UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 14, 2015
BG Medicine, Inc.
(Exact Name of Registrant as Specified in Its Charter)
001-33827
(Commission
File
Number)
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| Delaware |
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04-3506204 |
| (State or Other Jurisdiction
of Incorporation) |
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(IRS Employer
Identification No.) |
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| 880 Winter Street, Suite 210
Waltham, Massachusetts |
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02451 |
| (Address of Principal Executive Offices) |
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(Zip Code) |
(781) 890-1199
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. |
Entry into a Material Definitive Agreement. |
As previously disclosed in a Current Report on Form 8-K/A
filed with the Securities and Exchange Commission (the “SEC”) on June 9, 2015, BG Medicine, Inc., a Delaware corporation (the “Company” or “BG Medicine”), entered into a Securities Purchase Agreement (the
“Purchase Agreement”) on May 12, 2015 with the Company’s principal stockholders, Applied Genomic Technology Capital Fund, L.P., AGTC Advisors Fund, L.P. and Flagship Ventures Fund 2007, L.P. (the “Purchasers”), which
are affiliates of the Company’s directors, Noubar B. Afeyan, Ph.D. and Harry W. Wilcox.
As previously disclosed, pursuant to the terms of the
Purchase Agreement, on May 12, 2015 (the “Initial Closing”) the Company issued and sold to the Purchasers the Company’s secured convertible promissory notes (the “Notes”) in the aggregate principal amount of $500,000.
On July 14, 2015, the Company and the Purchasers entered into the First Amendment to the Purchase Agreement (the “First Amendment”) pursuant to which the Company and the Purchasers agreed to extend the period of time following the
Company’s 2015 annual meeting of stockholders (the “2015 Annual Meeting”) for the Second Closing to occur until July 14, 2015. On July 14, 2015 (the “Second Closing”), pursuant to the terms of the Purchase
Agreement, the Company issued and sold to the Purchasers 1,176,262 shares of newly designated Series A Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”), of the Company at a purchase price of $1.7003 per share
(the “Purchase Price”) for aggregate gross cash proceeds of approximately $2.0 million. In addition, at the Second Closing, the $500,000 in aggregate principal amount of Notes, plus accrued but unpaid interest thereon, that the Company had
issued to the Purchasers in the Initial Closing, converted into 298,181 shares of Series A Preferred Stock at the Purchase Price. Following the Second Closing, the Company had issued an aggregate of 1,474,443 shares of Series A Preferred Stock,
which are outstanding and held by the Purchasers. A copy of the First Amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Second Closing was subject to the approval of the Company’s stockholders at the 2015 Annual Meeting and the satisfaction or waiver of other closing
conditions. As previously disclosed on a Current Report on Form 8-K filed with the SEC on July 7, 2015, the Company’s stockholders approved the issuance of shares of Series A Preferred Stock, shares of Series A Preferred Stock issuable
upon conversion of the Notes and common stock issuable upon conversion of Series A Preferred Stock, at the 2015 Annual Meeting held on July 7, 2015.
The shares of Series A Preferred Stock have the rights, preferences and privileges set forth in the Certificate of Designations to the Company’s Restated
Certificate of Incorporation (the “Certificate of Designations”) that was filed by the Company on July 14, 2015 with the Secretary of State of the State of Delaware. Each share of Series A Preferred Stock is initially convertible into
one share of the Company’s common stock at any time at the option of each holder and automatically convertible upon the written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock. The conversion price
will be subject to adjustment in the event that the Company issues other securities at a price per share less than the conversion price of the Series A Preferred Stock then in effect, subject to specified exceptions, and is also subject to
adjustment in connection with stock splits, combinations, dividends and other corporate transactions affecting the common stock. The rights, preferences and privileges of the Series A Preferred Stock include full-ratchet anti-dilution protection
until the first anniversary of the date that the Series A Preferred Stock is issued and weighted-average anti-dilution protection thereafter. A copy of the Certificate of Designations is filed as Exhibit 3.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
In connection with the Second Closing, the Company also entered into the Fifth Amended and Restated Investor Rights
Agreement (the “Investor Rights Agreement”) with the Purchasers as well as the stockholders who hold shares of the Company’s common stock that are registrable securities (the “Prior Registrable Securities”) under the
Company’s existing Fourth Amended and Restated Investor Rights Agreement dated as of July 10, 2008 (the “Existing IRA”). Under the terms of the Investor Rights Agreement, the Existing IRA was amended and restated to grant certain
demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock. These registration rights are subject to certain conditions and limitations, including the right of the
underwriters of an offering to limit the number of shares of the Company’s common stock included in any such registration under certain circumstances. The Company is generally required to pay all expenses incurred in connection with
registrations effected in connection with the registration rights, excluding underwriting discounts and commissions. A copy of the Investor Rights Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by
reference.
| Item 3.02. |
Unregistered Sales of Equity Securities. |
The disclosure provided above under Item 1.01 is
incorporated by reference into this Item 3.02. The shares of Series A Preferred Stock were issued to the Purchasers without registration with the SEC in reliance on the exemption from such registration provided under Section 4(a)(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The Purchasers have represented that they are accredited investors, as that term is defined in
Regulation D, and that they are acquiring the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
In addition, on July 14, 2015, the Company paid off all of its outstanding
obligations under that certain Loan and Security Agreement by and among the Company, General Electric Capital Corporation (“GECC”) as agent and the lenders and the guarantors thereto dated as of February 10, 2012, as amended (the
“GECC Agreement”), and terminated the GECC Agreement. The security interest granted by the Company to GECC in its assets in connection with the GECC Agreement was also terminated at the time of the payoff. Notwithstanding the payoff, the
warrants to purchase the Company’s common stock that the Company previously issued to GECC’s affiliate, GE Capital Equity Investments, Inc., and Comerica Bank in connection with the GECC Agreement, continue to remain outstanding in
accordance with their terms and are not affected by the payoff.
On July 15, 2015, the Company issued a press release announcing the payoff, a copy
of which is being filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit
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Description |
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| 3.1 |
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Certificate of Designations of Series A Preferred Stock of BG Medicine, Inc. filed with the Secretary of State of the State of Delaware on July 14, 2015. |
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| 10.1 |
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First Amendment to Securities Purchase Agreement by and between the Company and the Purchasers, dated July 14, 2015. |
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| 10.2 |
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Fifth Amended and Restated Investor Rights Agreement by and between the Company and the stockholders named therein, dated July 14, 2015. |
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| 99.1 |
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Press Release, dated July 15, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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BG MEDICINE, INC. |
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| Date: July 15, 2015 |
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/s/ Stephen P. Hall |
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Stephen P. Hall |
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Executive Vice President & Chief Financial Officer |
Exhibit 3.1
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED
STOCK
OF
BG
MEDICINE, INC.
The undersigned, Paul R. Sohmer, M.D., the President and Chief Executive Officer of BG Medicine, Inc. (including any
successor in interest, the “Company”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify, in accordance with Sections 103 and 151 of
the DGCL, that the following resolutions were duly adopted by its Board of Directors (the “Board”) on July 14, 2015:
WHEREAS, the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”),
authorizes 5,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”), issuable from time to time in one or more series;
WHEREAS, the Certificate of Incorporation authorizes the Board to provide by resolution for the issuance of the shares of Preferred Stock in
one or more series, the number of shares in each series, the voting powers, if any, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof; and
WHEREAS, the Board desires, pursuant to its authority as aforesaid, to designate a new series of Preferred Stock, set the number of
shares constituting such series, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board hereby designates a new series of Preferred Stock, consisting of the number of shares set forth
herein, with the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions relating to such series as follows:
SECTION 1. Number; Designation; Rank.
(a) This series of convertible participating preferred stock is designated as the “Series A Preferred Stock” (the “Series A
Preferred Stock”). The number of shares constituting the Series A Preferred Stock is 1,474,443 shares, par value $0.001 per share.
(b) The Series A Preferred Stock ranks, with respect to the payment of dividends, redemption payments, rights (including as to the
distribution of assets) upon liquidation, dissolution or winding-up of the Company or otherwise:
(i) senior in preference and priority
to the Common Stock and each other class or series of Capital Stock of the Company, except for any class or series of Capital Stock hereafter issued in compliance with the terms hereof and the terms of which expressly provide that it will rank
senior to or on parity, without preference or priority, with the Series A Preferred Stock with respect to the payment of dividends, redemption payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding-up
of the Company, or otherwise (collectively with the Common Stock, the “Junior Securities”);
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(ii) on parity, without preference and priority, with each other class or series of Capital
Stock of the Company hereafter issued in compliance with the terms hereof and the terms of which expressly provide that it will rank on parity, without preference or priority, with the Series A Preferred Stock with respect to the payment of
dividends, redemption payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding-up of the Company, or otherwise (collectively, the “Parity Securities”); and
(iii) junior in preference and priority to each other class or series of Preferred Stock or any other Capital Stock of the Company hereafter
issued in compliance with the terms hereof and the terms of which expressly provide that it will rank senior in preference or priority to the Series A Preferred Stock with respect to the payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution or winding-up of the Company or otherwise (collectively, “Senior Securities”).
SECTION 2. Dividends.
(a) Cumulative Dividends. Holders shall be entitled to receive, out of funds legally available for the payment of dividends to the
Company’s stockholders under Delaware law, on each Preferred Share, cumulative dividends which accrue daily at a per annum rate of 8.00% on the Accrued Value of such Preferred Share (“Cumulative Dividends”). Such Cumulative
Dividends shall begin to accrue and be cumulative from the Issue Date. Cumulative Dividends shall be compounded quarterly and payable quarterly with respect to each Dividend Period in arrears on the first Dividend Payment Date after such Dividend
Period, at the option of each such Holder of Series A Preferred Stock, (i) in cash or (ii) by the issuance of such number of additional shares of Series A Preferred Stock equal to the Stock Dividend Amount.
(b) Participating Cash Dividends. If the Company declares, makes or pays any cash dividend or distribution in respect of the Common
Stock (a “Common Dividend”), each Holder shall receive a dividend (in addition to the Dividends provided for by SECTION 2(a)) in respect of each Preferred Share held thereby, in an amount equal to the product of (x) the amount
of such Common Dividend paid per share of Common Stock, multiplied by (y) the number of shares of Common Stock issuable if such Preferred Share had been converted into shares of Common Stock immediately prior to the record date for such Common
Dividend (such amount per share of Preferred Stock, the “Participating Cash Dividend”). Participating Cash Dividends shall be payable to Holders on the record date for such Common Dividend at the same time and in the same manner as
the Common Dividend triggering such Participating Cash Dividend is paid.
