of such Preferred Shares for the purposes of any conversion by or distribution to such Holder and for all other purposes, and the Preferred Shares Register shall be conclusive and binding for all purposes absent manifest error. [The Corporation] shall serve as agent hereunder (“Preferred Shares Agent”) for purposes of maintaining the Preferred Shares Register and effectuating issuances and transfers of Preferred Shares. Upon twenty (20) days’ prior written notice to the Holders, the Corporation may appoint a new Preferred Shares Agent. Any Person resulting from any merger or consolidation to which the Preferred Shares Agent shall be a party or any Person to which the Preferred Shares Agent transfers all or substantially all of its corporate trust or shareholders services business shall be a successor Preferred Shares Agent hereunder without any further act. Any such successor Preferred Shares Agent shall promptly cause written notice of its succession as Preferred Shares Agent to be delivered to the Holders at the Holders’ last addresses as shown on the Preferred Shares Register. So long any Preferred Shares remain outstanding, the Corporation or its Preferred Shares Agent shall maintain an office or agency (which shall be the principal executive offices of the Corporation unless and until the Corporation notifies the Holders otherwise) where certificates evidencing the Preferred Shares and/or Conversion Notices may be presented for conversion, registration of transfer, division or combination of the Preferred Shares or certificates evidencing same as provided herein.
2 Transfer of Preferred Shares. The Preferred Shares and all rights thereunder (including under any other Transaction Document to the extent applicable to the Preferred Shares, including without limitation any registration rights) may be transferred, in whole or in part, by a Holder without the consent of the Corporation, except as may otherwise be required hereunder or in the Securities Purchase Agreement, provided that if [the Preferred Shares were not issued pursuant to a Registered Direct Registration Statement and] such transfer is not (a) pursuant to an effective Registration Statement or Rule 144, (b) to the Corporation or to an Affiliate of such Holder, or (c) in connection with a pledge as contemplated in Section 9(g) below, the Corporation may require such Holder to provide the Corporation with a legal opinion, reasonably acceptable to the Corporation in form and substance from counsel reasonably acceptable to the Corporation, to the effect that such transfer does not require registration under the Securities Act. To transfer the Preferred Shares, such Holder shall surrender the stock certificate(s) evidencing the Preferred Shares to the Corporation (or other Preferred Shares Agent), together with (i) a stock power duly completed and executed by the Holder, and (ii) if requested by the Corporation, payment of funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender (with stock power) and, if required, such payment, the Corporation shall promptly prepare, execute, issue and deliver a new stock certificate evidencing the Preferred Shares (issued in accordance with Section 9(e) below) (A) to and in the name of each transferee representing the number of Preferred Shares being transferred to such transferee, and (B) if less than the total number of Preferred Shares held by such Holder is being transferred, to and in the name of such Holder representing the balance of the Preferred Shares not being transferred. The acceptance of such new certificate representing Preferred Shares by any such transferee shall be deemed the acceptance by such transferee of all the rights and obligations of a holder of Preferred Shares hereunder. Such transfer shall be registered by the Corporation or the Preferred Shares Agent in the Preferred Shares Register. The Preferred Shares, if properly transferred, may be converted in accordance with the terms hereunder by any new holder thereof prior to the actual issuance and delivery of a new certificates evidencing Preferred Shares.
3 Lost, Stolen or Mutilated Certificates. Upon receipt by the Corporation of (a) evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of certificate(s) evidencing the Preferred Shares, and (b) (i) in the case of loss, theft or destruction, a customary and reasonable indemnification (without the requirement of posting bond), if requested by the Corporation, or (ii) in the case of mutilation, the mutilated certificate(s) evidencing the Preferred Shares for surrender and cancellation, the Corporation shall promptly prepare, execute, issue and deliver to the Holder new certificate(s) evidencing the outstanding number of Preferred Shares (issued in accordance with Section 9(e) below) in lieu of and substitution for the certificate so lost, stolen, destroyed or mutilated.
