Exhibit 3.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
VIVOS, INC.
The
undersigned, the Chief Executive Officer of Vivos, Inc., a Delaware
corporation (the “
Company
”), does hereby certify
that, pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Company, the
following resolution creating a series of Series C Convertible
Preferred Stock, was duly adopted on March 27, 2019.
RESOLVED
, that pursuant to the authority
expressly granted to and vested in the Board of Directors of the
Company by provisions of the Certificate of Incorporation of the
Company, as amended (the “
Certificate of Incorporation
”),
there hereby is created out of the shares of Preferred Stock, par
value $0.001 per share (the “
Preferred Stock
”), of the
Company, as authorized in Article IV of the Company’s
Certificate of Incorporation, a series of Preferred Stock of the
Company, to be named “Series C Convertible Preferred
Stock,” consisting of Five Million (5,000,000) shares, which
series shall have the following designations, powers, preferences
and relative and other special rights and the following
qualifications, limitations and restrictions:
1.
Designation and Rank
. The
designation of such series of the Preferred Stock shall be the
Series C Preferred Stock, par value $0.001 per share (the
“
Series C
Preferred
”). The maximum number of shares of Series C
Preferred shall be Five Million (5,000,000) shares. The Series C
Preferred shall rank pari passu in Liquidation with existing Series
A Preferred and Series B Preferred, senior to the Company’s
common stock, par value $0.001 per share (the “
Common Stock
”), and senior to all
other classes and series of equity securities of the Company which
by their terms rank junior to the Series C Preferred
(“
Junior
Stock
”). The date of original issuance of the Series C
Preferred is referred to herein as the “
Issuance Date
”.
2.
Voting Rights
.
(a)
Each holder of
Series C Preferred shall be entitled to vote on all matters,
together with the holders of Common Stock, and shall have the
equivalent of thirty-two (32) votes for every Conversion Share, as
defined below, issuable upon conversion of such holder’s
outstanding shares of Series C Preferred.
(b)
The Common Stock
into which the Series C Preferred is convertible shall, upon
issuance, have the same voting rights as other issued and
outstanding shares of Common Stock of the Company, and none of the
rights of the Series C Preferred.
3.
Liquidation, Dissolution;
Winding-Up
.
(a)
In the event of the
liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, the holders of shares of
the Series C Preferred then outstanding shall be entitled to
receive, out of the assets of the Company available for
distribution to its stockholders, an amount equal to $1.00 per
share (the “
Liquidation
Preference Amount
”) before any payment shall be made
or any assets distributed to the holders of the Common Stock or any
other Junior Stock. If the assets of the Company are not sufficient
to pay in full the Liquidation Preference Amount payable to the
holders of outstanding shares of the Series C Preferred and any
series of preferred stock or any other class of stock on a parity,
as to rights on liquidation, dissolution or winding up, with the
Series C Preferred, then all of said assets will be distributed
among the holders of the Series C Preferred and the other classes
of stock on a parity with the Series C Preferred, if any, ratably
in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. The
liquidation payment with respect to each outstanding fractional
share of Series C Preferred shall be equal to a ratably
proportionate amount of the liquidation payment with respect to
each outstanding share of Series C Preferred. All payments for
which this Section 3(a) provides shall be in cash, property (valued
at its fair market value as determined reasonably and in good faith
by the Board of Directors of the Company) or a combination thereof;
provided
,
however
, that no cash shall be paid to
holders of Junior Stock unless each holder of the outstanding
shares of Series C Preferred has been paid in cash the full
Liquidation Preference Amount to which such holder is entitled as
provided herein. After payment of the full Liquidation Preference
Amount to which each holder is entitled, such holders of shares of
Series C Preferred will not be entitled to any further
participation as such in any distribution of the assets of the
Company.
(b)
Written notice of
any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, stating a payment date and the place
where the distributable amounts shall be payable, shall, to the
extent possible, be given by mail, postage prepaid, no less than
twenty (20) days prior to the payment date stated therein, to the
holders of record of the Series C Preferred at their respective
addresses as the same shall appear on the books of the
Company.
4.
Conversion
.