(c) In-Kind Participating Dividends. If the Company
distributes shares of its Capital Stock, evidences of its indebtedness or other assets, securities or property, in respect of the Common Stock (an “In-Kind Common Dividend”), including without limitation any spin-off of one or more
subsidiaries or businesses of the Company but excluding: (I) dividends or distributions referred to in SECTIONS 5(f)(i)(B) and 5(f)(i)(C); and (II) cash dividends with respect to which Holders are entitled to Participating Cash Dividends, then
the Holders shall receive in such distribution or other transaction, at the same time and in the same manner as holders of Common Stock, the same type and amount of consideration (the “In-Kind Participating Dividend” and,
collectively with the Participating Cash Dividend, the “Participating Dividends”) as Holders would have received if, immediately prior to the record date of such In-Kind Common
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Dividend, they had held the number of shares of Common Stock issuable upon conversion of the Preferred Shares. To the extent that the Company establishes or adopts a stockholder rights plan or
agreement (i.e., a “poison pill”), the Company shall ensure that the Holders will receive, as an In-Kind Participating Dividend, rights under the stockholder rights plan or agreement with respect to any shares of Common Stock that at the
time of such distribution would be issuable upon conversion of the Preferred Shares.
(d) Dividends (other than Participating Dividends)
payable on the Series A Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of Dividends (other than Participating Dividends) payable on the Series A
Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.
(e) Cumulative Dividends that are payable on Series A Preferred Stock on any Dividend Payment Date will be payable to Holders of record on the
applicable record date, which shall be the fifteenth (15th) calendar day before the applicable Dividend Payment Date, or, with respect to any Cumulative Dividends not paid on the scheduled
Dividend Payment Date therefor, such record date fixed by the Board (or a duly authorized committee of the Board) that is not more than sixty (60) nor less than ten (10) days prior to such date on which such accrued and unpaid Cumulative
Dividends are to be paid (each such record date, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
(f) The quarterly dividend periods with respect to Cumulative Dividends shall commence on and include
January 1, April 1, July 1 and October 1 (other than the initial Dividend Period, which shall commence on and include the Issue Date) and shall end on and include the last calendar day of the calendar quarter ending
March 31, June 30, September 30 and December 31 preceding the next Dividend Payment Date (a “Dividend Period”).
SECTION 3. Liquidation Preference.
(a) Upon any Liquidation Event, each Preferred Share entitles the Holder thereof to receive and to be paid out of the assets of the Company
legally available for distribution to the Company’s stockholders, before any distribution or payment may be made to a holder of any Junior Securities, an amount in cash per share equal to the sum of (A) the Accrued Value, plus (B) all
accrued and unpaid Dividends (including, without limitation, accrued and unpaid Cumulative Dividends for the then current Dividend Period) (“Liquidation Preference”).
(b) If upon any such Liquidation Event, the assets of the Company legally available for distribution to the Company’s stockholders are
insufficient to pay the Holders the full Liquidation Preference and the holders of all Parity Securities the full liquidation preferences to which they are entitled, the Holders and the holders of such Parity Securities will share ratably in any
such distribution of the assets of the Company in proportion to the full respective amounts to which they are entitled.
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(c) After payment to the Holders of the full Liquidation Preference to which they are entitled,
the Holders will additionally receive such per share amount distributed to each holder of Common Stock, treating for this purpose all shares of Series A Preferred Stock as if they had been converted to Common Stock pursuant to the terms hereof.
(d) The value of any property not consisting of cash that is distributed by the Company to the Holders will equal the Fair Market Value
thereof on the date of distribution.
(e) No holder of Junior Securities shall receive any cash upon a Liquidation Event unless the entire
Liquidation Preference in respect of the Preferred Shares has been paid in cash. To the extent that there is insufficient cash available to pay the entire Liquidation Preference in respect of the Preferred Shares and any liquidation preference in
respect of Parity Securities in full in cash upon a Liquidation Event, the Holders and the holders of such Parity Securities will share ratably in any cash available for distribution in proportion to the full respective amounts to which they are
entitled upon such Liquidation Event.
SECTION 4. As-Converted Voting Rights; Certain Consent Rights.
(a) The Holders are entitled to vote on all matters on which the holders of shares of Common Stock are entitled to vote and, except as
otherwise provided herein (including under SECTION 7 below) or by law, the Holders shall vote together with the holders of shares of Common Stock as a single class. As of any record date or other determination date, each Holder shall be entitled to
the number of votes such Holder would have had if all Preferred Shares held by such Holder on such date had been converted into shares of Common Stock immediately prior thereto; (i) provided, however, that no Holder shall be entitled to cast
votes for the number of shares of Common Stock issuable upon conversion of such Preferred Shares held by such Holder that exceeds (subject to a proportionate adjustment in the event of a stock split, stock dividend, combination or other
proportionate recapitalization) the quotient of (A) the aggregate purchase price paid by such Holder for its Preferred Shares, divided by (B) the greater of (i) $3.20 and (ii) the Closing Price of the Common Stock on the Trading
Day immediately prior to the Issue Date of such Holder’s Preferred Shares, and (ii) provided, further, that in the event that any Holder would be required to file any Notification and Report Form pursuant to the HSR Act as a result of the
receipt of any Cumulative Dividends by such Holder, the voting rights of such Holder pursuant to this SECTION 4(a) shall not be increased as a result of such Holder’s receipt of such Cumulative Dividends unless and until such Holder and the
Company shall have made their respective filings under the HSR Act and the applicable waiting period shall have expired or been terminated in connection with such filings. At the request of a Holder in the case of clause (ii) of this SECTION
4(a), the Company shall make all required filings and reasonably cooperate with and assist such Holder in connection with the making of such filing and obtaining the expiration or termination of such waiting period and shall be reimbursed by such
Holder for any reasonable and documented out-of-pocket costs incurred by the Company in connection with such filings and cooperation.
(b)
In addition to the voting rights provided for by SECTION 4(a) and SECTION 7 and any voting rights to which the Holders may be entitled to under law, for so long as any Preferred Shares are outstanding, the Company may not, directly or indirectly,
take any of the following actions (including by means of merger, consolidation, reorganization, recapitalization or
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otherwise) without the prior written consent of the Requisite Holders and any such actions entered into without such consent or vote shall be null and void ab initio, and of no force or
effect:
(i) liquidate, dissolve or wind-up the business and affairs of the Company, effect any merger or consolidation or any other
Liquidation Event;
(ii) amend, alter or repeal any provision of the Certificate of Incorporation, including this Certificate of
Designations, or Bylaws of the Company;
(iii) create, or authorize the creation of, or issue or obligate itself to issue shares of, any
additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of
redemption, or increase the authorized number of shares of Series A Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with
respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption;
(iv) purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any
shares of capital stock of the Company other than (i) redemptions of or dividends or distributions on the Series A Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in
the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of
such employment or service at the lower of the original purchase price or the then-current Fair Market Value thereof;
(v) sell, assign,
license, pledge or encumber technology or intellectual property or other assets of the Company or any Subsidiary;
(vi) create, or hold
capital stock in, any subsidiary that is not a Wholly Owned Subsidiary, or sell, transfer or otherwise dispose of any capital stock of any Subsidiary of the Company, or permit any Subsidiary to sell, lease, transfer, exclusively license or otherwise
dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such Subsidiary;
(vii)
cease to maintain a directors and officers liability insurance policy in an amount of at least $15 million from financially sound and reputable insurers;
(viii) increase or decrease the size of the Board;
(ix) make, or permit any Subsidiary to make, any loan or advance to, or own any stock or other securities of, any Subsidiary or other
corporation, partnership or other entity unless it is a Wholly Owned Subsidiary;
(x) incur any aggregate indebtedness in excess of
$50,000;
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(xi) guarantee, directly or indirectly, or permit any Subsidiary to guarantee, directly or
indirectly, any indebtedness;
(xii) institute or settle any action, suit, litigation, petition, claim, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, or investigation by or before, or otherwise involving, any court or other governmental authority or arbitral body;
(xiii) enter into, amend, terminate take or omit to take any action that would constitute a violation or default under, or waive any rights
under, any contract or agreement relating to intellectual property of the Company or of a nature that would be required to be filed as an exhibit to a report filed with the SEC;
(xiv) enter into any corporate strategic relationship; or
(xv) agree to do, directly or indirectly, any of the foregoing actions set forth in clauses (i) through (xiv) above, unless such
agreement expressly provides that the Company’s obligation to undertake any of the foregoing is subject to the prior approval of the Requisite Holders.
(c) Notwithstanding anything to the contrary contained in this SECTION 4, the Company may not, directly or indirectly, take any action
otherwise approved pursuant to SECTION 4(b) if such action would have a materially adverse and disproportionate effect on the powers, preferences, rights, limitations, qualifications and restrictions or privileges of any Holder with respect to any
shares of Series A Preferred Stock held by any Holder, without the prior approval of such Holder.
(d) Any action as to which a class vote
of the holders of Preferred Stock, or the holders of Preferred Stock and Common Stock voting together, is required pursuant to the terms of this Certificate of Designations may be taken without a meeting, without prior notice and without a vote, if
a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be delivered to the Company.
SECTION 5. Conversion. Each
Preferred Share is convertible into shares of Common Stock (or Reference Property, to the extent applicable) as provided in this SECTION 5.
(a) Conversion at the Option of Holders of Series A Preferred Stock. Each Holder is entitled to convert, at any time and from time to
time, at the option and election of such Holder, any or all outstanding Preferred Shares held by such Holder and receive therefor the property described in SECTION 5(c) upon such conversion. In order to convert Preferred Shares into shares of Common
Stock (or Reference Property, to the extent applicable), the Holder must surrender the certificates representing such Preferred Shares at the office of the Company’s transfer agent for the Series A Preferred Stock (or at the principal office of
the Company, if the Company serves as its own transfer agent), together with (x) written notice that such Holder elects to convert all or part of the Preferred Shares represented by such certificates as specified therein, (y) a written
instrument or instructions of transfer or other documents and endorsements
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reasonably acceptable to the transfer agent or the Company, as applicable (if reasonably required by the transfer agent or the Company, as applicable), and (z) funds for any stock transfer,
documentary, stamp or similar taxes, if payable by the Holder pursuant to SECTION 5(e)(i). Except as provided in SECTION 5(b), the date the transfer agent or the Company, as applicable, receives such certificates, together with such notice and any
other documents and amounts required to be paid by the Holder pursuant to this SECTION 5, will be the date of conversion (the “Conversion Date”).
(b) Mandatory Conversion at the Option of the Requisite Holders. Upon the written consent of the Requisite Holders, all outstanding
Preferred Shares held by all Holders shall be converted into shares of Common Stock and each Holder shall receive therefor the property described in SECTION 5(c) upon such conversion. The date of the consent of the Requisite Holders shall be the
Conversion Date. On the Conversion Date, all rights with respect to the Series A Preferred Stock so converted shall terminate, except any of the rights of the holders thereof upon surrender of their certificate or certificates therefor or delivery
of an affidavit of loss thereof to receive certificates for the number of shares of Common Stock into which such shares of Series A Preferred Stock have been converted. If so required by the Company, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. Upon surrender of such
certificates or affidavit of loss, the Company shall issue and deliver to such holder, promptly at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common
Stock into which the shares of the Series A Preferred Stock surrendered are convertible on the Conversion Date.
