Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE
OF DESIGNATION
OF
SERIES
F CONVERTIBLE PREFERRED STOCK
OF
CORMEDIX
INC.
Pursuant to Section 151 of the
Delaware
General Corporation Law
I,
Khoso Baluch, Chief Executive Officer of CorMedix Inc. (the
“
Corporation
”),
a corporation organized and existing under the laws of the State of
Delaware, DO HEREBY CERTIFY:
1.
Pursuant to its
Certificate of Incorporation, as amended (the “
Certificate of
Incorporation
”), the Corporation is authorized to
issue 2,000,000 shares of preferred stock, of which 5,000 shares
have been previously designated as Series F Convertible Preferred
Stock, of which 2,000 shares are currently issued and
outstanding.
2.
Pursuant to Section
242(b) of the Delaware General Corporation law (the
“
DGCL
”),
the Board of Directors of the Corporation, on December 5, 2017, and
the holders of all of the outstanding shares of Series F Non-Voting
Convertible Preferred Stock, on December 8, 2017, approved this
Amended and Restated Certificate of Designation of Series F
Convertible Preferred Stock (this “
Certificate of
Designation
”).
3.
The
Corporation’s common stockholders were not required to
approve this Certificate of Designation.
4.
The text of the
Certificate of Designation of Series F Convertible Preferred Stock
which was filed on November 9, 2017, is hereby amended and restated
in its entirety as follows:
SERIES F CONVERTIBLE PREFERRED STOCK
SECTION 1.
DEFINITIONS
.
For the purposes hereof, the following terms shall have the
following meanings:
“
Affiliate
”
means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under
common control with a person or entity, as such terms are used in
and construed under Rule 144 under the Securities Act. With respect
to a Holder, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such
Holder will be deemed to be an Affiliate of such
Holder.
“
Alternate
Consideration
” shall have the meaning set forth in
Section 7(d).
“
Bankruptcy
Event
” means: the Corporation shall (i) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic), (iv) file a petition seeking to
take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of
creditors’ rights generally, (v) acquiesce in writing to any
petition filed against it in an involuntary case under United
States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (vi)
issue a notice of bankruptcy or winding down of its operations or
issue a press release regarding same, or (vii) take any action
under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing; and/or a proceeding or case shall be
commenced in respect of the Corporation, without its application or
consent, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, moratorium, dissolution, winding up,
or composition or readjustment of its debts, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets in connection with the
liquidation or dissolution of the Corporation or (iii) similar
relief in respect of it under any law providing for the relief of
debtors, and such proceeding or case described in clause (i), (ii)
or (iii) shall continue undismissed, or unstayed and in effect, for
a period of thirty (30) days or any order for relief shall be
entered in an involuntary case under United States Bankruptcy Code
(as now or hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic) against the Corporation or
action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing shall be taken with respect to
the Corporation or any of its subsidiaries and shall continue
undismissed, or unstayed and in effect for a period of sixty (60)
days.
“
Beneficial
Ownership Limitation
” shall have the meaning set forth
in Section 6(c).
“
Bloomberg
”
means Bloomberg, L.P.
“
Business
Day
” means any day except Saturday, Sunday, any day
which shall be a federal legal holiday in the United States or any
day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.
“
Buy-In
”
shall have the meaning set forth in Section 6(e)(iii).
“
Closing Sale
Price
” means, for any security as of any date, the
last closing trade price for such security prior to 4:00 p.m., New
York City time, on the principal securities exchange or trading
market where such security is listed or traded, as reported by
Bloomberg (or, to the extent that Bloomberg is unavailable
generally, an equivalent, reliable reporting service mutually
acceptable to and hereafter designated by Holders of a majority of
the then-outstanding Series F Preferred Stock and the Corporation),
or if the foregoing do not apply, the last trade price of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last
trade price is reported for such security by Bloomberg, the average
of the bid prices of any market makers for such security as
reported on the OTC Pink Market by OTC Markets Group, Inc. If the
Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value
as determined in good faith by the Board of Directors of the
Corporation.
“
Commission
”
means the Securities and Exchange Commission.
“
Common
Stock
” means the Corporation’s common stock, par
value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed
into.
“
Contingent
Obligation
” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with
respect thereto.
“
Conversion
Date
” shall have the meaning set forth in Section
6(a).
“
Conversion
Price
” shall mean, on any date of determination, from
and after the date of filing of this Certificate of Designation,
(A) if the aggregate cash proceeds actually received by the
Corporation from the sale, other than to Affiliates of or Persons
managed by Elliott Management Corporation, of its equity or
equity-linked securities, in one or more bona fide transactions
consummated on or before March 31, 2018 equals or exceeds
$3,000,000 (a “
Triggering
Transaction
”), the lesser of (1) $0.6334 and (2) a 10%
discount to the lowest notional price at which such Triggering
Transaction is completed by the Corporation on or before March 31,
2018 (excluding any at-the-market equity offerings through a
broker-dealer, sales of Common Stock or Junior Securities to
directors, officers and employees of the Corporation and equity
grants pursuant to the Corporation’s 2013 Stock Incentive
Plan), (B) for so long as (1) the Company actually consummates one
or more sales, other than to Affiliates of or Persons managed by
Elliott Management Corporation, of its equity or equity-linked
securities (excluding any at-the-market equity offerings through a
broker-dealer, sales of Common Stock or Junior Securities to
directors, officers and employees of the Corporation and equity
grants pursuant to the Corporation’s 2013 Stock Incentive
Plan) before March 31, 2018 and (2) the aggregate cash proceeds
actually received by the Corporation from any such sales is less
than $3,000,000, the lowest average Closing Sale Price of the
Common Stock for the five (5) Trading Days immediately following
the date of the public announcement (whether by press release, the
filing of a Current Report on Form 8-K, any other filing with the
Commission or otherwise) of such sale, or (C) otherwise, the lower
of (1) $0.6334 and (2) a 10% discount to the closing price of the
Corporation’s Common Stock on April 2, 2018, in each case, as
adjusted hereunder.