At any time
after the date that the Company shall have amended
its Certificate of Incorporation to increase the number of shares
of Common Stock authorized for issuance thereunder or effect a
reverse stock split of the outstanding shares of Common Stock by a
sufficient amount to permit the conversion of all Series C
Preferred into shares of Common Stock (“
Authorized Share
Approval
”) (such date,
the “
Initial Convertibility
Date
”), each share of
Series C Preferred shall be convertible into validly issued, fully
paid and non-assessable shares of Common Stock on the terms and
conditions set forth in this Section 4
(the
“
Conversion
Rights
”):
(a)
Voluntary Conversion
. A holder
of shares of Series C Preferred may, at such holder's option at any
time after the Initial Convertibility Date, elect to convert (a
“
Voluntary
Conversion
”) all or any portion of the shares of
Series C Preferred held by such person into Conversion Shares in an
amount equal to the quotient of (i) the Liquidation Preference
Amount of the shares of Series C Preferred being converted ($1)
divided by (ii) the Conversion Price (as defined in Section 4(c)
below) then in effect as of the date of the delivery by such holder
of its notice of election to convert (the “
Conversion Shares
”) In the event
of a notice of redemption of any shares of Series C Preferred
pursuant to Section 8 below, the Voluntary Conversion of the shares
designated for redemption shall terminate at the close of business
on the last full day preceding the date fixed for redemption,
unless the redemption price is not paid on such redemption date, in
which case the Voluntary Conversion option for such shares shall
continue until such price is paid in full. In the event of a
liquidation, dissolution or winding up of the Company, the
Voluntary Conversion option provided by this Section 4(b) shall
terminate at the close of business on the last full day preceding
the date fixed for the payment of any such amounts distributable on
such event to the holders of Series C Preferred. In the event of
such a redemption or liquidation, dissolution or winding up, the
Company shall provide to each holder of shares of Series C
Preferred notice of such redemption or liquidation, dissolution or
winding up, which notice shall (i) be sent at least fifteen (15)
days prior to the termination of the Voluntary Conversion option
and (ii) state the amount per share of Series C Preferred that will
be paid or distributed on such redemption or liquidation,
dissolution or winding up, as the case may be.
(b)
Mechanics of Conversion
. The
conversion of Series C Preferred pursuant to this Section 4 shall
be conducted in the following manner:
(i)
Mechanics of a Voluntary
Conversion
.
(1)
Holder's Delivery Requirements
.
To convert shares Series C Preferred into Conversion Shares on any
date (the “
Voluntary
Conversion Date
”), the holder thereof shall transmit
by e-mail (or otherwise deliver), for receipt on or prior to 5:00
p.m., New York time on such date, a copy of a fully executed notice
of conversion in the form attached hereto as Exhibit A (the
“
Voluntary
Conversion Notice
”),
to the Company. As soon as practicable following such Voluntary
Conversion Date, the holder shall surrender to a common carrier for
delivery to the Company the electronic shares of Series C Preferred
or the original certificates representing the shares of Series C
Preferred being converted (or an indemnification undertaking with
respect to such shares in the case of their loss, theft or
destruction) (the “
Preferred
Stock Certificates
”) and the originally executed
Voluntary Conversion Notice.
(2)
Company's Response
. Upon
receipt by the Company of a copy of the fully executed Voluntary
Conversion Notice, the Company or its designated transfer agent
(the “
Transfer
Agent
”), as applicable, shall within three (3)
business days following the date of receipt by the Company of a
copy of the fully executed Voluntary Conversion Notice, issue and
deliver to the Depository Trust Company (“
DTC
”) account on the holder's
behalf via the Deposit Withdrawal Agent Commission System
(“
DWAC
”) as
specified in the Voluntary Conversion Notice, registered in the
name of the holder or its designee, for the number of Conversion
Shares to which the holder shall be entitled. Notwithstanding the
foregoing to the contrary, the Company or its Transfer Agent shall
only be required to issue and deliver the shares to the DTC on a
holder's behalf via DWAC if (i) the Conversion Shares may be issued
without restrictive legends and (ii)
the Company and the Transfer Agent are
participating in DTC through the DWAC system
. If all of the
conditions set forth in clauses (i) and (ii) above are not
satisfied, the Company shall deliver physical certificates to the
holder or its designee. If the number of shares of Preferred Stock
represented by the Preferred Stock Certificate(s) submitted for
conversion is greater than the number of shares of Series C
Preferred being converted, then the Company shall, as soon as
practicable and in no event later than three (3) business days
after receipt of the Preferred Stock Certificate(s) and at the
Company's expense, issue and deliver to the holder a new Preferred
Stock Certificate representing the number of shares of Series C
Preferred not converted.