(c) Amounts Received
Upon Conversion. Upon a conversion of Preferred Shares pursuant to SECTION 5(a) or (b), the Holder of such converted Preferred Shares shall receive in respect of each Preferred Share a number of shares of Common Stock (or Reference Property, to
the extent applicable) equal to the amount (the “Conversion Amount”) determined by dividing (A) the Series A Original Purchase Price by (B) the Conversion Price in effect at the time of conversion. Notwithstanding the
foregoing, in the event any Holder would be required to file any Notification and Report Form pursuant to the HSR Act as a result of the conversion of any Preferred Shares into the property described above in this SECTION 5(c), at the option of such
Holder upon written notice to the Company, the effectiveness of such conversion shall be delayed (only to the extent necessary to avoid a violation of the HSR Act), until such Holder shall have made such filing under the HSR Act and the applicable
waiting period shall have expired or been terminated; provided, however, that in such circumstances such Holder shall use commercially reasonable efforts to make such filing and obtain the expiration or termination of such waiting period as promptly
as reasonably practical and the Company shall make all required filings and reasonably cooperate with and assist such Holder in connection with the making of such filing and obtaining the expiration or termination of such waiting period and shall be
reimbursed by such Holder for any reasonable and documented out-of-pocket costs incurred by the Company in connection with such filings and cooperation.
(d) Fractional Shares. No fractional shares of Common Stock (or fractional shares in respect of Reference Property, to the extent
applicable) will be issued upon conversion of the Series A Preferred Stock. In lieu of fractional shares, the Company shall pay cash in respect of
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each fractional share equal to such fractional amount multiplied by the Thirty Day VWAP as of the closing of business on the Business Day immediately preceding the Conversion Date (or the Fair
Market Value thereof in respect of any Reference Property). If more than one Preferred Share is being converted at one time by the same Holder, then the number of full shares issuable upon conversion will be calculated on the basis of the aggregate
number of Preferred Shares converted by such Holder at such time.
(e) Mechanics of Conversion.
(i) As soon as reasonably practicable after the Conversion Date (and in any event within four (4) Business Days after such date), the
Company shall issue and deliver to the applicable Holder one or more certificates for the number of shares of Common Stock (or Reference Property, to the extent applicable) to which such Holder is entitled, together with, at the option of the
Holder, a check or wire transfer of immediately available funds for payment of fractional shares in exchange for the certificates representing the converted Preferred Shares. Such conversion will be deemed to have been made on the Conversion Date,
and the Person entitled to receive the shares of Common Stock (or Reference Property, to the extent applicable) issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock (or Reference
Property, to the extent applicable) on such date. The delivery of the Common Stock upon conversion of Preferred Shares shall be made, at the option of the applicable Holder, in certificated form or by book-entry. Any such certificate or certificates
shall be delivered by the Company to the appropriate Holder on a book-entry basis or by mailing certificates evidencing the shares to such Holder at its address as set forth in the conversion notice. In cases where fewer than all the Preferred
Shares represented by any such certificate are to be converted, a new certificate shall be issued representing the unconverted Preferred Shares. The Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Common
Stock (or Reference Property, to the extent applicable) upon conversion or due upon the issuance of a new certificate for any Preferred Shares not converted to the converting Holder; provided that the Company shall not be required to pay any such
amounts, and any such amounts shall be paid by the converting Holder, in the event that such Common Stock or Preferred Shares are issued in a name other than the name of the converting Holder.
(ii) For the purpose of effecting the conversion of Preferred Shares, the Company shall: (A) at all times reserve and keep available,
free from any preemptive rights, out of its treasury or authorized but unissued shares of Common Stock (or Reference Property, to the extent applicable) the full number of shares of Common Stock (or Reference Property, to the extent applicable)
deliverable upon the conversion of all outstanding Preferred Shares after taking into account any adjustments to the Conversion Price from time to time pursuant to the terms of this SECTION 5and any increases to the Accrued Value from time to time
and assuming for the purposes of this calculation that all outstanding Preferred Shares are held by one holder); and (B) without prejudice to any other remedy at law or in equity any Holder may have as a result of such default, take all actions
reasonably required to amend its Certificate of Incorporation, as expeditiously as reasonably practicable, to increase the authorized and available amount of Common Stock (or Reference Property, to the extent applicable) if at any time such
amendment is necessary in order for the Company to be able to satisfy its obligations under this SECTION 5. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value of the shares of Common Stock
(or Reference Property, to the extent applicable)
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issuable upon conversion of the Series A Preferred Stock, the Company will take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock (or Reference Property, to the extent applicable) upon the conversion of all outstanding Preferred Shares at such adjusted Conversion Price.
(iii) From and after the Conversion Date, the Preferred Shares converted on such date, will no longer be deemed to be outstanding and all
rights of the Holder thereof including the right to receive Dividends, but excluding the right to receive from the Company the Common Stock (or Reference Property, to the extent applicable) or any cash payment upon conversion, and except for any
rights of Holders (including any voting rights) pursuant to this Certificate of Designations which by their express terms continue following conversion or, for the avoidance of doubt, rights which by their express terms continue following conversion
pursuant to any of the other Transaction Agreements (as defined in the Securities Purchase Agreement) shall immediately and automatically cease and terminate with respect to such Preferred Shares; provided that, in the event that a Preferred
Share is not converted due to a default by the Company or because the Company is otherwise unable to issue the requisite shares of Common Stock (or Reference Property, to the extent applicable), such Preferred Share will, without prejudice to any
other remedy at law or in equity any Holder may have as a result of such default, remain outstanding and will continue be entitled to all of the rights attendant to such Preferred Share as provided herein.
(iv) The Company shall comply with all federal and state laws, rules and regulations and applicable rules and regulations of the Exchange on
which shares of the Common Stock (or Reference Property, to the extent applicable) are then listed. If any shares of Common Stock (or Reference Property, to the extent applicable) to be reserved for the purpose of conversion of Preferred Shares
require registration with or approval of any Person or group (as such term is defined in Section 13(d)(3) of the Exchange Act) under any federal or state law or the rules and regulations of the Exchange on which shares of the Common Stock (or
Reference Property, to the extent applicable) are then listed before such shares may be validly issued or delivered upon conversion, then the Company will, as expeditiously as reasonably practicable, use commercially reasonable efforts to secure
such registration or approval, as the case may be. So long as any Common Stock (or Reference Property, to the extent applicable) into which the Preferred Shares are then convertible is then listed on an Exchange, the Company will list and keep
listed on any such Exchange, upon official notice of issuance, all shares of such Common Stock (or Reference Property, to the extent applicable) issuable upon conversion.
(v) All shares of Common Stock (or Reference Property, to the extent applicable) issued upon conversion of the Preferred Shares will, upon
issuance by the Company, be duly and validly issued, fully paid and nonassessable, not issued in violation of any preemptive or similar rights arising under law or contract and free from all taxes, liens and charges with respect to the issuance
thereof, and the Company shall take no action which will cause a contrary result.
(f) Adjustments to Conversion Price.
(i) The Conversion Price shall be subject to the following adjustments:
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(A) Stock Splits and Combinations. If the Company shall at any time or from time to time
after the Original Issue Date effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on
conversion of each Preferred Share shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Company shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each Preferred Share shall be decreased
in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.
(B) Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Conversion
Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a 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.
Notwithstanding the foregoing: (a) 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 recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment
of such dividends or distributions; and (b) no such adjustment shall be made if the Holders simultaneously receive 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 Preferred Shares had been converted into Common Stock on the date of such event.
(C) Other
Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix 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 a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of SECTION 2 do not apply to such dividend or
distribution, then and in each such event the Holders shall receive, simultaneously with the distribution to the holders of Common
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Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding
Preferred Shares had been converted into Common Stock on the date of such event.
(D) Common Stock Issued at Less than Conversion
Price.
(1) If, during the period beginning on the Original Issue Date and ending on the first anniversary of the Original Issue
Date, the Company issues or sells any Common Stock (or Option Securities or Convertible Securities, to the extent set forth in this SECTION 5(f)(i)(D)), other than Excluded Stock, for no consideration or for consideration per share (“New
Issuance Price”) less than the Conversion Price in effect as of the date of such issuance or sale, then the Conversion Price in effect immediately prior to each such issuance or sale will (except as provided below) be adjusted at the time
of such issuance or sale to equal the New Issuance Price.
(2) If, at any time after the first anniversary of the Original Issue Date,
the Company issues or sells any Common Stock (or Option Securities or Convertible Securities, to the extent set forth in this SECTION 5(f)(i)(D)), other than Excluded Stock, for no consideration or for consideration per share less than the
Conversion Price in effect as of the date of such issuance or sale, then the Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following
formula:
CP2 = CP1* (A +
B) ÷ (A + C).
For purposes of the foregoing formula, the following definitions shall apply:
(i) “CP2” shall mean the Conversion Price in effect immediately following
such issuance or sale;
(ii) “CP1” shall mean the Series A Conversion
Price in effect immediately prior to such issuance or sale;
(iii) “A” shall mean the number of shares of Common Stock
outstanding immediately prior to such issuance or sale (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Option Securities outstanding immediately prior to such issue or upon conversion or exchange of
Convertible Securities (including the Series A Preferred Stock) outstanding (assuming exercise of any outstanding Option Securities therefor) immediately prior to such issuance or sale);
(iv) “B” shall mean the number of shares of Common Stock that would have been issued if such additional shares of Common Stock so
issued had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CP1); and
(v) “C” shall mean the number of additional shares of Common Stock
so issued.