4 Exchangeable for Multiple Certificates. The certificate(s) evidencing Preferred Shares may be divided or combined with other certificate(s) evidencing Preferred Shares upon presentation and surrender of the certificate(s) evidencing Preferred Shares to the Corporation (or other Preferred Shares Agent), together with a written notice, signed by the requesting Holder, specifying the names and denominations in which new certificate(s) evidencing Preferred Shares(s) are to be issued, provided that any transfer which may be involved in such division or combination shall be subject to compliance with Section 9(b) above. Such new certificate(s) evidencing Preferred Shares shall be issued in accordance with Section 9(e) below and have an aggregate number equal to the aggregate number of Preferred Shares surrendered for exchange, and each such new certificate evidencing Preferred Shares shall be for the number specified by such Holder in its notice.
5 Issuance of New Stock Certificate. Whenever the Corporation is required to issue a new stock certificate evidencing Preferred Shares to a Holder in replacement of an old stock certificate pursuant to the terms hereof, such new stock certificate shall (a) be in the name of the then Holder, (b) represent, as indicated on the face of such new certificate, the number of then outstanding Preferred Shares held by such Holder (or in the case of a new stock certificate being issued pursuant to Section 9(b) or Section 9(d) above, the number specified by such Holder which, when added to the number of other new stock certificates issued in connection with such issuance, does not exceed the then outstanding number of Preferred Shares held by such Holder), and (c) represent accrued and unpaid dividends, expenses and damages under such Preferred Shares from the original Issuance Date of such Preferred Shares. No service charge or other fee will be imposed by the Corporation in connection with the issuance of any new stock certificates pursuant to Sections 9(b) through 9(d) or any registration of any transfer or exchange in connection therewith.
6 Resale of Conversion Shares. [PIPE Transaction. The resale of the Conversion Shares shall be subject to registration rights to the extent set forth in the Securities Purchase Agreement, and (b) the Corporation shall comply with Section 5.4 (Rule 144 Information) of PST Document GTC. By acceptance of the Preferred Shares each Holder acknowledges that pursuant to the Securities Purchase Agreement, the Corporation has the right to request that the Holder furnish information regarding the Holder and its intended distribution of the Conversion Shares in connection with any such registration.] [Registered Direct Offering. If at any time the Registered Direct Registration Statement (or any subsequent Registration Statement registering the sale or resale of the Conversion Shares under the Securities Act) is not effective or is not otherwise available for the sale or resale of the Conversion Shares, the Corporation shall immediately notify the Holder in writing that such Registration Statement is not then effective and thereafter shall promptly notify the Holder when such Registration Statement is effective again and available for the sale or resale of the Conversion Shares. The Corporation shall use best efforts to keep a Registration Statement (including the Registered Direct Registration Statement) registering the issuance or resale of the Conversion Shares effective unless the Conversion Shares may be sold pursuant to Rule 144(b)(1).]
7 Pledge of Shares. The Corporation acknowledges and agrees that each Holder may from time to time pledge or grant a security interest in such Holder’s Preferred Shares and/or Conversion Shares in whole or in part pursuant to a bona fide margin agreement with a registered broker-dealer or pursuant to a security or pledge agreement with a financial institution that is an Accredited Investor in connection with a loan from such institution. If required under the terms of such pledge or security agreement, such Holder may transfer such securities to such pledgee or secured party, in which case (a) such pledge or transfer shall not be subject to approval by the Corporation, (b) no legal opinion of counsel to the pledgee, secured party or pledgor shall be required in connection therewith, and (c) no notice shall be required of such pledge or security interest. At such Holder’s expense, the Corporation shall execute and deliver such reasonable documentation as such pledgee or secured party of securities may reasonably request in connection with such pledge or transfer of securities, including, if the securities are subject to registration pursuant to the Transaction Documents, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. Except to the extent otherwise provided by applicable law, the pledge of the Preferred Shares or Conversion Shares shall not be deemed to be a transfer, sale or assignment of the Preferred Shares or Conversion Shares under the Transaction Documents or applicable securities laws.