(ii)
Dispute
Resolution
. In the case of a dispute as to the arithmetic
calculation of the number of Conversion Shares to be issued upon
conversion in accordance with this Section 4, the Company shall
cause its Transfer Agent to promptly issue to the holder the number
of Conversion Shares that is not disputed and shall submit the
arithmetic calculations to the holder via e-mail as soon as
possible, but in no event later than two (2) business days after
receipt of such holder's Voluntary Conversion Notice. If such
holder and the Company are unable to agree upon the arithmetic
calculation of the number of Conversion Shares to be issued upon
such conversion within two (2) business days of such disputed
arithmetic calculation being submitted to the holder, then the
Company shall within two (2) business days submit via e-mail the
disputed arithmetic calculation of the number of Conversion Shares
to be issued upon such conversion to the Company's independent,
outside accountant (the “
Accountant
”). The Company shall
cause the Accountant to perform the calculations and notify the
Company and the holder of the results no later than five (5)
business days from the time it receives the disputed calculations.
The Accountant's calculation shall be binding upon all parties
absent manifest error. The reasonable expenses of such Accountant
in making such determination shall be paid by the Company, in the
event the holder's calculation was correct, or by the holder, in
the event the Company's calculation was correct, or equally by the
Company and the holder in the event that neither the Company's or
the holder's calculation was correct. The period of time in which
the Company is required to effect conversions or redemptions under
this Certificate of Designations shall be tolled with respect to
the subject conversion or redemption pending resolution of any
dispute by the Company made in good faith and in accordance with
this Section 4(c)(ii).
(iii)
Record
Holder
. The person or persons entitled to receive the
Conversion Shares issuable upon a conversion of the Series C
Preferred shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on the Conversion
Date.
(iv)
Company's
Failure to Timely Convert
. If within five (5) business days
of the Company's receipt of an executed copy of a Voluntary
Conversion Notice (so long as the applicable Series C Preferred
certificates, if any, and original Voluntary Conversion Notice are
received by the Company on or before such third business day), the
Transfer Agent shall fail to issue and deliver to a holder the
number of shares of Common Stock to which such holder is entitled
upon such holder's conversion of the Series C Preferred or to issue
a new Preferred Stock Certificate representing the number of shares
of Series C Preferred to which such holder is entitled (a
“
Voluntary
Conversion Failure
”),
in addition to all other available remedies which such holder may
pursue hereunder, the Company shall pay additional damages to such
holder on each business week after such fifth (5th) business day
that such conversion is not timely effected (so long as the
applicable Preferred Stock Certificates and original Voluntary
Conversion Notice are received by the Company on or before such
fifth business day) in an amount equal 0.5% of the product of (A)
the sum of the number of Conversion Shares not issued to the holder
on a timely basis pursuant to Section 4(c)(i) and to which such
holder is entitled and, in the event the Company has failed to
deliver a Preferred Stock Certificate to the holder on a timely
basis pursuant to Section 4(c)(i), the number of shares of
Conversion Shares issuable upon conversion of the shares of Series
C Preferred represented by such Series C Preferred certificate, as
of the last possible date which the Company could have issued such
Series C Preferred certificate to such holder without violating
Section 4(c)(i) and (B) the Closing Bid and Ask Price (as defined
below) of the Common Stock on the last possible date which the
Company could have issued the Conversion Shares and such Series C
Preferred certificate, as the case may be, to such holder without
violating Section 4(c)(i). If the Company fails to pay the
additional damages set forth in this Section 4(c)(iv) within seven
(7) business days of the date incurred, then such payment shall
bear interest at the rate of 1.0% per month (pro rated for partial
months) until such payments are made.
(c)
Conversion Price
.
(i)
The term
“Conversion Price” shall mean $0.01 per share, subject
to adjustment under Section 4(d) hereof.
(d)
Adjustments of Conversion
Price
.
(i)
Adjustments for Stock Splits and
Combinations
. If the Company shall at any time or from time
to time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the Conversion Price shall be
proportionately decreased. If the Company shall at any time or from
time to time after the Issuance Date, combine the outstanding
shares of Common Stock, the Conversion Price shall be
proportionately increased. Any adjustments under this Section
4(e)(i) shall be effective at the close of business on the date the
stock split or combination becomes effective.
(ii)
Adjustments
for Certain Dividends and Distributions
. If the Company
shall at any time or from time to time after the Issuance Date,
make or issue or set a record date for the determination of holders
of Common Stock entitled to receive a dividend or other
distribution payable in shares of Common Stock, then, and in each
event, the Conversion Price shall be decreased as of the time of
such issuance or, in the event such record date shall have been
fixed, as of the close of business on such record date, by
multiplying the Conversion Price then in effect by a
fraction:
(1)
the numerator of
which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or
the close of business on such record date; and
(2)
the denominator of
which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or
the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or
distribution;
provided
,
however
, that no such
adjustment shall be made if the holders of Series C Preferred
simultaneously receive (i) a dividend or other distribution of
shares of Common Stock in a number equal to the number of shares of
Common Stock as they would have received if all outstanding shares
of Series C Preferred had been converted into Common Stock on the
date of such event or (ii) a dividend or other distribution of
shares of Series C Preferred which are convertible, as of the date
of such event, into such number of shares of Common Stock as is
equal to the number of additional shares of Common Stock being
issued with respect to each share of Common Stock in such dividend
or distribution.