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(E) For the purposes of any adjustment of the Conversion Price pursuant to this
SECTION 5(f)(i)(D), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
amount of the consideration received by the Company shall be deemed to be the amount of the cash proceeds received by the Company for such Common Stock after deducting therefrom any discounts or commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with the issuance and sale thereof;
(2) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of Capital Stock or other securities of the Company) for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be the Fair Market Value thereof;
(3) In the case of (A) the
issuance of Option Securities (whether or not at the time exercisable) or (B) the issuance of Convertible Securities (whether or not at the time so convertible or exchangeable):
(i) the issuance of Option Securities shall be deemed the issuance of all shares of Common Stock deliverable upon the exercise of such Option
Securities;
(ii) such Option Securities shall be deemed to be issued for a consideration equal to the value of the consideration
(determined in the manner provided in SECTION 5(f)(i)(E)(1) and (2)), if any, received by the Company for such Option Securities, plus the exercise price, strike price or purchase price provided in such Option Securities for the Common Stock covered
thereby;
(iii) the issuance of Convertible Securities shall be deemed the issuance of all shares of Common Stock deliverable upon
conversion of, or in exchange for, such Convertible Securities;
(iv) such Convertible Securities shall be deemed to be issued for a
consideration equal to the value of the consideration (determined in the manner provided in SECTION 5(f)(i)(E)(1) and (2) and excluding any cash received on account of accrued interest or accrued dividends), if any, received by the Company for
such Convertible Securities, plus the value of the additional consideration (determined in the manner provided in SECTION 5(f)(i)(E)(1) and (2)) to be received by the Company upon the conversion or exchange of such Convertible Securities, if
any;
(v) upon any change in the number of shares of Common Stock deliverable upon exercise of any Option Securities or Convertible
Securities or upon any change in the consideration to be received by the Company upon the exercise, conversion or exchange of such securities, the Conversion Price then in effect shall be readjusted to such Conversion Price as would have been in
effect had such change been in effect, with respect to any Option Securities or Convertible Securities outstanding at the time of the change, at the time such Option Securities or Convertible Securities originally were issued;
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(vi) if the Conversion Price shall have been fully adjusted upon the issuance of any such
options, warrants, rights or convertible or exchangeable securities, no further adjustment of the Conversion Price shall be made for the actual issuance of Common Stock upon the exercise, conversion or exchange thereof; and
(vii) if any issuance of Common Stock, Option Securities or Convertible Securities would also require an adjustment pursuant to any other
adjustment provision of this SECTION 5(f)(i), then only the adjustment most favorable to the Holders shall be made.
(F) Merger or
Reorganization. Subject to the provisions of SECTION 3(a), if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock (but not the Series A Preferred
Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by SECTION 5(f)(i)(A), (B) or (C)), then, following any such reorganization, recapitalization, reclassification, consolidation
or merger, each Preferred Share shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of
Common Stock issuable upon conversion of one (1) share of Series A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such
transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this SECTION 5 with respect to the rights and interests thereafter of the holders of the
Series A Preferred Stock, to the end that the provisions set forth in this SECTION 5 (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock. For the avoidance of doubt, nothing in this SECTION 5(f)(i)(F) shall be construed as preventing the holders of
Series A Preferred Stock from seeking any appraisal rights to which they are otherwise entitled under the DGCL in connection with a merger triggering an adjustment hereunder, nor shall this SECTION 5(f)(i)(F) be deemed conclusive evidence of
the fair value of the shares of Series A Preferred Stock in any such appraisal proceeding.
(ii) If the Company issues rights, options or
warrants that are only exercisable upon the occurrence of certain triggering events (each, a “Trigger Event”), then the Conversion Price will not be adjusted pursuant to SECTION 5(f)(i)(B) until the earliest Trigger Event occurs,
and the Conversion Price shall be readjusted to the extent any of these rights, options or warrants are not exercised before they expire (provided, however, that, for the avoidance of doubt, if such Trigger Event would require an adjustment pursuant
to SECTION 5(f)(i)(D), such adjustment pursuant to SECTION 5(f)(i)(D) shall be made at the time of issuance of such rights, options or warrants in accordance with such Section).
(iii) Notwithstanding anything in this SECTION 5(f) to the contrary, if a Conversion Price adjustment becomes effective pursuant to any of
clauses (A), (B) or (C) of this SECTION 5(f)(i) on any Ex-Date as described above, and a Holder that converts its Preferred Shares on or after such Ex-Date and on or prior to the related record date would be treated as the record holder of
shares of Common Stock as of the related Conversion Date based on an adjusted
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Conversion Price for such Ex-Date and participate on an adjusted basis in the related dividend, distribution or other event giving rise to such adjustment, then, notwithstanding the foregoing
Conversion Price adjustment provisions, the Conversion Price adjustment relating to such Ex-Date will not be made for such converting Holder. Instead, such Holder will be treated as if such Holder were the record owner of the shares of Common Stock
on an un-adjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.
Notwithstanding
anything in this SECTION 5(f) to the contrary, no adjustment under SECTION 5(f)(i) need be made to the Conversion Price unless such adjustment would require a decrease of at least one percent (1%) of the Conversion Price then in effect. Any
lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall amount to a decrease of at least
one percent (1%) of such Conversion Price; provided that, on the date of any conversion of the Preferred Shares pursuant to SECTION 5, adjustments to the Conversion Price will be made with respect to any such adjustment carried forward
that has not been taken into account before such date. In addition, at the end of each year, beginning with the year ending December 31, 2015, the Conversion Price shall be adjusted to give effect to any adjustment or adjustments so carried
forward, and such adjustments will no longer be carried forward and taken into account in any subsequent adjustment.
(iv)
Adjustments Below Par Value. The Company shall not take any action that would require an adjustment to the Conversion Price such that the Conversion Price, as adjusted to give effect to such action, would be less than the then-applicable par
value per share of the Common Stock, except that the Company may undertake a share split or similar event if such share split results in a corresponding reduction in the par value per share of the Common Stock such that the as-adjusted new
Conversion Price per share would not be below the new as-adjusted par value per share of the Common Stock following such share split or similar transaction and the Conversion Price is adjusted as provided under SECTION 5(f)(i)(A) and any other
applicable provision of SECTION 5(f).
(v) Reference Property. In the case of any recapitalization, reclassification or change of
the Common Stock (other than changes resulting from a subdivision, combination or reclassification described in SECTION 5(f)(i)(A)), a consolidation, merger or combination involving the Company, a sale, lease or other transfer to a third party of
all or substantially all of the assets of the Company (or the Company and its Subsidiaries on a consolidated basis), or any statutory share exchange, in each case as a result of which the Common Stock would be converted into, or exchanged for,
stock, other securities, other property or assets (including cash or any combination thereof) (any of the foregoing, a “Transaction”), then, at the effective time of the Transaction, the right to convert each Preferred Share will be
changed into a right to convert such Preferred Share into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) (the “Reference Property”) that a Holder
would have received in respect of the Common Stock issuable upon conversion of such Preferred Shares immediately prior to such Transaction. In the event that holders of Common Stock have the opportunity to elect the form of consideration to be
received in the Transaction, the Company shall make adequate provision whereby the Holders shall have a reasonable opportunity to determine the form of consideration into which all of the Preferred Shares, treated as a single class, shall be
convertible from and after the effective date of the Transaction. Any such election
14
shall be made by the Requisite Holders. Any such determination by the Holders shall be subject to any limitations to which all holders of Common Stock are subject, such as pro rata reductions
applicable to any portion of the consideration payable in the Transaction, and shall be conducted in such a manner as to be completed at approximately the same time as the time elections are made by holders of Common Stock. The provisions of this
SECTION 5(f)(v) and any equivalent thereof in any such securities similarly shall apply to successive Transactions. The Company shall not become a party to any Transaction unless its terms are in compliance with the foregoing.
(vi) Rules of Calculation; Treasury Stock. All calculations will be made to the nearest one-hundredth of a cent or to the nearest
one-ten thousandth of a share. Except as explicitly provided herein, the number of shares of Common Stock (or Reference Property, to the extent applicable) outstanding will be calculated on the basis of the number of issued and outstanding shares of
Common Stock (or Reference Property, to the extent applicable), not including shares held in the treasury of the Company. The Company shall not pay any dividend on or make any distribution to shares of Common Stock (or Reference Property, to the
extent applicable) held in treasury.
(vii) No Duplication. If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described in this SECTION 5 in a manner such that such adjustments are duplicative, only one adjustment (which shall be the adjustment most favorable to the Holders) shall be made.
(viii) Notice of Record Date. In the event of:
(A) any event described in SECTION 5(f)(i)(A), (B), (C) or (D);
(B) any Transaction to which SECTION 5(f)(v) applies;
(C) the dissolution, liquidation or winding-up of the Company; or
(D) any other event constituting a Change of Control;
then the Company shall mail to the Holders at their last addresses as shown on the records of the Company, at least ten (10) days prior to the record
date specified in (A) below or ten (10) days prior to the date specified in (B) below, as applicable, a notice stating:
(E) the record date for the dividend, other distribution, stock split or combination or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend, other distribution, stock split or combination; or
(F) the date
on which such reclassification, change, dissolution, liquidation, winding-up or other event constituting a Transaction or Change of Control, or any transaction which would result in an adjustment pursuant to SECTION 5(f)(i)(D), is estimated to
become effective or otherwise occur, and the date as of which it is expected that holders of Common Stock of record will be entitled to exchange their shares of Common Stock for Reference Property, other securities or other property deliverable upon
such reclassification, change,
15
liquidation, dissolution, winding-up, Transaction or Change of Control or that such issuance of Common Stock, Option Securities or Convertible Securities is anticipated to occur.
(ix) Certificate of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this
SECTION 5, the Company at its expense shall as promptly as reasonably practicable compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder a certificate, signed by an officer of the Company (in his or
her capacity as such and not in an individual capacity), setting forth (A) the calculation of such adjustments and readjustments in reasonable detail, (B) the facts upon which such adjustment or readjustment is based, (C) the
Conversion Price then in effect, and (D) the number of shares of Common Stock (or Reference Property, to the extent applicable) and the amount, if any, of Capital Stock, other securities or other property (including but not limited to cash and
evidences of indebtedness) which then would be received upon the conversion of a Preferred Share.
(x) No Upward Revisions to
Conversion Price. For the avoidance of doubt, except in the case of a reverse share split or share combination resulting in an adjustment under SECTION 5(f)(i)(A) effected with the approvals, if any, required pursuant to SECTION 4(b), in no
event shall any adjustment be made pursuant to this SECTION 5 that results in an increase in the Conversion Price.
SECTION 6.
Redemption.