[Redemption.][12]
Miscellaneous.
1 No Impairment or Circumvention. Except as and to the extent waived or consented to by the Holders [holding a majority of the Preferred Shares], the Corporation shall not by any action, including without limitation by amendment of its Organizational Documents or through any reorganization, transfer of assets, consolidation, merger, amalgamation, 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 hereunder (including without limitation conversion hereunder), but shall at all times in good faith assist in carrying out all such terms and take all action as may be necessary or appropriate to protect the rights of the Holders as set forth herein against impairment. Without limiting the generality of the foregoing or any other provision herein or the Securities Purchase Agreement, the Corporation (a) shall not increase the par value of any Conversion Shares above the Conversion Price then in effect, (b) shall take all such action as may be reasonably necessary or appropriate in order that the Corporation may validly and legally issue fully paid and nonassessable Conversion Shares in accordance with the terms hereof upon the conversion of the Preferred Shares, and (c) shall use its commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body or bodies having jurisdiction thereof as may be necessary to enable the Corporation to perform its obligations hereunder. The Corporation shall not close its stockholder books or records (including stock or note transfer books) in any manner which prevents, delays or otherwise interferes with the timely conversion or transfer of the Preferred Shares.
2 No Stockholder Rights or Liabilities before Conversion. Except as otherwise specifically provided herein or the provisions of any other written agreement between the Corporation and a Holder, prior to the conversion of the Preferred Shares in accordance with the terms thereof, such Holder (solely in such Person’s capacity as a holder of Preferred Shares) shall not be entitled to any rights as a common stockholder of the Corporation, nor shall anything contained herein be construed to confer upon such Holder (solely in such Person’s capacity as a holder of Preferred Shares) any of the rights of a common stockholder of the Corporation, including with limitation the right to [(a) vote for the election of directors of the Corporation or upon any matter submitted to stockholders at any meeting thereof, (b) give or withhold consent to any corporate action (whether upon or for any recapitalization, reorganization, issue of stock, reclassification of stock, change of par value, change of stock to or from no par value, consolidation, merger, amalgamation, conveyance or otherwise), (c) receive notice of meetings (other than pursuant to Section 8(d)(ii) above), or (d)] receive dividends, distributions or subscription rights, and such Holder (solely in such Person’s capacity as a holder of Preferred Shares) shall not be deemed the holder of Conversion Shares or any other securities of the Corporation that may at any time be issuable upon the conversion of Preferred Shares for any purpose prior to the conversion thereof. No provision hereof, in the absence of any affirmative action by a Holder to convert Preferred Shares into Conversion Shares, and no enumeration herein of the rights or privileges of Holders, shall give rise to any liability of a Holder as a common stockholder of the Corporation, whether such liability is asserted by the Corporation or by creditors of the Corporation.
3 Successors and Assigns; Benefits. Subject to the restrictions on transfer set forth herein and/or in the Transaction Documents, the Preferred Shares may be transferred by the Holders. Nothing herein shall be construed to give to any Person other than the Corporation and the Holders any legal or equitable right, remedy, claim or cause of action under the Preferred Shares, it being understood that the Preferred Shares shall be for the sole and exclusive benefit of the Corporation and the Holders.