(iii)
Adjustment
for Other Dividends and Distributions
. If the Company shall
at any time or from time to time after the Issuance Date, make or
issue or set a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution
payable in securities of the Company other than shares of Common
Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be
made (by adjustments of the Conversion Price or otherwise) so that
the holders of Series C Preferred shall receive upon conversions
thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which
they would have received had their Series C Preferred been
converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together
with any distributions payable thereon during such period), giving
application to all adjustments called for during such period under
this Section 4(e)(iii) with respect to the rights of the holders of
the Series C Preferred;
provided
,
however
, that if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price shall be adjusted pursuant to this paragraph as of
the time of actual payment of such dividends or
distributions.
(iv)
Adjustments
for Reclassification, Exchange or Substitution
. If the
Common Stock issuable upon conversion of the Series C Preferred at
any time or from time to time after the Issuance Date shall be
changed to the same or different number of shares of any class or
classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections
4(e)(i), (ii) and (iii), or a reorganization, merger,
consolidation, or sale of assets provided for in Section 4(e)(v)),
then, and in each event, an appropriate revision to the Conversion
Price shall be made and provisions shall be made (by adjustments of
the Conversion Price or otherwise) so that the holder of each share
of Series C Preferred shall have the right thereafter to convert
such share of Series C Preferred into the kind and amount of shares
of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of
shares of Common Stock into which such share of Series C Preferred
might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all
subject to further adjustment as provided herein.
(v)
Adjustments for Reorganization,
Merger, Consolidation or Sales of Assets
. If at any time or
from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions
provided for in Section 4(e)(i), (ii) and (iii), or a
reclassification, exchange or substitution of shares provided for
in Section 4(e)(iv)), or a merger or consolidation of the Company
with or into another corporation where the holders of outstanding
voting securities prior to such merger or consolidation do not own
over fifty percent (50%) of the outstanding voting securities of
the merged or consolidated entity, immediately after such merger or
consolidation, or the sale of all or substantially all of the
Company's properties or assets to any other person (an
“
Organic
Change
”), then as a part of such Organic Change an
appropriate revision to the Conversion Price shall be made if
necessary and provision shall be made if necessary (by adjustments
of the Conversion Price or otherwise) so that the holder of each
share of Series C Preferred shall have the right thereafter to
convert such share of Series C Preferred into the kind and amount
of shares of stock and other securities or property which such
holder would have had the right to receive had such holder
converted its shares of Series C Preferred immediately prior to the
consummation of such Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of
this Section 4(e)(v) with respect to the rights of the holders of
the Series C Preferred after the Organic Change to the end that the
provisions of this Section 4(e)(v) (including any adjustment in the
Conversion Price then in effect and the number of shares of stock
or other securities deliverable upon conversion of the Series C
Preferred) shall be applied after that event in as nearly an
equivalent manner as may be practicable.
(vi)
Consideration
for Stock
. In case any shares of Common Stock or any
securities convertible into or exchangeable for, directly or
indirectly, Common Stock (“
Convertible Securities
”), other
than the Series C Preferred, or any rights or warrants or options
to purchase any such Common Stock or Convertible Securities, shall
be issued or sold:
(1)
in connection with
any merger or consolidation in which the Company is the surviving
corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall
be changed to or exchanged for the stock or other securities of
another corporation), the amount of consideration therefore shall
be deemed to be the fair value, as determined reasonably and in
good faith by the Board of Directors of the Company, of such
portion of the assets and business of the non-surviving corporation
as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or
options, as the case may be; or
(2)
in the event of any
consolidation or merger of the Company in which the Company is not
the surviving corporation or in which the previously outstanding
shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another corporation,
or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any
corporation, the Company shall be deemed to have issued a number of
shares of its Common Stock for stock or securities or other
property of the other corporation computed on the basis of the
actual exchange ratio on which the transaction was predicated, and
for a consideration equal to the fair market value on the date of
such transaction of all such stock or securities or other property
of the other corporation. If any such calculation results in
adjustment of the applicable Conversion Price, or the number of
shares of Common Stock issuable upon conversion of the Series C
Preferred, the determination of the applicable Conversion Price or
the number of shares of Common Stock issuable upon conversion of
the Series C Preferred immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon
conversion of the Series C Preferred. In the event any
consideration received by the Company for any securities consists
of property other than cash, the fair market value thereof at the
time of issuance or as otherwise applicable shall be as determined
in good faith by the Board of Directors of the Company. In the
event Common Stock is issued with other shares or securities or
other assets of the Company for consideration which covers both,
the consideration computed as provided in this Section 4(e)(vi)
shall be allocated among such securities and assets as determined
in good faith by the Board of Directors of the
Company.