(a) Redemption at Maturity. Unless prohibited by Delaware law governing distributions to stockholders, each
Holder shall have the right to require the Company to redeem such Holder’s Preferred Shares, in whole or in part, on or after March 31, 2016 (the “Maturity Date”) at a price per share payable, subject to SECTION 6(e), in
cash and equal to the Redemption Price (the right to redeem at maturity described in this SECTION 6(a), the “Redemption Right At Maturity”); provided, however, that the Redemption Right At Maturity shall expire and have no further
force or effect, if the Company closes a single or a series of related capital raising transactions in which the Company issues its Capital Stock to investors resulting in gross proceeds to the Company of at least $5.5 million in the aggregate,
excluding the conversion of any indebtedness and inclusive of the Series A Preferred Stock issuable pursuant to the Securities Purchase Agreement. At any time during the period beginning on the thirtieth (30th) calendar day prior to the Maturity Date (the “Holder Redemption Notice Period”), each Holder may deliver written notice to the Company notifying the Company of such
Holder’s election to require the Company to redeem all or a portion of such Holder’s Preferred Shares on or after the Maturity Date (the “Election Notice”). No later than thirty (30) calendar days prior to the
commencement of the Holder Redemption Notice Period, the Company shall deliver a notice to each Holder including the following information: (A) informing the Holder of the Maturity Date and such Holder’s right to elect to have all or a
portion of its Preferred Shares redeemed by Company on or after the Maturity Date, (B) the Redemption Price payable with respect to each share of Series A Preferred Stock on or after the Maturity Date in connection with any such redemption (to
the extent the Redemption Price is known or can be calculated, and to the extent not capable of being calculated, the manner in which such price will be determined); (C) that any certificates representing Preferred Shares which a Holder elects
to have redeemed must be surrendered for payment of the Redemption Price at the office of the Company or any redemption agent located in
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New York City selected by the Company therefor together with any written instrument or instructions of transfer or other documents and endorsements reasonably acceptable to the redemption agent
or the Company, as applicable (if reasonably required by the redemption agent or the Company, as applicable); (D) that, upon a Holder’s compliance with clause (C), Holder shall receive, at the option of the Holder, either (x) payment
of the Redemption Price to the Holder with respect to any Preferred Shares within twenty (20) Business Days following receipt to an account specified in such Holder’s redemption Election Notice or (y) a secured promissory note issued
by the Company to the Holder in principal amount equal to the Redemption Price, bearing an interest rate per annum of 12.00% and a maturity date six (6) months from the date of the Election Notice, and secured by all of the assets of the
Company, in form and substance acceptable to the Holder. The Company shall issue a press release for publication on the Dow Jones News Service or Bloomberg Business News (or if either such service is not available, another broadly disseminated news
or press release service selected by the Company) prior to the opening of business on the first Business Day following any date on which the Company provides notice to Holders pursuant to this SECTION 6(a) disclosing the right of Holders to have the
Company redeem Preferred Shares pursuant to this SECTION 6(a).
(b) Redemption at Option of the Holder upon a Change of Control.
(i) If a Change of Control occurs, each Holder shall have the right to require the Company to redeem its Preferred Shares pursuant to a
Change of Control Offer, which Change of Control Offer shall be made by the Company in accordance with SECTION 6(b)(ii). In such Change of Control Offer, the Company will offer a payment (such payment, a “Change of Control Payment”)
in cash per Preferred Share equal to the Redemption Price.
(ii) Within thirty (30) days following any Change of Control, the
Company will mail a notice (a “Change of Control Offer”) to each Holder describing the transaction or transactions that constituted such Change of Control and offering to redeem the Preferred Shares on the date specified in such
notice (the “Change of Control Payment Date”), which date shall be no earlier than thirty (30) days and no later than sixty-one (61) days from the date such notice is mailed. In addition, such Change of Control Offer shall
further state: (A) the amount of the Change of Control Payment; (B) that the Holder may elect to have all or any portion of its Preferred Shares redeemed pursuant to the Change of Control Offer, (C) that any Preferred Shares to be
redeemed must be surrendered for payment of the Change of Control Payment at the office of the Company or any redemption agent selected by the Company therefor together with any written instrument or instructions of transfer or other documents and
endorsements reasonably acceptable to the redemption agent or the Company, as applicable (if reasonably required by the redemption agent or the Company, as applicable); (D) that, upon a Holder’s compliance with clause (C), payment of the
Change of Control Payment with will be made to the Holder on the Change of Control Payment Date to the account specified by such Holder to the Company in writing; (E) the date and time by which the Holder must make its election, (F) that
any Holder may withdraw its election notice with respect to all or a portion of their Preferred Shares at any time prior to 5:00 p.m. (New York City time) on the Business Day immediately preceding the Change of Control Payment Date; and (G) the
amount and type of property that the Holder would receive in connection with such Change of Control if the Holder elects to convert its Preferred Shares in connection with the Change of Control. The Company shall issue a press release for
publication on the Dow Jones News Service or Bloomberg Business News (or if either such service is not
17
available, another broadly disseminated news or press release service selected by the Company) prior to the opening of business on the first Business Day following any date on which the Company
provides notice to Holders pursuant to this SECTION 6(b) disclosing the right of Holders to have the Company redeem Preferred Shares pursuant to this SECTION 6(b).
(iii) On the Change of Control Payment Date, the Company will, to the extent lawful: (A) accept for payment all Preferred Shares validly
tendered pursuant to the Change of Control Offer; and (B) make a Change of Control Payment to each Holder that validly tendered Preferred Shares pursuant to the Change of Control Offer.
(iv) If at any time prior to consummation of a transaction that would constitute a Change of Control, the Company has publicly announced
(whether by press release, SEC filing or otherwise) such transaction or prospective transaction or the entry by the Company into any definitive agreement with respect thereto, the Company shall, within five (5) Business Days of the issuance of
such public announcement, deliver a written notice to each Holder notifying them of the same and the anticipated date of consummation of such transaction.
(v) The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control
Offer and makes the Change of Control Payment in the manner, at the times and otherwise in compliance with the requirements set forth herein applicable to a Change of Control Offer made by the Company and purchases all Preferred Shares validly
tendered under such Change of Control Offer.
(vi) A Change of Control Offer may be made in advance of a Change of Control, conditional
upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
(c) Notwithstanding anything in this SECTION 6 to the contrary, each Holder shall retain the right to elect to convert any Preferred Shares to
be redeemed at any time prior to 5:00 p.m. (New York City time) on the Business Day immediately preceding any Redemption Date. Any Preferred Shares that a Holder elects to convert prior to the Redemption Date shall not be redeemed pursuant to this
SECTION 6.
(d) Insufficient Funds. Any redemption of the Preferred Shares pursuant to this SECTION 6 shall be payable out of any
cash legally available therefor, provided, however, that, other than in respect of a redemption pursuant to SECTION 6(b) (which the Company may only effectuate to the extent it has sufficient cash legally available therefor), if Delaware law
governing distributions to stockholders prevents the Company from redeeming all Preferred Shares to be redeemed, then the Company may pay the maximum portion of the Redemption Price consistent with such law (valued at the Fair Market Value thereof
on the date of payment). If Delaware law governing distributions to stockholders prevents the Company from redeeming all Preferred Shares to be redeemed pursuant to SECTION 6(a) or SECTION 6(b), the redemption notice delivered to Holders shall so
specify, and indicate the nature of the other assets expected to be distributed and the Fair Market Value of the same. At the time of any redemption pursuant to this SECTION 6, the Company shall take all actions required or permitted under Delaware
law to permit the redemption of the Preferred Shares, including, without limitation, through the revaluation of its assets in accordance with Delaware law, to make cash funds (and to the extent
18
cash funds are insufficient, other assets) legally available for such redemption. In connection with any redemption pursuant to SECTION 6(b), to the extent that Holders elect to have their
Preferred Shares redeemed and the Company has insufficient funds to redeem such Preferred Shares (after taking into account the amount of any repurchase obligations the Company has or expects to have under any Indebtedness ranking senior to the
Series A Preferred Stock), Senior Securities or any Parity Securities resulting from the same facts and circumstances as the Change of Control hereunder), the Company shall use any available funds to redeem a portion of such Preferred Shares and
Parity Securities (if any are being redeemed) ratably in proportion to the full respective amounts to which they are entitled and shall redeem the remaining shares as soon as it may lawfully do so under such law.
(e) Mechanics of Redemption.
(i) The Company (or a redemption agent on behalf of the Company, as applicable) shall pay the applicable Redemption Price on the Redemption
Date or the required payment date therefor upon surrender of the certificates representing the Preferred Shares to be redeemed and receipt of any written instrument or instructions of transfer or other documents and endorsements reasonably
acceptable to the redemption agent or the Company, as applicable, to the extent required by SECTIONS 6(a) and 6(b); provided that, if such certificates are lost, stolen or destroyed, the Company may require an affidavit certifying to
such effect and, if requested, an agreement indemnifying the Company from any losses incurred in connection therewith, in each case, in form and substance reasonably satisfactory to the Company, from such Holder prior to paying such amounts.
(ii) Following any redemption of Preferred Shares on any Redemption Date, the Preferred Shares so redeemed will no longer be deemed to be
outstanding and all rights of the Holder thereof shall cease, including the right to receive Dividends; provided, however, that any rights of Holders pursuant to this Certificate of Designations that by their terms survive
redemption of the Preferred Shares and, for the avoidance of doubt, any rights that survive pursuant to any of the other Transaction Agreements (as defined in the Securities Purchase Agreement), shall survive in accordance with their terms. The
foregoing notwithstanding, in the event that a Preferred Share is not redeemed by the Company when required, such Preferred Share will remain outstanding and will continue to be entitled to all of the powers, designations, preferences and other
rights (including but not limited to the accrual and payment of dividends and the conversion rights) as provided herein.
SECTION 7.
Director Election Rights.
Effective immediately following the Original Issue Date and for so long as at least 20% of the
originally issued shares of Series A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock) are outstanding, the
holders of the Preferred Shares, voting or consenting, as the case may be, separately as a single class to the exclusion of all other classes of the Company’s Voting Stock and with each Preferred Share entitled to one vote, by vote of the
Requisite Holders, be entitled to elect one (1) director to the Board (the “Preferred Elected Director”). Subject to applicable law, the Preferred Elected Director shall be entitled to be a member of each committee of the
Board, including the Compensation Committee, the audit
19
committee and the nominating and corporate governance committee of the Board; provided, that notwithstanding anything to the contrary herein, membership on any such committee will be
dependent upon such director meeting the qualification, and if applicable, independence criteria deemed necessary to so comply in accordance with any listing requirements of the Exchange on which the Company’s capital stock is then listed. The
Preferred Elected Director shall be elected as set forth in this SECTION 7; provided that as a condition precedent to the election of any Preferred Elected Director, the individual to be elected by the Requisite Holders shall be
required to provide to the Company a duly executed and delivered written resignation of such Person to be elected as the Preferred Elected Director, providing that effective immediately and automatically (without any further action by any Person)
upon the expiration of the Requisite Holders’ right to elect such individual to the Board as provided herein, the Preferred Elected Director shall resign from the Board. For the avoidance of doubt, no Preferred Elected Director shall be elected
to the Board unless the written resignation referred to in the preceding sentence is delivered to the Company prior thereto. The Preferred Elected Director shall be elected, at the option of the Requisite Holders, (i) by the written consent of
the Requisite Holders or (ii) at annual or special meetings of stockholders of the Company at which directors are to be elected. If there is a vacancy in the office of the Preferred Elected Director, then the vacancy may only be filled by a
nominee of the Requisite Holders. The Preferred Elected Director will be entitled to one (1) vote on any matter with respect to which the Board votes and the Preferred Elected Director may be removed at any time with or without cause by, and
shall not be removed otherwise than by, the written consent or vote of the Requisite Holders. The Company shall take all such action as may be reasonably requested by the Requisite Holders to effect SECTION 7 (including nominating and recommending
the Preferred Elected Director for election, if applicable).