“
Conversion
Ratio
” shall mean, with respect to each share of
Series F Preferred Stock, an amount equal to the aggregate Stated
Value and accrued but unpaid dividends thereon, divided by the
Conversion Price.
“
Conversion
Shares
” means, collectively, the shares of Common
Stock issuable upon conversion of the shares of Series F Preferred
Stock in accordance with the terms hereof.
“
Convertible
Securities
” means any stock, note, debenture or other
security (other than Options) that is, or may become, at any time
and under any circumstances, directly or indirectly, convertible
into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common
Stock.
“
Corporate
Event
” shall have the meaning set forth in Section
8(b).
“
Daily Failure
Amount
” means the product of (x) 0.005 multiplied by
(y) the Closing Sale Price of the Common Stock on the applicable
Share Delivery Date.
“
DTC
”
shall have the meaning set forth in Section 6(a).
“
DWAC
Delivery
” shall have the meaning set forth in Section
6(a).
“
Equity
Condition
” means, w
ith
respect to any given date of determination, each of the
following:
(i)
on each day during such thirty (30) day
period (the “
Equity
Conditions Measuring Period
”), the Common Stock (including all
Underlying Securities) is listed or designated for quotation on an
eligible market and, subject to limited exceptions, shall not have
been suspended from trading on an eligible market nor shall
delisting or suspension by an eligible market have been threatened
or reasonably likely to occur or pending;
(ii)
during
the Equity Conditions Measuring Period, the Corporation shall have
delivered all shares of Common Stock issuable upon conversion of
the Preferred Stock on a timely basis and all other shares of
capital stock required to be delivered by the Corporation on a
timely basis as set forth in the other transaction
documents;
(iii)
any
shares of Common Stock to be issued in connection with the event
requiring determination (or otherwise issuable pursuant to the
terms of the Preferred Stock) may be issued in full without
violating the rules or regulations of the eligible market on which
the Common Stock is then listed or designated for quotation (as
applicable);
(iv)
on
each day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Fundamental
Transaction shall have occurred which has not been abandoned,
terminated or consummated;
(v)
the
holder of any Preferred Stock shall not be possession of any
material, non-public information provided to any of them by the
Corporation, any of its subsidiaries or any of their respective
affiliates, employees, officers, representatives, agents or the
like;
(vi)
on
each day during the Equity Conditions Measuring Period, the
Corporation otherwise shall have been in compliance with each, and
shall not have breached any representation or warranty in any
material respect (other than representations or warranties subject
to material adverse effect or materiality, which may not be
breached in any respect) or any covenant or other term or condition
of any transaction document, including, without limitation, the
Corporation shall not have failed to timely make any payment
pursuant to any transaction document;
(vii)
as
of such applicable date of determination, (A) the aggregate daily
dollar trading volume of the Common Stock on at least fifteen (15)
trading days during the twenty (20) trading day period ending on
the trading day immediately preceding such date of determination
and on each of the last three (3) trading days in such period (the
“
Equity
Conditions Ending Period
”), is not less than
$200,000;
(viii)
on
the applicable date of determination (A) while any of the
Preferred Stock remain outstanding the Corporation has a sufficient
number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon conversion of
the Preferred Stock a number of shares of Common Stock equal to at
least 125% of the number of shares of Common Stock as shall from
time to time be necessary to effect the conversion of all of the
Preferred Stock then outstanding (the “
Required
Reserve Amount
”), and all
shares of Common Stock to be issued in connection with the event
requiring this determination are available under the Certificate of
Incorporation and reserved by the Corporation to be issued pursuant
to the terms hereof and (B) all shares of Common Stock to be
issued in connection with the event requiring this determination
may be issued in full without resulting in the Corporation’s
failure to maintain the Required Reserve
Amount;
(ix)
the
Series F Preferred Stock is senior in rank (
as to dividends,
distributions of assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntarily or
involuntarily
) to each and all series
of capital stock issued by the Corporation prior to the Initial
Issue Date;
(x)
any
meeting of stockholders of the Corporation required to waive the
Exchange Cap or to authorize the Corporation to issue Conversion
Shares notwithstanding the Exchange Cap has been held and such
waiver or authorization has been obtained; and
(xi)
the
shares of Common Stock issuable pursuant to the event requiring the
satisfaction of the Equity Conditions are duly authorized and
listed and eligible for trading without restriction on an eligible
market.
“
Eligible
Market
” means The New York Stock Exchange, the NYSE
American, the Nasdaq Global Select Market, the Nasdaq Global Market
or the Principal Market.
“
Encumbrance
”
means any security interest, pledge, hypothecation, mortgage,
assignment, Taxes, lien (statutory or other, and including
environmental and tax liens), deposit arrangement, violation,
charge, lease, license, encumbrance, servient easement, adverse
claim, reversion, reverter, preference, priority, other security
agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention
agreement and any capital lease or any synthetic or other financing
lease having substantially the same economic effect as any of the
foregoing), restrictive covenant, condition or restriction of any
kind, including any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of
ownership.
“
Exchange
Act
” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
“
Fundamental
Transaction
” shall have the meaning set forth in
Section 7(e).
“
Holder
”
means any holder of Series F Preferred Stock.
“
Indebtedness
”
of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with
generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all
reimbursement or payment obligations with respect to letters of
credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in
either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F)
all monetary obligations under any leasing or similar arrangement
which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, claim, lien, tax, right of first refusal,
encumbrance, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract
rights) owned by any Person, even though the Person which owns such
assets or property has not assumed or become liable for the payment
of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to
in clauses (A) through (G) above.
“
Initial Issue
Date
” shall mean the date that shares of Preferred
Stock are first issued by the Corporation.
“
Junior
Securities
” shall have the meaning set forth in
Section 5(a).
“
Liquidation
Event
” shall have the meaning set forth in Section
5(b).
“
Liquidation
Preference
” shall have the meaning set forth in
Section 5(b).
“
Material Adverse
Effect
” means any material adverse effect on the
business, operations, properties, or financial condition of the
Corporation and/or any condition, circumstance, or situation that
would prohibit or otherwise materially interfere with the ability
of the Corporation to perform any of its obligations under the
Series F Preferred Stock in any material respect.