(vii)
Record
Date
. In case the Company shall take record of the holders
of its Common Stock or any other Preferred Stock for the purpose of
entitling them to subscribe for or purchase Common Stock or
Convertible Securities, then the date of the issue or sale of the
shares of Common Stock shall be deemed to be such record
date.
(1)
No Impairment
. The Company
shall not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith,
assist in the carrying out of all the provisions of this Section 4
and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the
holders of the Series C Preferred against impairment. In the event
a holder shall elect to convert any shares of Series C Preferred as
provided herein, the Company cannot refuse conversion based on any
claim that such holder or any one associated or affiliated with
such holder has been engaged in any violation of law, unless (i) an
order from the Securities and Exchange Commission prohibiting such
conversion or (ii) an injunction from a court, on notice,
restraining and/or adjoining conversion of all or of said shares of
Series C Preferred shall have been issued and the Company posts a
surety bond for the benefit of such holder in an amount equal to
100% of the Liquidation Preference Amount of the Series C Preferred
such holder has elected to convert, which bond shall remain in
effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such holder
in the event it obtains judgment. If the Company is the prevailing
party in any legal action or other legal proceeding relating to the
Conversion Rights of the holders of the Series C Preferred, then
the Company shall be entitled to recover from the holders of Series
C Preferred reasonable attorneys’ fees, costs and
disbursements (in addition to any other relief to which the Company
may be entitled).
(b)
Certificates as to Adjustments
.
Upon occurrence of each adjustment or readjustment of the
Conversion Price or number of shares of Common Stock issuable upon
conversion of the Series C Preferred pursuant to this Section 4,
the Company at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to
each holder of such Series C Preferred a certificate setting forth
such adjustment and readjustment, showing in detail the facts upon
which such adjustment or readjustment is based. The Company shall,
upon written request of the holder of such affected Series C
Preferred, at any time, furnish or cause to be furnished to such
holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the time, and the
number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon the
conversion of a share of such Series C Preferred. Notwithstanding
the foregoing, the Company shall not be obligated to deliver a
certificate unless such certificate would reflect an increase or
decrease of at least one percent of such adjusted
amount.
(c)
Issue Taxes
. The Company shall
pay any and all issue and other taxes, excluding federal, state or
local income taxes, that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of
Series C Preferred pursuant thereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting
from any transfer requested by any holder in connection with any
such conversion.
(d)
Notices
. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally or by e-mail or three (3) business
days following being mailed by certified or registered mail,
postage prepaid, return-receipt requested, addressed to the holder
of record at its address appearing on the books of the Company. The
Company will give written notice to each holder of Series C
Preferred at least twenty (20) days prior to the date on which the
Company closes its books or takes a record (i) with respect to any
dividend or distribution upon the Common Stock, (ii) with respect
to any pro rata subscription offer to holders of Common Stock or
(iii) for determining rights to vote with respect to any Organic
Change, dissolution, liquidation or winding-up and in no event
shall such notice be provided to such holder prior to such
information being made known to the public. The Company will also
give written notice to each holder of Series C Preferred at least
twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no
event shall such notice be provided to such holder prior to such
information being made known to the public.
(e)
Fractional Shares
. No
fractional shares of Common Stock shall be issued upon conversion
of the Series C Preferred. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Company shall pay
cash equal to the product of such fraction multiplied by the
average of the Closing Bid and Ask Prices of the Common Stock for
the five (5) consecutive trading immediately preceding the
Voluntary Conversion Date.
(f)
Reservation of Common Stock
. At
such time as the Company has obtained the Authorized Share
Approval, the Company shall, so long as any shares of Series C
Preferred are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, for the purpose of effecting
the conversion of the Series C Preferred, such number of shares of
Common Stock sufficient to effect the conversion of all of the
Series C Preferred then outstanding.
(g)
Retirement of Series C
Preferred
. Conversion of Series C Preferred shall be deemed
to have been completed on the applicable Voluntary Conversion Date
or date of an Automatic Conversion in accordance with Section 4(a).
