Dividends
The holders of Series A Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of Common Stock, when and if actually paid.
Voting Rights
The Series A Preferred Stock has no voting rights, except the right to vote, with the holders of Common Stock, as a single class, with each share of Series A Preferred Stock entitled to vote on an as-converted basis (however, in only this instance, the Series A Preferred Stock will be considered to convert at the Minimum Price, $0.26, per Nasdaq voting requirements) on any resolution presented to stockholders for the purpose of obtaining approval of a proposed amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to effect a reverse split of the outstanding shares of the Common Stock at a ratio to be determined (the “Reverse Split Amendment”) and (ii) and any proposal to adjourn any meeting of stockholders called for the purpose of voting on the Reverse Split Amendment.
Otherwise, as long as any shares of Series A Preferred Stock are outstanding, the holders of the Series A Preferred Stock will be entitled to approve, by a majority vote of the then outstanding shares of Series A Preferred Stock if the Company seeks to (a) amend, alter or repeal adversely the powers, preferences or rights of the Series A Preferred Stock or alter or amend the Certificate of Designation governing the Series A Preferred Stock, (b) amend the Company’s Certificate of Incorporation or other charter documents in a manner adverse to rights, preferences or powers of the Series A Preferred Stock, (c) increase the number of authorized shares of Series A Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.
Liquidation
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or a Liquidation, the then holders of the Series A Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of Common Stock would receive if the Series A Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock.
Conversion
The Series A Preferred Stock is convertible into Common Stock at any time after the date of issuance. The conversion rate, subject to adjustment as set forth in the Certificate of Designation governing the Series A Preferred Stock, is determined by dividing the stated value of the Series A Preferred Stock by $0.20 (the “Conversion Price”). The Conversion Price can be adjusted as set forth in the Certificate of Designation governing the Series A Preferred Stock for stock dividends and stock splits or the occurrence of a fundamental transaction (as defined in the Certificate of Designation governing the Series A Preferred Stock). Upon conversion the shares of Series A Preferred Stock shall resume the status of authorized but unissued shares of preferred stock of the Company.
Optional Conversion
The Series A Preferred Stock can be converted at the option of the holder at any time and from time to time after the date of issuance.
Mandatory Conversion
Following the approval of the Reverse Split Amendment, the Company will deliver written notice to the holders of the Series A Preferred Stock of such occurrence and, on such date, the Company will mandatorily convert all outstanding shares of Series A Preferred Stock into shares of Common Stock, subject to the beneficial ownership limitations discussed below. In addition, following the mandatory conversion, if any Series A Preferred Stock remains outstanding, the Company may deliver a written notice to holders of such outstanding Series A Preferred Stock to cause each such holder to convert all or a part of the remaining outstanding shares of Series A Preferred Stock, subject to the beneficial ownership limitations discussed below. The Company is not permitted to issue any such notice more than once in any 60-day period.