“
New
Subsidiary
” means, as of any date of determination,
any Person in which the Corporation after the Initial Issue Date,
directly or indirectly, (i) owns or acquires any of the outstanding
capital stock or holds any equity or similar interest of such
Person or (ii) controls or operates all or any part of the
business, operations or administration of such Person, and all of
the foregoing, collectively, “
New
Subsidiaries
.”
“
Notice of
Conversion
” shall have the meaning set forth in
Section 6(a).
“
Options
”
means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
“
Parent
Entity
” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible
Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.
“
Parity
Securities
” shall have the meaning set forth in
Section 5(a).
“
Permitted
Distributions
” means dividends by Subsidiaries of the
Corporation to the Corporation or other Subsidiaries of the
Corporation and dividends required to be paid on the Parity
Securities and pursuant to Section 3 hereof.
“
Person
”
means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“
Principal
Market
” means the NYSE American.
“
Purchase
Rights
” shall have the meaning set forth in Section
8(a) below.
“
Securities
Act
” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
“
Series F Preferred
Stock Register
” shall have the meaning set forth in
Section 2(b).
“
Share Delivery
Date
” shall have the meaning set forth in Section
6(e)(i).
“
Stated
Value
” shall mean $1,000.
“
Trading
Day
” means a day on which the Common Stock is traded
for any period on the Principal Market or if the Common Stock is
not traded on the Principal Market, on a day that the Common Stock
is traded on another securities market on which the Common Stock is
then being traded.
SECTION 2.
DESIGNATION,
AMOUNT AND PAR VALUE; ASSIGNMENT
.
(a)
The series of
preferred stock designated by this Certificate of Designation shall
be designated as the Corporation’s “Series F
Convertible Preferred Stock” (the “
Series F Preferred
Stock
”) and the number of shares so designated shall
be 5,000. Each share of Series F Preferred Stock shall have a par
value of $0.001 per share.
(b)
The Corporation
shall register shares of the Series F Preferred Stock, upon records
to be maintained by the Corporation for that purpose (the
“
Series F Preferred
Stock Register
”), in the name of the Holders thereof
from time to time. The Corporation may deem and treat the
registered Holder of shares of Series F Preferred Stock as the
absolute owner thereof for the purpose of any conversion thereof
and for all other purposes. The Corporation shall register the
transfer of any shares of Series F Preferred Stock in the Series F
Preferred Stock Register, upon surrender of the certificates
evidencing such shares to be transferred, duly endorsed by the
Holder thereof, to the Corporation at its principal place of
business or such other office of the Corporation as may be
designated by the Corporation. Upon any such registration or
transfer, a new certificate evidencing the shares of Series F
Preferred Stock so transferred shall be issued to the transferee
and a new certificate evidencing the remaining portion of the
shares not so transferred, if any, shall be issued to the
transferring Holder, in each case, within three (3) Business Days.
The provisions of this Certificate of Designation are intended to
be for the benefit of all Holders from time to time and shall be
enforceable by any such Holder.
SECTION 3.
DIVIDENDS
.
Holders shall be entitled to receive, and the Corporation shall
pay, dividends on shares of the Series F Preferred Stock equal (on
an as-if-converted-to-Common-Stock basis without giving effect for
such purposes to the Beneficial Ownership Limitation set forth in
Section 6(c) hereof) to and in the same form as dividends (other
than dividends in the form of Common Stock) actually paid on shares
of the Common Stock when, as and if such dividends (other than
dividends in the form of Common Stock) are paid on shares of the
Common Stock.
SECTION 4.
VOTING
RIGHTS
.
Except as
otherwise provided herein or as otherwise required by the DGCL, the
Series F Preferred Stock shall have no voting rights. However, as
long as any shares of Series F Preferred Stock are outstanding, the
Corporation shall not, whether by merger, consolidation or
otherwise, without the affirmative vote of the Holders of a
majority of the then outstanding shares of the Series F Preferred
Stock: (a) alter or change the powers, preferences or rights given
to the Series F Preferred Stock as set forth herein or alter or
amend this Certificate of Designation, (b) increase the number of
authorized shares of Series F Preferred Stock, or (c) enter into
any agreement with respect to any of the foregoing; provided,
however, that the foregoing shall not preclude the Corporation from
designating or issuing any Junior Securities. The Corporation shall
not pay or cause to be paid, directly or indirectly, to any Holder
or any of its Affiliates any consideration of any type in
connection with a vote of Holders relating to Sections 4(a), (b) or
(c). The Corporation shall not, directly or indirectly, redeem or
repurchase any Series F Preferred Stock unless such offer of
redemption or repurchase is made pro rata to all Holders on
identical terms.
SECTION 5.
RANK;
LIQUIDATION
.
(a)
The Series F
Preferred Stock shall rank: (i) senior to all of the Common Stock
and the Series C-2, Series C-3 Convertible Preferred Stock (subject
to the Corporation obtaining any consent, waiver or other
authorization from the holders of the Series C-3 Convertible
Preferred Stock necessary for the subordination of the Series C-3
Convertible Preferred Stock to the Series F Preferred Stock),
Series D Non-Voting Convertible Preferred Stock, Series E
Non-Voting Convertible Stock; and (ii) senior to any class or
series of capital stock of the Corporation hereafter created
(clauses (i) and (ii), “
Junior
Securities
”), in each case, as to dividends,
distributions of assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntarily or involuntarily. The
foregoing shall not preclude the Corporation from designating or
issuing any Junior Securities. Without the prior express written
consent of Holders representing a majority of the outstanding
shares of Series F Preferred Stock, the Corporation shall not
hereafter authorize or issue additional or other capital stock that
is of senior or pari-passu rank to the Series F Preferred Stock in
respect of the preferences as to dividends and other distributions,
amortization and/or redemption payments, and/or payments upon a
Liquidation Event.