4 Notices. Any and all notices (including without limitation any Conversion Notice), consents, waivers or other communications or deliveries required or permitted to be given hereunder (except as otherwise provided therein) shall be (a) in writing, (b) delivered by regular mail, overnight courier (charges prepaid), facsimile, electronic mail or personal hand delivery to the physical address, facsimile number or email address (and to the attention of the contact person or title) set forth for such Party in the Securities Purchase Agreement or the Preferred Shares Register (as the case may be), and (c) deemed to have been delivered and effective (i) upon receipt, if delivered personally by hand, (ii) the date of transmission, if delivered via facsimile or email prior to 6:00 p.m. Eastern (New York) time on a Business Day, (iii) the next Business Day after the date of transmission, if delivered via facsimile or email on a day that is not a Business Day or later than 6:00 p.m. Eastern (New York) time on any Business Day, (iv) the Business Day following deposit with an internationally recognized overnight courier service with charges prepaid, or (v) the fifth (5th) Business Day following deposit with the United States Postal Service. Written confirmation of complete delivery or transmission of such notice, consent, waiver or other communication or delivery (A) given by the recipient thereof, (B) mechanically or electronically generated by the sender’s facsimile machine or computer containing the time, date, recipient facsimile number or email address, as the case may be, and an image of at least the first page of such transmission, which confirmation is kept on file by the sending party, or (C) provided by an internationally recognized overnight courier service, shall be rebuttable evidence of receipt of such notice, consent, waiver or other communication or delivery in accordance with clause (c) above. Addresses for notices, consents, waivers or other communications or deliveries may be changed as set forth in the Securities Purchase Agreement.
5 Remedies.
1 General. The Holders shall be entitled to (i) exercise any and all rights and remedies set forth herein or any agreement, (ii) recover damages by reason of any breach of any provision hereof, and (iii) exercise any and all other rights and remedies granted by law or to which the Holders are entitled in equity. Without limiting the foregoing, except as otherwise provided herein, any remedy expressly conferred upon the Holders in the Transaction Documents shall not constitute an exclusive remedy and shall be in addition to and not in lieu or limitation of any other rights or remedies the Holder may have at law, in equity or under the terms hereof or other Transaction Documents, and the exercise of any one remedy shall not preclude the exercise of any other remedy. The Holders may withdraw, revoke or suspend pursuit of any remedy at any time without prejudice prior to complete recovery as a result of such remedy. No waiver of any breach or default with respect to any provision, condition or requirement hereunder shall be deemed to constitute a continuing waiver in the future or a waiver of any subsequent default or a waiver of any breach or default with respect to any other provision, condition or requirement thereof, nor shall any delay by or omission of any Holder in exercising any right thereunder in any manner impair or prejudice the exercise of any such right.
2 Specific Performance; Injunction. Without limiting the foregoing, the Holders shall be entitled to (i) specific performance to enforce the terms and conditions of the Preferred Shares and (ii) preliminary and final injunction(s) to prevent or cure any breach (or further breach) of the terms hereof, in each case without being required to post a bond or other security or prove actual damages. The Corporation agrees that monetary damages or any other remedy at law may not be adequate compensation for any loss incurred by reason of any breach by the Corporation of any obligations or provisions contained herein and that irreparable damage may occur as a result of any such breach, and, to the fullest extent permitted by law, the Corporation waives, and agrees not to assert, in any action for specific performance or injunctive relief, any defense that a remedy at law would be adequate.
6 Corrections. The Corporation may, without the consent of the Holders (a) make any corrections to this Certificate of Designations that are required to correct any provision herein which may be defective.
7 No Waiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of any Holder shall operate as a waiver of such right or otherwise prejudice such Holder’s rights, powers or remedies.
8 Saturdays, Sundays, Holidays, Etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted hereunder shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
9 Severability. If any provision hereof is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable under applicable law (a) the remainder of the provisions set forth therein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and (b) the Corporation and the Holders shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.
10 No Reissuance. No Preferred Shares acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued.
11 [Rule 144 Tacking. For purposes of Rule 144, the Corporation understands and acknowledges that the holding period for any Conversion Shares shall be deemed to have commenced, and the Conversion Shares shall be deemed to have been acquired, on the Issuance Date of the Preferred Shares pursuant to which such Conversion Shares were issued (so long as no consideration is provided other than securities of the Corporation in connection with the conversion pursuant to which the applicable Conversion Shares were issued), and the Corporation shall not take any position inconsistent therewith.]