SECTION 8. Additional Definitions. For purposes of these resolutions, the
following terms shall have the following meanings:
(a) “Accrued Value” means $1.7003 per share, as the same may be
increased pursuant to SECTION 2.
(b) “Actively Traded Security” means, as of any date of determination, a Security of an
entity with $2,000,000 average daily trading volume during the preceding 60-day period.
(c) “Affiliate” means, with
respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person.
(d) “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such
“person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and
“Beneficially Owned” shall have a corresponding meaning.
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(e) “Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or obligated to close.
(f) “Capital Stock” means, with respect to
any Person, any and all shares of stock of a corporation, partnership interests or other equivalent interests (however designated, whether voting or non-voting) in such Person’s equity, entitling the holder to receive a share of the profits and
losses, and a distribution of assets, after liabilities, of such Person.
(g) “Cash Equivalents” means: (i) United
States dollars, or money in other currencies received in the ordinary course of business; (ii) U.S. Government Obligations or certificates representing an ownership interest in U.S. Government Obligations with maturities not exceeding one year
from the date of acquisition; (iii) (A) demand deposits, (B) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (C) banker’s acceptances with maturities not exceeding
one year from the date of acquisition, and (D) overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of the United States or any state thereof having capital, surplus and undivided profits in
excess of $500 million whose short-term debt is rated “A-2” or higher by S&P or “P-2” or higher by Moody’s; (iv) repurchase obligations with a term of not more than seven (7) days for underlying securities of
the type described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above; (v) commercial paper rated at least P-1 by Moody’s or A-1 by S&P
and maturing within six (6) months after the date of acquisition; and (vi) money market funds at least ninety-five percent (95%) of the assets of which consist of investments of the type described in clauses (i) through
(v) above.
(h) “Certificate of Designations” means this certificate of designations for the Series A Preferred
Stock, as such shall be amended from time to time.
(i) “Change of Control” means (i) a sale of all or substantially
all of the consolidated assets of the Company (including by way of any reorganization, merger, consolidation or other similar transaction or a sale of Equity Securities issued by Subsidiaries of the Company), except any merger or consolidation
involving the Company or a Subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that
represent, immediately following such merger or consolidation, at least 75% by Voting Power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary
of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation (ii) a direct or indirect acquisition of Beneficial Ownership of Voting Power of the Company by any
Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Holders or their Affiliates by means of any transaction or series of transactions (including any reorganization, merger, consolidation,
joint venture, share transfer, share exchange, share issuance, reclassification or other similar transaction), pursuant to which the stockholders of the Company immediately preceding such transaction or transactions collectively own, following the
consummation of such transaction or transactions, less than seventy-five percent (75%) of the Voting Power of the Company or other surviving entity (or parent thereof), as the case may be, (iii) the obtaining by any Person or
“group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Holders or their Affiliates of the power (whether or not
21
exercised), other than pursuant to a revocable proxy in favor of the Company’s proposed slate of directors in respect of an annual meeting or other meeting related to the election of
directors, to elect a majority of the members of the Board or more than seventy-five percent (75%) of the Voting Power of the Company.
(j) “Closing Price” shall mean the price per share of the final trade of the Common Stock on the applicable Trading Day (or
the last trade of the Common Stock preceding the applicable Trading Day if no trades of such Common Stock were made on the applicable Trading Day) on the principal Exchange on which the Common Stock is listed or admitted to trading; provided
that if the Common Stock is not so listed or traded, the Closing Price shall be equal to the fair market value, as reasonably determined in good faith by the Board.
(k) “Common Stock” means the shares of common stock, par value $0.001 per share, of the Company or any other Capital Stock of
the Company into which such Common Stock shall be reclassified or changed.
(l) “Compensation Committee” means the
compensation committee of the Board which shall consist solely of Independent Directors, which shall consist of the Preferred Elected Director at all times.
(m) “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and
“under common control with”) with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
(n) “Conversion Price” means initially $1.7003, as adjusted from time to time as
provided in SECTION 5.
(o) “Convertible Securities” means securities by their terms convertible into or exchangeable for
Common Stock or options, warrants or rights to purchase such convertible or exchangeable securities.
(p) “Daily VWAP”
means the volume-weighted average price per share of Common Stock (or per minimum denomination or unit size in the case of any security other than Common Stock) as displayed under the heading “Bloomberg VWAP” on the Bloomberg page for the
“<equity> AQR” page corresponding to the “ticker” for such Common Stock or unit (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled
close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of such Common Stock (or per minimum denomination or unit size in the case of any security
other than Common Stock) on such Trading Day. The “volume weighted average price” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
(q) “Dividend Payment Date” means December 31, March 31, June 30 and September 30 of each year,
commencing on September 30, 2015; provided that, if any such
22
Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be the immediately succeeding Business Day.
(r) “Dividends” means Cumulative Dividends, the Participating Cash Dividends and the In-Kind Participating Dividends.
(s) “Equity Securities” means, with respect to any Person, (i) shares of Capital Stock of, or other equity or voting
interest in, such Person, (ii) any securities convertible into or exchangeable for shares of Capital Stock of, or other equity or voting interest in, such Person, (iii) options, warrants, rights or other commitments or agreements to
acquire from such Person, or that obligates such Person to issue, any Capital Stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of Capital Stock of, or other equity or voting interest in,
such Person, (iv) obligations of such Person to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any Capital Stock of, or other equity or
voting interest (including any voting debt) in, such Person and (v) the Capital Stock of such Person.
(t)
“Exchange” means the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, The New York Stock Exchange, the NYSE MKT LLC or any of their respective successors.
(u) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(v) “Excluded Stock” means: (i) shares of Common Stock issued by the Company in an event subject to,
and for which the Conversion Price is subject to adjustment pursuant to, SECTION 5(f)(i)(A); (ii) the issuance of shares of Common Stock upon conversion of the Preferred Shares or upon the exercise or conversion of Option Securities and
Convertible Securities of the Company outstanding on the Original Issue Date or otherwise permitted to be issued, or not prohibited, by any other provision of this Certificate of Designations; (iii) Common Stock that becomes issuable in
connection with, or as a result of, accretions to the face amount of, or payments in kind with respect to, Preferred Shares, Option Securities and Convertible Securities of the Company outstanding on the Original Issue Date or otherwise permitted to
be issued, or not prohibited, by any other provision of this Certificate of Designations; (iv) shares of Common Stock issued by the Company pursuant to the Securities Purchase Agreement; (v) shares of Common Stock, Option Securities or
Convertible Securities issued as a dividend or distribution on Preferred Shares; (vi) shares of Common Stock, Option Securities or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of
Common Stock that is permitted to be issued, or not prohibited, by any other provision of this Certificate of Designations; (vii) shares of Common Stock or Option Securities issued to employees or directors of, or consultants or advisors to,
the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board; (viii) shares of Common Stock or Convertible Securities actually issued upon the exercise of Option Securities or shares of Common Stock
actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option Security or Convertible Security; and (ix) shares of Common Stock, Option Securities or
Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing,
23
equipment leasing or real property leasing transaction approved by the Board, which consent must include the Preferred Elected Director.
(w) Ex-Date” means the first date on which the Common Stock trades on the applicable exchange or in the applicable market, regular
way, without the right to receive the issuance, dividend or distribution in question from the Company or, if applicable, from the seller of the Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such
exchange or market.
(x) “Fair Market Value” means: (i) in the case of any Security that is either (a) listed
on an Exchange or (b) an Actively Traded Security in the over-the-counter-market that represents equity in a Person with a market capitalization of at least $25,000,000 on each Trading Day in the preceding 60 day period prior to such date, the
product of (a) (i) the sum of the Daily VWAP of a single unit of such Security for each of the 20 consecutive Trading Days immediately prior to such date, divided by (ii) 20, multiplied by (b) the number of units of such Security
being valued, (ii) in the case of any Security that is not so listed or not an Actively Traded Security or any other property or asset (other than Cash Equivalents), the fair market value thereof (defined as the price that would be negotiated
in an arms’ length transaction for cash between a willing buyer and willing seller, neither of which is acting under compulsion), as determined by a written opinion of a nationally recognized investment banking, appraisal, accounting or
valuation firm that is not an Affiliate of the Company and is selected by the Company in good faith (provided that the Requisite Holders may object in writing to any such determination of Fair Market Value by such valuation expert once every four
(4) Testing Periods and if the Requisite Holders object in writing to any such determination of Fair Market Value by such valuation expert an alternative binding valuation shall be performed by a nationally recognized investment banking,
appraisal, accounting or valuation firm that is not an Affiliate of the Company and is selected by the Company and the Requisite Holders jointly, or if the Company and such Requisite Holders cannot jointly select such an alternative valuation expert
within ten (10) Business Days of the Requisite Holders delivering to the Company a written notice objecting to the initial valuation, by a nationally recognized investment banking, appraisal, accounting or valuation firm that is not an
Affiliate of the Company and is selected by one such valuation expert proposed by the Company and a second such valuation expert proposed by the Requisite Holders (it being understood that the Company shall each be responsible for the payment of all
of the fees and expenses of such alternative valuation expert) and (iii) in the case of Cash Equivalents, the face value thereof; provided that with respect to any Security of the type referred to in clause (ii) above, in no event
shall the Fair Market Value thereof exceed the Company’s cost basis in such Security (taking into account adjustments made in respect of follow-on capital contributions and other similar investments) plus fifty percent (50%) of any
appreciation as determined pursuant to the valuation provisions set forth above.
(y) “Governmental Entity” shall mean
any United States or non-United States federal, state or local government, or any agency, bureau, board, commission, department, tribunal or instrumentality thereof or any court, tribunal, or arbitral or judicial body.
(z) “hereof”; “herein” and “hereunder” and words of similar import refer to this
Certificate of Designations as a whole and not merely to any particular clause, provision, section or subsection.
24
(aa) “Holders” means the holders of outstanding Preferred Shares as they appear
in the records of the Company.
(bb) “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations promulgated thereunder.
(cc) “Independent Director” means any director on the Board that is
“independent” as defined in the Exchange Act and the applicable rules of the Exchange on which the Common Stock is listed (or if the Common Stock is not listed on an Exchange, as defined in NASDAQ Marketplace Rule 4200(a)(15)).
(dd) “Issue Date” means, with respect to a Preferred Share, the date on which such share is first issued by the Company.