(b)
Upon liquidation,
dissolution or winding up of the Corporation or a Bankruptcy Event,
whether voluntary or involuntary (each, a “
Liquidation
Event
”), each holder of shares of Series F Preferred
Stock shall be entitled to receive, in preference to any
distributions of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock and Junior
Securities, an amount equal to the Stated Value per share of Series
F Preferred Stock, plus an additional amount equal to any dividend
declared but unpaid on such shares (the “
Liquidation
Preference
”), before any payments shall be made or any
assets distributed to holders of any class of Common Stock or
Junior Securities. If, upon any such Liquidation Event, the assets
of the Corporation shall be insufficient to pay the holders of
shares of the Series F Preferred Stock the Liquidation Preference,
then all remaining assets of the Corporation shall be distributed
ratably to holders of the shares of the Series F Preferred Stock
and Parity Securities.
(c)
After payment to
the holders of shares of the Series F Preferred Stock of the amount
required under Section 5(b), the remaining assets or surplus funds
of the Corporation, if any, available for distribution to
stockholders shall be distributed ratably among the holders of the
Series F Preferred Stock, any other class or series of capital
stock that participates with the Common Stock in the distribution
of assets upon any Liquidation Event and the Common Stock, with the
holders of the Series F Preferred Stock deemed to hold that number
of shares of Common Stock into which such shares of Series F
Preferred Stock are then convertible (without giving effect for
such purposes to the Beneficial Ownership Limitation set forth in
Section 6(c) hereof).
SECTION 6.
CONVERSION
.
(a)
Conversions at Option of
Holder
. Each share of Series F Preferred Stock along with
the aggregate accrued but unpaid dividends thereon shall be
convertible, at any time and from time to time from and after the
date of the issuance thereof, at the option of the Holder thereof,
into a number of shares of Common Stock equal to the Conversion
Ratio in effect at the time of such conversion. A Holder shall
effect a conversion by providing the Corporation with the form of
conversion notice (via overnight courier, facsimile or email)
attached hereto as
Annex A
(a
“
Notice of
Conversion
”), duly completed and executed. For
purposes of clarification, the Corporation or its transfer agent
shall not require a Holder to obtain a medallion guaranty, notary
attestation or any similar deliverable in order to effectuate the
conversion of all or a portion of such Holder’s shares of
Series F Preferred Stock. Other than a conversion following a
Fundamental Transaction, the Notice of Conversion must specify at
least a number of shares of Series F Preferred Stock to be
converted equal to the lesser of (x) 10,000 shares (such number
subject to appropriate adjustment following the occurrence of an
event specified in Section 7(a), 7(b), 7(c) and 7(d) hereof) and
(y) the number of shares of Series F Preferred Stock then held by
the Holder. Provided the Corporation’s Common Stock transfer
agent is participating in the Depository Trust Company
(“
DTC
”)
Fast Automated Securities Transfer program, the Notice of
Conversion may specify, at the Holder’s election, whether the
applicable Conversion Shares shall be credited to the account of
the Holder’s prime broker with DTC through its
Deposit/Withdrawal at Custodian system (a “
DWAC
Delivery
”). The date on which a conversion of Series F
Preferred Stock shall be deemed effective (the “
Conversion
Date
”) shall be defined as the Trading Day that the
Notice of Conversion, completed and executed, and a copy of the
original certificate(s) representing such shares of Series F
Preferred Stock being converted, is sent (via overnight courier,
facsimile or email) to, and received during regular business hours
by, the Corporation. The calculations set forth in the Notice of
Conversion shall control in the absence of manifest or mathematical
error.
(b)
Mandatory Conversion
. Provided
that each Equity Condition has been satisfied, each share of Series
F Preferred Stock along with the aggregate accrued but unpaid
dividends thereon shall be automatically converted on or after
March 31, 2018 into a number of shares of Common Stock equal to the
Conversion Ratio in effect at the time of such
conversion.
(c)
Beneficial Ownership
Limitation
. Notwithstanding anything herein to the contrary,
the Corporation shall not effect any conversion of the Series F
Preferred Stock, and a Holder shall not have the right to convert
any portion of its Series F Preferred Stock, to the extent that,
after giving effect to an attempted conversion set forth on an
applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any other Person whose beneficial
ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act
and the applicable rules and regulations of the Commission,
including any “group” of which the Holder is a member)
would beneficially own a number of shares of Common Stock in excess
of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the aggregate number of shares
of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock
issuable upon conversion of the Series F Preferred Stock subject to
the Notice of Conversion with respect to which the determination of
such sentence is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (A) conversion of the
remaining, unconverted shares of Series F Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B)
exercise or conversion of the unexercised or unconverted portion of
any other securities of the Corporation beneficially owned by such
Holder or any of its Affiliates (including, without limitation, any
convertible notes, convertible stock or warrants) that are subject
to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this Section 6(c), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the applicable rules and regulations of the
Commission. In addition, for purposes hereof, “group”
has the meaning set forth in Section 13(d) of the Exchange Act and
the applicable rules and regulations of the Commission. For
purposes of this Section 6(c), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Corporation’s most recent Form 10-K, Form 10-Q, Current
Report on Form 8-K or other public filing with the Commission, as
the case may be, (B) a more recent public announcement by the
Corporation or (C) a more recent notice by the Corporation or the
Corporation’s transfer agent to the Holder setting forth the
number of shares of Common Stock then outstanding. For any reason
at any time, upon the written or oral request of a Holder (which
may be by email), the Corporation shall, within two (2) Business
Days of such request, confirm orally and in writing to such Holder
(which may be via email) the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to any actual
conversion or exercise of securities of the Corporation, including
shares of Series F Preferred Stock, by such Holder or its
Affiliates since the date as of which such number of outstanding
shares of Common Stock was last publicly reported or confirmed to
the Holder. The “
Beneficial
Ownership Limitation
” shall be 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock pursuant to such
Notice of Conversion (to the extent permitted pursuant to this
Section 6(c)). The Corporation shall be entitled to rely on
representations made to it by the Holder in any Notice of
Conversion regarding its Beneficial Ownership Limitation. The
provisions of this Section 6(c) shall be construed, corrected and
implemented in a manner so as to effectuate the intended beneficial
ownership limitation herein contained and the shares of Common
Stock underlying the Series F Preferred Stock in excess of the
Beneficial Ownership Limitation shall not be deemed to be
beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
By written notice to the Corporation, any Holder may increase or
decrease the Beneficial Ownership Limitation to any other
percentage specified in such notice, provided, (i) any increase
will not be effective until the 61st day after such notice is
delivered to the Corporation and (ii) any such increase or decrease
will only apply to the Holder sending such notice and not to any
other Holder.