Upon conversion of only a portion of the number of shares of Series
C Preferred represented by a certificate surrendered for
conversion, the Company shall issue and deliver to such holder at
the expense of the Company, a new certificate covering the number
of shares of Series C Preferred representing the unconverted
portion of the certificate so surrendered.
(h)
Regulatory Compliance
. If any
shares of Common Stock to be reserved for the purpose of conversion
of Series C Preferred require registration or listing with or
approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or
otherwise before such shares may be validly issued or delivered
upon conversion, the Company shall, at its sole cost and expense,
in good faith and as expeditiously as possible, endeavor to secure
such registration, listing or approval, as the case may
be.
5.
Beneficial Ownership
.
Notwithstanding anything to the contrary set forth in this
Certificate of Designations, at no time, other than in a bona fide
Change of Control (as defined below) transaction, may a holder of
shares of Series C Preferred convert shares of the Series C
Preferred if the number of shares of Common Stock to be issued
pursuant to such conversion would exceed, when aggregated with all
other shares of Common Stock owned by such holder and its
affiliates at such time, the number of shares of Common Stock which
would result in such holder and its affiliates beneficially owning
(as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules thereunder) in
excess of 9.99% of all of the Common Stock outstanding at such
time;
provided
,
however
, that upon a holder
of Series C Preferred providing the Company with sixty-one (61)
days’ notice (a “
Waiver Notice
”) that such holder
would like to waive Section 5 of this Certificate of Designations
with regard to any or all shares of Common Stock issuable upon
conversion of Series C Preferred, this Section 5 shall be of no
force or effect with regard to those shares of Series C Preferred
referenced in the Waiver Notice provided.
6.
Inability to Fully
Convert
.
(a)
Holder's Option if Company Cannot
Fully Convert
. If the Company has not received the
Authorized Share Approval within six months following the Issuance
Date, upon the Company's receipt of a Voluntary Conversion Notice
the Company cannot issue shares of Common Stock issuable pursuant
to such Voluntary Conversion Notice because the Company (x) does
not have a sufficient number of shares of Common Stock authorized
and available or (y) is otherwise prohibited by applicable law or
by the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with
jurisdiction over the Company or its securities from issuing all of
the Common Stock which is to be issued to a holder of Series C
Preferred pursuant to a Voluntary Conversion Notice, then the
Company shall issue as many Conversion Shares as it is able to
issue in accordance with such holder's Voluntary Conversion Notice
and pursuant to Section 4(c)(i) above and, with respect to the
unconverted Series C Preferred, the holder, solely at such holder's
option, can elect, within five (5) business days after receipt of
notice from the Company thereof to:
(i)
void its Voluntary
Conversion Notice and retain or have returned, as the case may be,
the shares of Series C Preferred that were to be converted pursuant
to such holder's Voluntary Conversion Notice (provided that a
holder's voiding its Voluntary Conversion Notice shall not impact
the Company's obligations to make any payments which have accrued
prior to the date of such notice).
(b)
Mechanics of Fulfilling Holder's
Election
. The Company shall promptly send via e-mail or
otherwise to a holder of Series C Preferred, upon receipt of an
e-mail or otherwise copy of a Voluntary Conversion Notice from such
holder which cannot be fully satisfied as described in Section 6(a)
above, a notice of the Company's inability to fully satisfy such
holder's Conversion Notice (the “
Inability to Fully Convert
Notice
”). Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Company is unable to fully satisfy
such holder's Conversion Notice, and (ii) the number of Series C
Preferred which cannot be converted. Such holder shall notify the
Company of its election above by delivering written notice via
e-mail to the Company (“
Notice in Response to Inability to
Convert
”).
7.
Pro-Rata Conversion and
Redemption
. In the event the Company receives a Voluntary
Conversion Notice from more than one holder of Series C Preferred
on the same day and the Company can convert and redeem some, but
not all, of the Series C Preferred pursuant to this Section 7, the
Company shall convert and redeem from each holder of Series C
Preferred electing to have Series C Preferred converted and
redeemed at such time an amount equal to such holder's pro-rata
amount (based on the number shares of Series C Preferred held by
such holder relative to the number shares of Series C Preferred
outstanding) of all shares of Series C Preferred being converted
and redeemed at such time.
8.
Redemption
.
(a)
Redemption Option Upon Change of
Control
. In addition to any other rights of the Company or
the holders of Series C Preferred contained herein, simultaneous
with the occurrence of a Change of Control (as defined below), the
Company, at its option, shall have the right to redeem all or a
portion of the outstanding Series C Preferred in cash at a price
per share of Series C Preferred equal to 100% of the Liquidation
Preference amount thereof (the “
Change of Control Redemption
Price
”). Notwithstanding the foregoing to the
contrary, the Company may effect a redemption pursuant to this
Section 8(a) only if
the Company is in
material compliance with the terms and conditions of this
Certificate of Designations
.