(ee) “Liquidation Event” means (i) the voluntary or involuntary liquidation, dissolution or winding-up of the Company,
(ii) the commencement by the Company of any case under applicable bankruptcy, insolvency or other similar laws now or hereafter in effect, including pursuant to Chapter 11 of the U.S. Bankruptcy Code, (iii) the consent to entry of an order
for relief in an involuntary case under applicable bankruptcy, insolvency or other similar laws now or hereafter in effect, including pursuant to Chapter 11 of the U.S. Bankruptcy Code, (iv) the consent to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee or similar official of the Company, or any general assignment for the benefit of creditors and (v) any Change of Control unless the Requisite Holders elect otherwise by written
notice sent to the Company at least three (3) days prior to the effective date of such Change of Control.
(ff) “Market
Disruption Event” means the occurrence or existence for more than one half hour period in the aggregate on any scheduled Trading Day for the Common Stock (or Reference Property, to the extent applicable) of any suspension or limitation
imposed on trading (by reason of movements in price exceeding limits permitted by the applicable Exchange or otherwise) in the Common Stock (or Reference Property, to the extent applicable) or in any options, contracts or future contracts relating
to the Common Stock (or Reference Property, to the extent applicable), and such suspension or limitation occurs or exists at any time before 4:00 p.m. (New York City time) on such day.
(gg) “Option Securities” means options, warrants or other rights to purchase or acquire Common Stock, as well as stock
appreciation rights, phantom stock units and similar rights whose value is derived from the value of the Common Stock.
(hh)
“Original Issue Date” means Closing Date (as such term is defined in the Securities Purchase Agreement).
(ii)
“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government, any agency or political
subdivisions thereof or other “Person” as contemplated by Section 13(d) of the Exchange Act.
(jj) “Preferred
Shares” means the shares of Series A Preferred Stock.
25
(kk) “Purchasers” means the several “Purchasers” named in and party to
the Securities Purchase Agreement.
(ll) “Redemption Date” means the Maturity Date or any Change of Control Payment Date,
as applicable.
(mm) “Redemption Price” means, with respect to each Preferred Share, the greater of (i) the Fair
Market Value of such Preferred Share and (ii) the Accrued Value plus all accrued and unpaid Dividends (to the extent not included in the Accrued Value, including, without limitation, accrued and unpaid Cash Dividends to the Redemption Date), if
any, on each Preferred Share to be redeemed.
(nn) “Requisite Holders” means Holders owning a majority of the issued and
outstanding Preferred Shares.
(oo) “SEC” means the Securities and Exchange Commission.
(pp) “Securities” with respect to a Person means debt or equity securities issued by such Person or similar obligations of,
or participations in, such Person.
(qq) “Securities Purchase Agreement” means that certain Securities Purchase
Agreement, dated May 12, 2015, by and among the Company and the Purchasers, as amended, supplemented or modified in accordance with its terms.
(rr) “Series A Original Purchase Price” means $1.7003 per share.
(ss) “Stock Dividend Amount” equals the accrued but unpaid Cumulative Dividend divided by the lower of the Accrued Value and
the Conversion Price.
(tt) “Subsidiary” means with respect to any Person, any corporation, association or other business
entity of which more than fifty percent (50%) of the outstanding Voting Stock is owned, directly or indirectly, by, or of which more than fifty percent (50%) of the economic value accrues to, or, in the case of a partnership, the sole
general partner or the managing partner or the only general partners of which are, such Person and one or more Subsidiaries of such Person (or a combination thereof). Unless otherwise specified, “Subsidiary” means a Subsidiary of the
Company.
(uu) “Thirty Day VWAP” means, with respect to a security, the average of the Daily VWAP of such security for
each day during a thirty (30) consecutive Trading Day period ending immediately prior to the date of determination. Unless otherwise specified, “Thirty Day VWAP” means the Thirty Day VWAP of the Common Stock.
(vv) “Trading Day” means any day on which (i) there is no Market Disruption Event and (ii) the Exchange on which
the Common Stock (or Reference Property, to the extent applicable) is listed and is open for trading or, if the Common Stock (or Reference Property, to the extent applicable) is not so listed, admitted for trading or quoted, any Business Day. A
Trading Day only includes those days that have a scheduled closing time of 4:00 p.m. (New York City
26
time) or the then standard closing time for regular trading on the relevant exchange or trading system.
(ww) “Transaction Agreements” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(xx) “U.S. Government Obligations” means obligations issued or directly and fully guaranteed or insured by the United States
of America or by any agent or instrumentality thereof, provided that the full faith and credit of the United States of America is pledged in support thereof.
(yy) “Voting Power” means either (a) the power to elect, designate or nominate directors to the Board, or (b) vote
(as Common Stock or together with Common Stock) on matters to be voted on or consented to by the Common Stock through the ownership of Voting Stock, by contract or otherwise.
(zz) “Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote
for the election of directors, managers or other voting members of the governing body of such Person.
(aaa) “Wholly Owned
Subsidiary” means any Subsidiary of a Person of which such Person owns, either directly or indirectly, one hundred percent (100%) of the commons stock or other common equity interests of such Subsidiary (excluding qualifying shares
held by directors).
SECTION 9. Miscellaneous. For purposes of this Certificate of Designations, the following provisions shall
apply:
(a) Share Certificates. If any certificates representing Preferred Shares shall be mutilated, lost, stolen or
destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation of the mutilated certificate, or in lieu of and substitution for the lost, stolen or destroyed certificate, a new Preferred Share certificate of like tenor
and representing an equivalent number of Preferred Shares, but only upon receipt of evidence of such loss, theft or destruction of such certificate and indemnity by the holder thereof, if requested, reasonably satisfactory to the Company.
(b) Status of Cancelled Shares. Preferred Shares which have been converted, redeemed, repurchased or otherwise cancelled shall be
retired and, following the filing of any certificate required by the DGCL, have the status of authorized and unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated by the Board as part of a
particular series of Preferred Stock of the Company.
(c) Severability. If any right, preference or limitation of the Series A
Preferred Stock set forth in this Certificate of Designations is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this Certificate of
Designations which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect,
27
and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.
(d) Remedies.
(i) The
Company acknowledges that the obligations imposed on it in this Certificate of Designations are special, unique and of an extraordinary character, and irreparable damages, for which money damages, even if available, would be an inadequate remedy,
would occur in the event that the Company does not perform the provisions of this Certificate of Designations in accordance with its specified terms or otherwise breaches such provisions. The Holders shall be entitled to seek an injunction, specific
performance and other equitable relief to prevent breaches of this Certificate of Designations and to seek to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled, at law or in
equity, including without limitation money damages.
(e) Renunciation under DGCL Section 122(17). Pursuant to
Section 122(17) of the DGCL, the Company renounces any interest or expectancy of the Company in, or being offered an opportunity to participate in, business opportunities that are presented to one or more of the Preferred Elected Director, in
each case other than any business opportunities that are presented to the Preferred Elected Director solely in his or her capacity as a director of the Company.
(f) Headings. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
(g) Notices. All notices or communications in respect of Preferred Stock shall be
in writing and shall be deemed delivered (a) one (1) Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, (b) on the date of delivery if delivered personally or by
electronic communication, or (c) if by facsimile, upon written confirmation of receipt by facsimile. Notwithstanding the foregoing, if Preferred Stock is issued in book-entry form through The Depository Trust Company or any similar facility,
such notices may be given to the beneficial holders of Preferred Stock in any manner permitted by such facility.
(h) Other Rights.
The shares of Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or
in the Certificate of Incorporation or as provided by applicable law and regulation.
(i) Waiver. Any of the rights, powers,
preferences and other terms of the Series A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the Requisite Holders.
(j) Requisite Holders. Notwithstanding anything to the contrary contained herein, any consent, waiver, vote, decision, election or
action required or permitted to be taken hereunder by the Holders of the Preferred Shares as a group (i.e., as opposed to by a specified Holder or specified subset of Holders) shall require the approval or action, as applicable, of the Requisite
Holders and, after such approval or action, shall be binding on all of the Holders.
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be executed by a
duly authorized officer of the Company as of July 14, 2015.
|
|
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| BG MEDICINE, INC. |
|
|
| By: |
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/s/ Paul R. Sohmer, M.D. |
| Name: |
|
Paul R. Sohmer, M.D. |
| Title: |
|
President and Chief Executive Officer |
[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATIONS]
Exhibit 10.1
BG MEDICINE, INC.
FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
July 14, 2015
Reference is
hereby made to that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of May 12, 2015, by and among BG Medicine, Inc. (the “Company”) and the purchasers named therein (the
“Purchasers”). Capitalized terms used and not defined herein shall have the meanings given to them in the Purchase Agreement.
WHEREAS, Section 2.2(b) of the Purchase Agreement provides that the Second Closing shall occur within three Business Days of the Required
Stockholder Vote authorizing the sale of the Shares by the Company to the Purchasers (the “Second Closing Date Condition”);
WHEREAS, Section 12.12 of the Purchase Agreement provides that the terms of the Purchase Agreement may be waived or modified upon the
written consent of the Company and the Required Holders;
WHEREAS, the undersigned Purchasers constitute the Required Holders; and
WHEREAS, the undersigned Purchasers desire to amend the Second Closing Date Condition on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Company and the Purchasers agree as follows:
1. Amendment of Second Closing
Date. The Company and the Required Holders hereby agree that the last sentence of Section 2.2(b) is hereby amended and restated in its entirety to read as follows:
“Notwithstanding the foregoing, the Second Closing shall occur within five (5) Business Days of the Required Stockholder Vote
authorizing the Second Closing and the sale of the Shares by the Company to the Purchasers contemplated by this Agreement.”
2. Amendment to Annex A. The Company and the Required Holders hereby agree that Annex A to the Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
“Annex A
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchaser Name |
|
Initial Closing
- Principal
Amount of
Note |
|
|
Second Closing
- Number of
Shares of
Series A
Preferred
Stock Issuable
Upon
Conversion of
Notes |
|
|
Second Closing
- Aggregate
Purchase Price |
|
|
Second
Closing -
Number of
Shares of
Series A
Preferred
Stock
Purchased
at the
Purchase
Price of
$1.7003
Per
Share |
|
|
Total
Number
of Shares
of Series
A
Preferred
Stock
Issued at
Second
Closing |
|
| Applied Genomic Technology Capital Fund, L.P. |
|
$ |
308,487.65 |
|
|
|
183,971 |
|
|
$ |
1,233,950.22 |
|
|
|
725,725 |
|
|
|
909,696 |
|
| AGTC Advisors Fund, L.P. |
|
$ |
22,726.86 |
|
|
|
13,553 |
|
|
$ |
90,906.54 |
|
|
|
53,465 |
|
|
|
67,018 |
|
| Flagship Ventures Fund 2007, L.P. |
|
$ |
168,785.49 |
|
|
|
100,657 |
|
|
$ |
675,141.53 |
|
|
|
397,072 |
|
|
|
497,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL |
|
$ |
500,000.00 |
|
|
|
298,181 |
|
|
$ |
1,999,998.29 |
|
|
|
1,176,262 |
|
|
|
1,474,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Wire Instructions:
Bank Name:
Address:
Bank ABA Routing No.:
Account Name: BG Medicine, Inc.