(d)
Principal Market
Regulation. The Corporation shall not effect any conversion of the
Series F Preferred Stock, and the Holder shall not have the right
to convert any portion of its Series F Preferred Stock if the
issuance of shares of Common Stock upon such conversion would
exceed the aggregate number of shares of Common Stock which the
Corporation may issue upon conversion of the Series F Preferred
Stock, together with the exercise of any warrants to purchase
Common Stock, without breaching the Corporation’s obligations
under the rules or regulations of the Principal Market (the
“
Exchange
Cap
”), except that such limitation shall not apply in
the event that the Corporation obtains the approval of its
stockholders as required by the applicable rules of the Principal
Market for issuances of shares of Common Stock in excess of such
amount. Until such approval is obtained, no Holder shall be issued
in the aggregate, upon conversion or exercise (as the case may be)
of any Series F Preferred Stock, or any of the warrants to purchase
Common Stock, shares of Common Stock in an amount greater than the
product of (i) the Exchange Cap multiplied by (ii) the quotient of
(1) the number of shares of Series F Preferred Stock beneficially
owned by such Holder divided by (2) all outstanding shares of
Series F Preferred Stock.
(e)
Mechanics of
Conversion
.
(i)
Delivery of Certificate or Electronic
Issuance Upon Conversion
. Not later than two (2) Trading
Days after the applicable Conversion Date (the “
Share Delivery
Date
”), the Corporation shall: (a) deliver, or cause
to be delivered, to the converting Holder a physical certificate or
certificates representing the number of Conversion Shares being
acquired upon the conversion of shares of Series F Preferred Stock
(which certificate or certificates shall not have any legends on
it) or (b) in the case of a DWAC Delivery, electronically transfer
such Conversion Shares by crediting the account of the
Holder’s prime broker with DTC through its DWAC system. If in
the case of any Notice of Conversion such certificate or
certificates are not delivered to or as directed by or, in the case
of a DWAC Delivery, such shares are not electronically delivered to
or as directed by, the applicable Holder by the Share Delivery
Date, the applicable Holder shall be entitled to elect to rescind
such Conversion Notice by written notice to the Corporation at any
time on or before its receipt of such certificate or certificates
for Conversion Shares or electronic receipt of such shares, as
applicable, in which event the Corporation shall promptly return to
such Holder any original Series F Preferred Stock certificate
delivered to the Corporation and such Holder shall promptly return
to the Corporation any Common Stock certificates or otherwise
direct the return of any shares of Common Stock delivered to the
Holder through the DWAC system, representing the shares of Series F
Preferred Stock unsuccessfully tendered for conversion to the
Corporation.
(ii)
Obligation
Absolute
. Subject to any limitations on the beneficial
ownership of Series F Preferred Stock to which a Holder may be
subject and subject to such Holder’s right to rescind a
Conversion Notice pursuant to Section 6(e)(i) above, the
Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of Series F Preferred Stock in accordance
with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by a Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by such
Holder or any other Person of any obligation to the Corporation or
any violation or alleged violation of law by such Holder or any
other Person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Corporation to such
Holder in connection with the issuance of such Conversion Shares.
Subject to any limitations on the beneficial ownership of Series F
Preferred Stock to which a Holder may be subject and subject to
such Holder’s right to rescind a Conversion Notice pursuant
to Section 6(e)(i) above, in the event a Holder shall elect to
convert any or all of its Series F Preferred Stock, the Corporation
may not refuse conversion based on any claim that such Holder or
anyone associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless
an injunction from a court, on notice to such Holder, restraining
and/or enjoining conversion of all or part of the Series F
Preferred Stock of such Holder shall have been sought and obtained
by the Corporation, and the Corporation posts a surety bond for the
benefit of such Holder in the amount of 150% of the value of the
Conversion Shares into which would be converted the Series F
Preferred Stock which is subject to such injunction, which bond
shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of such injunction, the Corporation shall,
subject to any limitations on the beneficial ownership of Series F
Preferred Stock to which a Holder may be subject and subject to
such Holder’s right to rescind a Conversion Notice pursuant
to Section 6(e)(i) above, issue Conversion Shares upon a properly
noticed conversion. If the Corporation fails to deliver to a Holder
such certificate or certificates, or electronically deliver (or
cause its transfer agent to electronically deliver) such shares in
the case of a DWAC Delivery, pursuant to Section 6(e)(i) on or
prior to the third (3rd) Trading Day after the Share Delivery Date
applicable to such conversion (other than a failure caused by
incorrect or incomplete information provided by such Holder to the
Corporation), then, unless the Holder has rescinded the applicable
Conversion Notice pursuant to Section 6(e)(i) above, the
Corporation shall pay (as liquidated damages and not as a penalty)
to such Holder an amount payable in cash equal to the product of
(x) the number of Conversion Shares required to have been issued by
the Corporation on such Share Delivery Date, (y) an amount equal to
the Daily Failure Amount and (z) the number of Trading Days
actually lapsed after such third (3rd) Trading Day after the Share
Delivery Date during which such certificates have not been
delivered, or, in the case of a DWAC Delivery, such shares have not
been electronically delivered. The foregoing liquidated damages is
not intended to be, and is not, an exclusive remedy. Nothing herein
shall limit a Holder’s right to pursue actual damages for the
Corporation’s failure to deliver Conversion Shares within the
period specified herein and such Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief; provided that Holder shall not receive
duplicate damages for the Corporation’s failure to deliver
Conversion Shares within the period specified herein. The exercise
of any such rights shall not prohibit a Holder from seeking to
enforce damages pursuant to any other Section hereof or under
applicable law.