(b)
“Change of
Control”
. A “
Change of Control
” shall be
deemed to have occurred at such time as a third party not
affiliated with the Company or any holders of the Series C
Preferred shall have acquired, in one or a series of related
transactions, equity securities of the Company representing more
than fifty percent 50% of the outstanding voting securities of the
Company.
(c)
Mechanics of Redemption Option Upon
Change of Control
. At any time within ten (10) days
p
(d)
rior to a Change of
Control transaction, the Company may redeem, effective immediately
prior to the consummation of such Change of Control, all of the
holder's Series C Preferred then outstanding by delivering written
notice thereof via e-mail and overnight courier
(“
Notice of Redemption at
Option of Company Upon Change of Control
”) to each
holder of Series C Preferred, which Notice of Redemption at Option
of Company Upon Change of Control shall indicate (i) the number of
shares of Series C Preferred that the Company is electing to redeem
and (ii) the Change of Control Redemption Price, as calculated
pursuant to Section 8(a) above. The Change of Control Redemption
Price shall be paid in cash in accordance with Section 8(a) of this
Certificate of Designations. On or prior to the Change of Control,
the holders of Series C Preferred shall surrender to the Company
the certificate or certificates representing such shares, in the
manner and at the place designated in the Notice of Redemption at
Option of Company Upon Change of Control. The Company shall deliver
the Change of Control Redemption Price immediately prior to or
simultaneously with the consummation of the Change of Control;
provided that a holder's Preferred Stock Certificates shall have
been so delivered to the Company (or an indemnification undertaking
with respect to such Preferred Stock Certificates in the event of
their loss, theft or destruction). From and after the Change of
Control transaction, unless there shall have been a default in
payment of the Change of Control Redemption Price, all rights of
the holders of Series C Preferred as a holder of such Series C
Preferred (except the right to receive the Change of Control
Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to any
redeemed shares of Series C Preferred, and such shares shall not
thereafter be transferred on the books of the Company or be deemed
to be outstanding for any purpose whatsoever. Notwithstanding the
foregoing to the contrary, nothing contained herein shall limit a
holder’s ability to convert its shares of Series C Preferred
following the receipt of the Notice of Redemption at Option of
Company Upon Change of Control and prior to the consummation of the
Change of Control transaction.
(e)
Company's Redemption Option
.
Any time after the six-month period following the Issuance Date,
the Company may redeem all or a portion of the Series C Preferred
outstanding upon thirty (30) calendar days prior written notice
(the “
Company's Redemption
Notice
”) in cash at a price per share of Series C
Preferred equal to 100% of the Liquidation Preference amount
thereof (the “
Company’s Redemption
Price
”); provided, that if a holder has delivered a
Voluntary Conversion Notice to the Company for all or a portion of
the shares of Series C Preferred, such shares of Series C Preferred
designated to be redeemed may be converted by such
holder.
(f)
Mechanics of Company’s
Redemption Option
. The Company's Redemption Notice shall
state the date of redemption which date shall be thirty (30)
calendar days after the Company has delivered the Company's
Redemption Notice (the “
Company's Redemption
Date
”), the Company's Redemption
Price and the number of shares to be redeemed by the Company. The
Company shall deliver the Company's Redemption Price to the
holder(s) within five (5) business days after the Company has
delivered the Company's Redemption Notice, provided, that if the
holder(s) delivers a Conversion Notice before the Company's
Redemption Date, then the portion of the Company's Redemption Price
which would be paid to redeem the shares of Series C Preferred
covered by such Conversion Notice shall be returned to the Company
upon delivery of the Common Stock issuable in connection with such
Conversion Notice to the holder(s). On the Redemption Date, the
Company shall pay the Company's Redemption Price, subject to any
adjustment pursuant to the immediately preceding sentence, to the
holder(s) on a pro rata basis, provided, however, that upon receipt
by the Company of the Preferred Stock Certificates to be redeemed
pursuant to this Section 8(e), the Company shall, on the next
business day following the date of receipt by the Company of such
Preferred Stock Certificates, pay the Company's Redemption Price,
subject to any adjustment pursuant to the immediately preceding
sentence, to the holder(s) on a pro rata basis. Notwithstanding the
foregoing to the contrary, the Company may effect a redemption
pursuant to this Section 8(e) only if (A)
trading in the Common Stock shall not have been
suspended by
the Securities and
Exchange Commission or the OTC Bulletin Board (or other exchange or
market on which the Common Stock is trading), (B) the Company is in
material compliance with the terms and conditions of this
Certificate of Designations, and (C) the Company is not in
possession of any material non-public information
. Nothing
contained herein shall limit a holder’s ability to convert
its shares of Series C Preferred following the receipt of the
Company’s Redemption Notice and prior to the Company's
Redemption Date.