[Signature Page Follows]
IN WITNESS WHEREOF, this Certificate of Designations of the Corporation has been duly executed this ____ day of ________, 20___.[13]
[Company]
By:
Name:
Title:
[By:
Name:
Title:]
[FORM OF]
CONVERSION NOTICE[14]
Reference is made to the shares of [Security Title] (the “Preferred Shares”) issued to the undersigned Holder by [Company], a [State] corporation (the “Corporation”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Certificate of Designations for such Preferred Shares (including as incorporated therein by reference).
Conversion: In accordance with and pursuant to such Certificate of Designations, the Holder hereby elects to convert the number of Preferred Shares indicated below, together with accrued and unpaid dividends thereon [(plus any Liquidated Damages indicated below)], into Conversion Shares as of the date specified below.
| | |
|Date to Effect Conversion: |Stated Value of Preferred |
| |Shares Being Converted: $ |
|Number of Preferred Shares Held by Holder: | |
| |Plus: Accrued and Unpaid Dividends |
|Prior to Conversion: |on Preferred Shares Being Converted: $ |
| | |
|Being Converted Hereby: |[Plus: Liquidated Damages |
| |Being Converted (if any):] [$ ] |
|After Conversion: | |
| | |
| |Total Amount Being Converted: $ |
| | |
| | |
| |Applicable Conversion Price: $ |
| | |
| | |
| |Number of Conversion Shares To Be Issued: |
Delivery of Conversion Shares: Pursuant to this conversion, the Corporation shall deliver the applicable number of Conversion Shares issuable in accordance with the terms of the Certificate of Designations as set forth below. If shares are to be issued in the name of a Person other than the Holder, the Holder will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Corporation in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any. The Holder acknowledges and confirms that the Conversion Shares issued pursuant to this Conversion Notice has been or will be sold in accordance with the prospectus delivery requirements of the Securities Act (if applicable) or pursuant to an exemption from, or in a transaction not subject to, the Securities Act.
|If stock certificates are to be issued, in the following name and to the following|If DWAC is permissible, to the following brokerage account: |
|address: | |
|_______________________________________ |Broker: _____________________________________ |
|_______________________________________ |DTC No.: ___________________________________ |
|_______________________________________ |Acct. Name: _________________________________ |
|_______________________________________ |For Further Credit (if applicable): ________________ |
|_______________________________________ |____________________________________________ |
Beneficial Ownership Limitation: The Holder represents that, after giving effect to the conversion provided for in this Conversion Notice, the Holder Group will not beneficially own a number of shares of Common Stock which exceeds [the Holder’s Maximum Ownership Percentage] of the total outstanding shares of Common Stock as determined pursuant to the provisions of the Certificate of Designations.
| |_______________________________________ |
| |(Print Name of Holder) |
| | |
| |By/Sign: _______________________________ |
| |Print Name: ____________________________ |
| |Print Title: _____________________________ |
-----------------------
[1] May be Amendment to Certificate of Incorporation as applicable under state law.
[2] Insert desired title of Series of Preferred Shares.
[3] Conform references and format as appropriate for the Company’s jurisdiction of incorporation.
[4] Insert definitions as applicable.
[5] Insert description of any series to which the Preferred Shares shall rank junior.
[6] Exclude if violates proportionate voting rules of applicable exchange or market.
[7] If dividend payments required.
[8] Insert below only if payment of dividend in Common Stock is permitted.
[9] Alter if dividend payments permitted in restricted stock.
[10] Insert if Preferred Shares are participating.
[11] Only if Book Entry not permitted.
[12] Insert any applicable redemption provisions, either voluntary or involuntary and either at the Corporation’s option of the Holders’ option, and any forced or automatic conversion provisions.
[13] Must be executed in compliance with applicable state corporate law requirements.
[14] To be executed by Holder to convert security. Form of Conversion Notice available in Microsoft® Office Word at .
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