(iii)
Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion
. If the Corporation fails to deliver to a Holder
the applicable certificate or certificates or to effect a DWAC
Delivery, as applicable, by the Share Delivery Date pursuant to
Section 6(e)(i) (other than a failure caused by incorrect or
incomplete information provided by such Holder to the Corporation)
(a “
Conversion
Failure
”), and if after such Share Delivery Date such
Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “
Buy-In
”),
then the Corporation shall (A) pay in cash to such Holder (in
addition to any other remedies available to or elected by such
Holder) the amount by which (x) such Holder’s total purchase
price (including any brokerage commissions) for the shares of
Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder was
entitled to receive from the conversion at issue multiplied by (2)
the actual sale price at which the sell order giving rise to such
purchase obligation was executed (including any brokerage
commissions) and (B) at the option of such Holder, either reissue
(if surrendered) the shares of Series F Preferred Stock equal to
the number of shares of Series F Preferred Stock submitted for
conversion or deliver to such Holder the number of shares of Common
Stock that would have been issued if the Corporation had timely
complied with its delivery requirements under Section 6(e)(i). For
example, if a Holder purchases shares of Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of shares of Series F Preferred Stock with
respect to which the actual sale price (including any brokerage
commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the
Corporation shall be required to pay such Holder $1,000. The Holder
shall provide the Corporation written notice, within three (3)
Trading Days after the occurrence of a Buy-In, indicating the
amounts payable to such Holder in respect of such Buy-In together
with applicable confirmations and other evidence reasonably
requested by the Corporation. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Corporation’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of
the shares of Series F Preferred Stock as required pursuant to the
terms hereof; provided, however, that the Holder shall not be
entitled to both (i) require the reissuance of the shares of Series
F Preferred Stock submitted for conversion for which such
conversion was not timely honored and (ii) receive the number of
shares of Common Stock that would have been issued if the
Corporation had timely complied with its delivery requirements
under Section 6(e)(i).
(iv)
Reservation
of Shares Issuable Upon Conversion
. The Corporation
covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock for the sole
purpose of issuance upon conversion of the Series F Preferred
Stock, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holders of the Series F
Preferred Stock, not less than 125% of such aggregate number of
shares of the Common Stock as shall be issuable (taking into
account the adjustments of Section 7) upon the conversion of all
outstanding shares of Series F Preferred Stock. The Corporation
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable.
(v)
Fractional Shares
. No
fractional shares or scrip representing fractional shares of Common
Stock shall be issued upon the conversion of the Series F Preferred
Stock. 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
final fraction in an amount equal to such fraction multiplied by
the Conversion Price or round up to the next whole
share.
(vi)
Transfer
Taxes
. The issuance of certificates for shares of the Common
Stock upon conversion of the Series F Preferred Stock shall be made
without charge to any Holder for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of
such certificates, provided that the Corporation shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the
registered Holder(s) of such shares of Series F Preferred Stock and
the Corporation shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Corporation the amount of
such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
(f)
Status as Stockholder
. Upon
each Conversion Date: (i) the shares of Series F Preferred Stock
being converted shall be deemed converted into shares of Common
Stock and (ii) the Holder’s rights as a holder of such
converted shares of Series F Preferred Stock shall cease and
terminate, excepting only the right to receive certificates for or
electronic delivery of such shares of Common Stock and to any
remedies provided herein or otherwise available at law or in equity
to such Holder because of a failure by the Corporation to comply
with the terms of this Certificate of Designation. In all cases,
the holder shall retain all of its rights and remedies for the
Corporation’s failure to convert Series F Preferred
Stock.
SECTION 7.
CERTAIN
ADJUSTMENTS
.
(a)
Adjustments for Stock Splits and
Combinations
. If the Corporation shall at any time or from
time to time after the Initial Issue Date effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in
effect immediately prior to the stock split shall be
proportionately decreased. If the Corporation shall at any time or
from time to time after the Initial Issue Date, combine the
outstanding shares of Common Stock, the applicable Conversion Price
in effect immediately prior to the combination shall be
proportionately increased. Any adjustments under this Section 7(a)
shall be effective at the close of business on the date the stock
split or combination occurs.
(b)
Adjustments for Certain Dividends and
Distributions
. If the Corporation shall at any time or from
time to time after the Initial Issue 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 applicable
Conversion Price in effect immediately prior to such event 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 applicable Conversion Price
then in effect by a fraction:
(i)
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
(ii)
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.
(c)
Adjustment for Other Dividends and
Distributions
. Subject to Sections 3 and 5 hereof, if the
Corporation shall at any time or from time to time after the
Initial Issue 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 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 shall receive upon conversions thereof, in
addition to the number of shares of Common Stock receivable
thereon, the number of securities of the Corporation or other
issuer (as applicable) or other property that they would have
received had the shares of Series F Preferred Stock 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) or assets, giving
application to all adjustments called for during such period under
this Section 7(c) with respect to the rights of each Holder;
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.
(d)
Adjustments for Reclassification,
Exchange or Substitution
. If the Common Stock at any time or
from time to time after the Initial Issue Date shall be changed to
the same or different number of shares or other securities of any
class or classes of stock or other property, 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 Section 7(a), Section 7(b), and Section 7(c), or a
reorganization, merger, consolidation, or sale of assets provided
for in Section 7(e)), 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 each Holder shall have the right thereafter to convert shares
of Series F Preferred Stock into the kind and amount of shares of
stock or other securities or other property receivable upon
reclassification, exchange, substitution or other change, by
holders of the number of shares of Common Stock into which such
shares of Series F Preferred Stock might have been converted
immediately prior to such reclassification, exchange, substitution
or other change, all subject to further adjustment as provided
herein.