9.
No Preemptive Rights
. No holder
of the Series C Preferred shall be entitled to rights to subscribe
for, purchase or receive any part of any new or additional shares
of any class, whether now or hereinafter authorized, or of bonds or
debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or
additional shares of any class, or any bond, debentures or other
evidences of indebtedness convertible into or exchangeable for
shares, may be issued and disposed of by the Board of Directors on
such terms and for such consideration (to the extent permitted by
law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.
10.
Amendments
. The affirmative
vote at a meeting duly called for such purpose, or the written
consent without a meeting, of the holders of a majority of the then
outstanding shares of Series C Preferred shall be required for any
change, amendment or otherwise to this Certificate of Designations
or the Company's Certificate of Incorporation which would amend,
alter, change or repeal, or otherwise adversely affect, any of the
powers, designations, preferences and rights of the Series C
Preferred.
11.
Lost or Stolen Certificates
.
Upon receipt by the Company of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of any Preferred
Stock Certificates representing the shares of Series C Preferred,
and, in the case of loss, theft or destruction, of an
indemnification undertaking by the holder to the Company (in form
and substance satisfactory to the Company) and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new Preferred
Stock Certificate(s) of like tenor and date; provided, however, the
Company shall not be obligated to re-issue Preferred Stock
Certificates if the holder contemporaneously requests the Company
to convert such shares of Series C Preferred into Common
Stock.
12.
Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief
. The remedies
provided in this Certificate of Designations shall be cumulative
and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a
decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall
limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of this Certificate of
Designations. Amounts set forth or provided for herein with respect
to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the holder thereof and shall
not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holders of the Series C Preferred and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach, the
holders of the Series C Preferred shall be entitled, in addition to
all other available remedies, to an injunction restraining any
breach or the Series C Preferred holders' reasonable perception of
a threatened breach by the Company of the provisions of this
Certificate of Designations, without the necessity of showing
economic loss and without any bond or other security being
required.
13.
Specific Shall Not Limit General;
Construction
. No specific provision contained in this
Certificate of Designations shall limit or modify any more general
provision contained herein. This Certificate of Designation shall
be deemed to be jointly drafted by the Company and all initial
purchasers of the Series C Preferred and shall not be construed
against any person as the drafter hereof.
14.
Failure or Indulgence Not
Waiver
. No failure or delay on the part of a holder of
Series C Preferred in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or
privilege.
IN
WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this
22
nd
day
of March 2019.
|
By:
/s/ Mike
Korenko
Chief
Executive Officer
|
VIVOS,
INC.
SERIES
C CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences
and Rights of the Series C Convertible Preferred Stock
(“
Series C
Preferred
”)
(“
Certificate of
Designations
”) of Vivos
Inc. (the “Company”) In accordance with and pursuant to
the Certificate of Designations, the undersigned holder (the
“
Holder
”) hereby elects to convert the number of
shares of Series C Preferred, par value $0.001 per share (the
“
Preferred
Shares
”), of Vivos Inc.,
a Delaware corporation (the “
Company
”), indicated below into shares of Common
Stock, par value $0.001 per share (the “
Common
Stock
”), of the Company,
by submitting this Notice of Conversion to the Company as of the
date specified below.
Date of Conversion Notice: __________
Series C Preferred owned by the Holder in book entry with Vivos
Inc. prior to this Conversion Notice: __________
Series C Preferred Shares to be converted: ________
Series C Preferred Shares owned by the Holder Inc. in book entry
with Vivos Inc. after this Conversion Notice:
__________
Shares of Common Stock to be issued upon conversion of Series C
Preferred: ___________
(on the initial issuance date of the Series C, each share of
Series C converts into 100 common shares)
Shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Date of Conversion:
______________
Please instruct the Transfer Agent to issue the Common Stock into
which the Series C Preferred Shares are being converted in the
following name and to the following address:
Physical Delivery:
Issue to:
Electronic Delivery: (Subject to Transfer Agent conditions for
Electronic Delivery)
Name of bank/broker due to receive the underlying Common
Stock:
Bank/broker's four digit “DTC” participant
number
(obtained from the receiving bank/broker): __________
Holder’s Account Number: __________
Holder’s Signature:
By:
_________________
Title:
________________
Dated