(e)
Adjustments for Reorganization,
Merger, Consolidation or Sales of Assets
. In case of any
reorganization of the Corporation (or any other corporation the
stock or other securities of which are at the time receivable on
the conversion of the shares of Series F Preferred Stock) after the
Issuance Date, or in case, after such date, the Corporation (or any
such other corporation) shall consolidate with or merge into
another corporation or entity or convey all or substantially all
its assets to another corporation or entity (any such
reorganization or other event hereafter being referred to as a
“
Fundamental
Transaction
”), then and in each such case the shares
of Series F Preferred Stock, upon conversion, as and at any time
after the consummation of such Fundamental Transaction, shall be
converted into, in lieu of the stock or other securities and
property into which the shares of Series F Preferred Stock would
have been convertible prior to such Fundamental Transaction, such
stock or other securities or property to which the shares of Series
F Preferred Stock would have converted if the shares of Series F
Preferred Stock had been converted immediately prior to any such
Fundamental Transaction (the “
Alternate
Consideration
”), subject to further adjustment as
provided in Section 7(a), Section 7(b), Section 7(c) and Section
7(d) in each such case. To the extent necessary to effectuate the
foregoing provisions, any successor to the Corporation or surviving
entity in such Fundamental Transaction shall file a new Certificate
of Designation with the same terms and conditions and issue to the
Holders new preferred stock consistent with the foregoing
provisions and evidencing the Holders’ right to convert such
preferred stock into Alternate Consideration. The terms of any
agreement to which the Corporation is a party and pursuant to which
a Fundamental Transaction is effected shall include terms requiring
any such successor or surviving entity to comply with the
provisions of this Section 7(e) and ensuring that the Series F
Preferred Stock (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. In the event of the merger or
consolidation of the Corporation with or into another corporation,
the Series F Preferred Stock shall maintain their relative rank,
powers, designations and preferences provided for herein (for the
avoidance of doubt, the Series F Preferred Stock shall be senior to
all other classes of capital stock of the successor entity) and no
merger shall have a result inconsistent therewith. The Corporation
shall cause to be delivered (via overnight courier, facsimile or
email) to each Holder, at its last address as it shall appear upon
the books and records of the Corporation, written notice of any
Fundamental Transaction at least ten (10) calendar days prior to
the date on which such Fundamental Transaction is expected to
become effective or close.
(f)
Other Adjustments
. In the event
that (A) the Corporation may not effect the conversion of Series F
Preferred Stock as a result of the Exchange Cap or clause (ix) of
the definition of Equity Conditions is not satisfied and (B) the
Corporation, at any time after the Initial Issue Date, issues or
sells any class of equity or equity-linked securities (other than
at-the-market equity offerings through a broker-dealer, sales of
Common Stock or Junior Securities to directors, officers and
employees of the Corporation and equity grants pursuant to the
Corporation’s 2013 Stock Incentive Plan), in one or more
transactions, at a notional price less than the Conversion Price,
the Conversion Price then in effect shall be reduced to the lowest
notional price per share at which any such share of Common Stock
has been issued or sold.
(g)
Record Date
. In case the
Corporation shall take record of the holders of its Common 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.
(h)
No Impairment
. The Corporation
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 other
Fundamental Transaction 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 Corporation, but will at
all times in good faith assist in the carrying out of all the
provisions of this Section 7 and in the taking of all such action
as may be necessary or appropriate in order to protect the
conversion rights of each Holder against impairment.
(i)
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 shares of Series F Preferred Stock pursuant to
this Section 7, the Corporation, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each Holder a certificate setting forth
such adjustment and readjustment, showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation
shall, upon written request of a Holder, at any time, furnish or
cause to be furnished to such Holder a like certificate setting
forth such adjustments and readjustments, the applicable 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 the shares of
Series F Preferred Stock.
SECTION 8.
RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE
EVENTS
.
(a)
Purchase Rights
. In addition to
any adjustments pursuant to Section 7 above, if at any time the
Corporation grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to all or substantially all of the record
holders of any class of Common Stock (the “
Purchase Rights
”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of the
Holder’s shares of Preferred Stock (without taking into
account any limitations or restrictions on the convertibility of
the Preferred Shares) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record
holders of Common Stock are to be determined for the grant, issue
or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
(b)
Other Corporate Events
. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “
Corporate Event
”), the Corporation
shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon a conversion of the
Holder’s shares of Preferred Stock (i) in addition to the
shares of Common Stock receivable upon such conversion, such
securities or other assets to which the Holder would have been
entitled with respect to such shares of Common Stock had such
shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account
any limitations or restrictions on the convertibility of the
Preferred Stock) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other
assets received by the holders of shares of Common Stock in
connection with the consummation of such Corporate Event in such
amounts as the Holder would have been entitled to receive had the
Holder’s shares of Preferred Stock initially been issued with
conversion rights for the form of such consideration (as opposed to
shares of Common Stock) at a conversion rate for such consideration
commensurate with the Conversion Rate. Provision made pursuant to
the preceding sentence shall be in a form and substance reasonably
satisfactory to the Holder. The provisions of this Section 8(b)
shall apply similarly and equally to successive Corporate Events
and shall be applied without regard to any limitations on the
conversion of the Preferred Stock.
SECTION 9.
COVENANTS
.
So long as any shares of the Series F Preferred Stock are
outstanding, without the prior express written consent of Holders
representing 66 2/3% of the outstanding shares of Series F
Preferred Stock, the Corporation shall not, and shall not permit
any Subsidiary, to, directly or indirectly:
(i)
create, incur,
guarantee, assume or suffer to exist any Indebtedness, other than
trade payables incurred in the ordinary course of business
consistent with past practice and letters of credit not in excess
of $3.0 million in the aggregate at any point in time;
(ii)
create,
incur, assume or suffer to exist any Encumbrances on any of its
assets or property now owned or hereafter acquired;
(iii)
redeem,
repurchase or pay any cash dividend or distribution on any of its
capital stock (other than Permitted Distributions);
(iv)
redeem,
repurchase or prepay any Indebtedness;
(v)
engage in any
material line of business substantially different from those lines
of business conducted by the Corporation and each of its
Subsidiaries on the Initial Issue Date or any business
substantially related or incidental thereto. The Corporation shall
not, and the Corporation shall cause each of its Subsidiaries to
not, directly or indirectly, modify its or their corporate
structure or purpose;
(vi)
acquire
or form any New Subsidiary if such New Subsidiary would not be
wholly-owned, directly or indirectly, by the
Corporation;
(vii)
fail
to maintain and preserve all of its properties which are necessary
or useful in the proper conduct of its business in good working
order and condition, ordinary wear and tear excepted, and fail to
comply at all times with the provisions of all leases to which it
is a party as lessee or under which it occupies property, so as to
prevent any loss or forfeiture thereof or thereunder;
(viii)
fail
to maintain insurance with responsible and reputable insurance
companies or associations (including, without limitation,
comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including
all real properties leased or owned by it) and business, in such
amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried
generally in accordance with sound business practice by companies
in similar businesses similarly situated;
(ix)
lend
money or credit (by way of guarantee or otherwise) or make advances
to any Subsidiary, or purchase or acquire any stock, bonds, notes,
debentures or other obligations or securities of, or any other
interest in, or make any capital contribution to, any Subsidiary,
other than capital contributions in amounts consistent with prior
practices of the Corporation to its wholly-owned subsidiary
CorMedix Europe GmbH; or
(x)
sell, lease,
license, assign, transfer, convey or otherwise dispose of any
assets or rights of the Corporation or any Subsidiary owned or
hereafter acquired whether in a single transaction or a series of
related transactions, other than (i) sales, leases, licenses,
assignments, transfers, conveyances and other dispositions of such
assets or rights by the Corporation and its Subsidiaries that are
in the ordinary course of their respective businesses and, after
giving effect thereto, would not result in a Material Adverse
Effect and (ii) sales of product, inventory or receivables in the
ordinary course of business.
SECTION 10.
MISCELLANEOUS
.
(a)
Notices
. Any and all notices or
other communications or deliveries to be provided by the Holders
hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by email, facsimile,
or sent by a nationally recognized overnight courier service,
addressed to the Corporation, at 400 Connell Drive, 5th Floor,
Suite 5000, Berkeley Heights, NJ 07922, facsimile number (908)
429-4307, or such other facsimile number or address or email
address as the Corporation may specify for such purposes by notice
to the Holders delivered in accordance with this Section. Any and
all notices or other communications or deliveries to be provided by
the Corporation hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized
overnight courier service or email addressed to each Holder at the
facsimile number or address of such Holder appearing on the books
of the Corporation, or if no such facsimile number or address
appears on the books of the Corporation, at the principal place of
business of such Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile or email at the facsimile
number or email address specified in or pursuant to this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the date
immediately following the date of transmission, if such notice or
communication is delivered via facsimile or mail at the facsimile
number or email address specified in or pursuant to this Section
between 5:30 p.m. and 11:59 p.m. (New York City time) on any date,
(iii) the second (2nd) Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to
be given.
(b)
Lost or Mutilated Series F Preferred
Stock Certificate
. If a Holder’s Series F Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed,
the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate,
or in lieu of or in substitution for a lost, stolen or destroyed
certificate, a new certificate for the shares of Series F Preferred
Stock so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence of such loss, theft or destruction of such
certificate, and of the ownership thereof, reasonably satisfactory
to the Corporation and, in each case, customary and reasonable
indemnity, if requested. Applicants for a new certificate under
such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable
third-party costs as the Corporation may prescribe.
(c)
Waiver
. Any waiver by the
Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Corporation or a
Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of
the right thereafter to insist upon strict adherence to that term
or any other term of this Certificate of Designation. Any waiver by
the Corporation or a Holder must be in writing.
(d)
Severability
. If any provision
of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.
(e)
Next Business or Trading Day
.
Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day or a Trading Day, such payment
shall be made on the next succeeding Business Day or Trading Day,
as the case may be.
(f)
Headings
. The headings
contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit
or affect any of the provisions hereof.
(g)
Status of Converted Series F Preferred
Stock
. If any shares of Series F Preferred Stock shall be
converted or reacquired by the Corporation, such shares shall
resume the status of authorized but unissued shares of preferred
stock and shall no longer be designated as Series F Preferred
Stock.
[
Signature
page follows
]
IN WITNESS WHEREOF
, the Corporation has
caused this Amended and Restated Certificate of Designation to be
signed by its duly authorized officer this 8th day of December,
2017.
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CORMEDIX INC.
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By:
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/s/
Khoso
Baluch
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Name:
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Khoso
Baluch
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Title:
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Chief
Executive Officer
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ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO
CONVERT
SHARES OF SERIES F PREFERRED STOCK)
The
undersigned Holder hereby irrevocably elects to convert the number
of shares of Series F Convertible Preferred Stock indicated below,
represented by stock certificate No(s). _______________ (the
“
Preferred Stock
Certificates
”), into shares of common stock, par value
$0.001 per share (the “
Common Stock
”), of
CorMedix Inc., a Delaware corporation (the “
Corporation
”), as of the
date written below. If securities are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Capitalized terms
utilized but not defined herein shall have the meaning ascribed to
such terms in that certain Amended and Restated Certificate of
Designation (the “
Certificate of
Designation
”) of Series F Convertible Preferred Stock
(the “
Series F
Preferred Stock
”) filed by the Corporation on
[_____________] __, 2017.
As of
the date hereof, the number of shares of Common Stock beneficially
owned by the undersigned Holder (together with such Holder’s
Affiliates, and any other Person whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act and the applicable
regulations of the Commission, including any “group” of
which the Holder is a member), including the number of shares of
Common Stock issuable upon conversion of the Series F Preferred
Stock subject to this Notice of Conversion, but excluding the
number of shares of Common Stock which are issuable upon (A)
conversion of the remaining, unconverted Series F Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B)
exercise or conversion of the unexercised or unconverted portion of
any other securities of the Corporation (including any warrants)
beneficially owned by such Holder or any of its Affiliates that are
subject to a limitation on conversion or exercise analogous to the
limitation contained in Section 6(c) of the Certificate of
Designation, is _______________. For purposes hereof, beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the applicable regulations of the Commission.
In addition, for purposes hereof, “group” has the
meaning set forth in Section 13(d) of the Exchange Act and the
applicable regulations of the Commission.
CONVERSION
CALCULATIONS:
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Date to
Effect Conversion:
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Number
of shares of Series F Preferred Stock owned prior to
Conversion:
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Number
of shares of Series F Preferred Stock to be Converted:
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Number
of shares of Common Stock to be Issued:
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Address
for delivery of physical certificates:
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For
DWAC Delivery, please provide the following:
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Broker
no:
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Account
no:
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[HOLDER]
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By:
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Name:
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Title:
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Date:
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