Account No.:
SWIFT / BIC CODE -
Special Instructions: ”
3.
Effect of this Amendment. Except as specifically set forth herein, each term and condition of the Purchase Agreement shall continue in full force and effect.
4. Counterparts; Facsimile Signatures. This First Amendment to Securities Purchase Agreement (this
“Amendment”) may be executed or consented to in counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. This Amendment may be executed and delivered by
facsimile or electronically and, upon such delivery, the facsimile or electronically transmitted signature will be deemed to have the same effect as if the original signature had been delivered to the other party. This Amendment shall be governed by
and construed in accordance with the General
2
Corporation Law of the State of Delaware as to matters within the scope thereof, and, as to all other matters, in accordance with the internal laws of the Commonwealth of Massachusetts (without
reference to the conflicts of law provisions thereof that would require the application of laws of any other jurisdiction).
[Remainder
of page intentionally left blank.]
3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first
above written.
|
|
|
|
|
| COMPANY: |
|
| BG MEDICINE, INC. |
|
|
| By: |
|
/s/ Paul R. Sohmer, M.D. |
|
|
Name: |
|
Paul R. Sohmer, M.D. |
|
|
Title: |
|
President and Chief Executive Officer |
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first
above written.
|
|
|
| PURCHASERS: |
|
| APPLIED GENOMIC TECHNOLOGY CAPITAL FUND, L.P.; |
| AGTC ADVISORS FUND, L.P. |
|
| Each by its General Partner, AGTC Partners, L.P. |
| By its General Partner, NewcoGen Group Inc. |
|
|
| By: |
|
/s/ Noubar B. Afeyan, Ph.D. |
| Name: |
|
Noubar B. Afeyan, Ph.D. |
| Title: |
|
President |
|
| FLAGSHIP VENTURES FUND 2007, L.P. |
|
| By its General Partner |
| Flagship Ventures Fund 2007 General Partner LLC |
|
|
| By: |
|
/s/ Noubar B. Afeyan, Ph.D. |
| Name: |
|
Noubar B. Afeyan, Ph.D. |
| Title: |
|
Manager |
Exhibit 10.2
Execution Version
BG
MEDICINE, INC.
FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the “Agreement”) is made as of July 14, 2015, by and
among BG Medicine, Inc., a Delaware corporation (the “Company”), and the holders of capital stock of the Company as set forth on Schedule A hereto (the “Stockholders”).
R E C I T A L S:
A.
Whereas the Company, certain Stockholders owning shares of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”) and certain other parties entered into an Investor Rights Agreement dated as of April 20,
2001 and subsequently amended and restated such agreement on October 28, 2004, March 28, 2005, May 1, 2007 and July 10, 2008 (the “Investor Rights Agreement”).
B. Whereas the Company and the Preferred Stockholders (as defined in the Investor Rights Agreement) holding at least 50% of the Registrable
Securities (as defined in the Investor Rights Agreement) desire to amend and restate in its entirety the Investor Rights Agreement by their execution of this Agreement to induce certain Stockholders to purchase shares of Series A Preferred Stock,
par value $0.001 per share, of the Company (the “Series A Preferred Stock”), which are convertible into shares of Common Stock, pursuant to the terms and conditions set forth in the Securities Purchase Agreement, dated May 12,
2015, by and among the Company, certain Stockholders and the other parties named therein, as amended by the First Amendment thereto dated July 14, 2015.
Now, therefore, the parties hereto agree as follows:
A G R E E M E N T:
1.
Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:
“Board” shall mean the Company’s Board of Directors.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Holders” means the Holders who are not Series A Holders.
“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time to time.
“Holders” or “Holders
of Registrable Securities” shall mean the Stockholders and any Person who shall have acquired Registrable Securities from the Stockholders as permitted herein, either individually or jointly, as the case may be, in a transaction pursuant to
which registration rights are transferred pursuant to Section 10 hereof.
“Person” shall mean an individual, a
partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a gov-
ernmental or quasi-governmental entity, or any department, agency or political subdivision thereof or any other entity of any kind.
“Registrable Securities” shall mean (i) any shares of Common Stock at any time beneficially owned by the Stockholders or
their respective affiliates (including shares of Common Stock issued or issuable upon conversion of the Series A Preferred Stock), as the case may be; and (ii) any shares of Common Stock issued or issuable in respect of the securities referred
to in clause (i) above, whether to satisfy interest or dividend payments or upon any stock split, stock dividend, recapitalization or otherwise, until, in the case of any such security, it is: (A) sold pursuant to an effective registration
statement under the Securities Act; (B) eligible to be sold into the public market by persons who are not “affiliates” (as defined in Rule 144 promulgated under the Securities Act) of the Company (and have not been affiliates of the
Company for the preceding three months) pursuant to the second sentence of Rule 144(b)(1)(i) (or any successor rule); (C) sold pursuant to Rule 144 under the Securities Act (or any successor rule); or (D) sold by a Person in a transaction
in which registration rights are not transferred pursuant to Section 10 hereof. Whenever reference is made in this Agreement to a request or consent of holders of a certain number or percentage of Registrable Securities, the determination of
such number or percentage shall be calculated on the basis of shares of Common Stock issued or issuable pursuant to the conversion of shares of Series A Preferred Stock.
The terms “register,” “registered” and “registration” refer to a registration effected by
preparing, filing and having declared effective a registration statement in compliance with the Securities Act.
“Registration
Expenses” shall mean (i) all expenses, other than Selling Expenses (defined below), incurred by the Company in complying with Sections 2 or 3 hereof, including without limitation, all registration, qualification and filing fees,
exchange or quotation medium listing fees, printing and delivery expenses, escrow and custodian fees, fees and disbursements of counsel for the Company, blue sky fees and expenses and the expenses of accountants for the Company including the
expenses of any special audits incident to or required by any such registration and (ii) the reasonable fees and disbursements of one counsel chosen by the Holders of a majority of the Registrable Securities included in such registration in
connection with any Demand Registration or Piggyback Registration.
“Securities Act” shall mean the U.S. Securities Act
of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.
“Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes and the costs, fees
and expenses of any accountants, attorneys (other than the cost, fees and expenses of attorneys which are Registration Expenses) or other experts retained by the Holders.
“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments,
requirements or requests of the Commission staff and (ii) the Securities Act.
“Series A Holders” means (i) the
Holders owning shares of Common Stock issued or issuable upon conversion of shares of the Series A Preferred Stock and (ii) the Holders who are affiliates of the Holders set forth in clause (i).
2. Holders Demand Registrations.
(a) Request for Registration. Any Series A Holder or Series A Holders, or any Holder or Holders who collectively hold Registrable
Securities representing at least 40% of the Regis-
2
trable Securities then outstanding, shall have the right (subject to the limitations set forth below), exercisable by written notice to the Company (each a “Registration
Request”), to have the Company prepare and file with the Commission a registration statement under the Securities Act covering the Registrable Securities that are the subject of such request (each, a “Demand Registration”);
provided, that the Company shall not be obligated to prepare and file a registration statement if neither Form S-3 nor another short form registration statement is available to the Company to fulfill such Registration Request, unless the
Registrable Securities that are the subject of such request have an expected aggregate offering price to the public of at least U.S.$1,000,000. Within 10 days after receipt of any such request, the Company will give written notice of such requested
registration to all other Holders of Registrable Securities. The Company shall include such other Holders’ Registrable Securities in such offering if they have responded affirmatively within 10 days after the receipt of the Company’s
notice. Subject to the foregoing, the Series A Holders shall be permitted two (2) Demand Registrations hereunder on Form S-1 and unlimited Demand Registrations hereunder on Form S-3 and the Common Holders shall be permitted one (1) Demand
Registration hereunder.
A request for registration under this Section 2(a) will not count as a Demand Registration until the
registration statement has become effective and remained effective until the earlier of 30 days and the sale of all securities requested to be registered thereunder are registered (unless such registration statement has not become effective due
solely to the actions or failure to act with respect to such registration of the Holders requesting such registration, including a request by such Holders that such registration be withdrawn).
(b) Priority on Holders Demand Registrations. If a Demand Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering, exceeds the number of Registrable Securities and other securities, if any,
which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration:
i. first, the Registrable Securities issued or issuable upon conversion of shares of Series A Preferred Stock requested to be
included in such registration by the Series A Holders (or, if necessary, such Registrable Securities pro rata among such Series A Holders based upon the number of Registrable Securities issued or issuable upon conversion of shares of
Series A Preferred Stock owned by each such Series A Holder or such other arrangement agreed to among such Series A Holders); and
ii. second, the Registrable Securities requested to be included in such registration by the Common Holders (or, if necessary,
such Registrable Securities pro rata among such Common Holders based upon the number of Registrable Securities owned by each such Common Holder or such other arrangement agreed to among such Common Holders); and
iii. thereafter, other securities requested to be included in such registration, as determined by the Company.
If, solely as a result of the pro rata cutback limitation set forth in this Section 2(b), the number of Registrable Securities requested
by Holders to be included in the Demand Registration exceeds the number of Registrable Securities actually included in the Demand Registration, the Holders shall be entitled to an additional Demand Registration for the sole purpose of including the
Registrable Securities that had been excluded from the first Demand Registration; provided, however, such second Regis-
3
tration Request may not be made until six months following the date of effectiveness of the registration statement filed for the first Demand Registration. If a second Demand Registration is
effected for this purpose, it shall be considered a “Demand Registration” for all purposes of this Agreement, including, without limitation, the threshold, notice, priority and other requirements.
The Holders of any Registrable Securities to be included in such an underwritten offering shall enter into an underwriting agreement (which
shall be in customary form, may include agreements as to indemnification and contribution and shall provide that the representations and warranties by the Company to and for the benefit of such underwriters, shall also be made to and for the benefit
of such Holders).
(c) Restrictions on Demand Registration. The Company may postpone or suspend, for up to 90 days in any 12-month
period, the filing or the effectiveness of a registration statement for a Demand Registration if the Board determines in good faith and notifies the Holders in writing that such Demand Registration (i) would reasonably be expected to have a
material adverse effect on (x) any proposal or plan by the Company to engage in any financing, acquisition or disposition of assets (other than in the ordinary course of business) or (y) any merger, consolidation, tender offer or similar
transaction or (ii) would require disclosure of any information that the Board determines in good faith the disclosure of which would be detrimental to the Company; provided, however, that in such event, the Holders initially
requesting such Demand Registration shall be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as a permitted Demand Registration hereunder and the Company will pay any Registration Expenses
in connection with such registration.
(d) Selection of Investment Bankers and Managers. The Company will have the right to select
the investment banker(s) and manager(s) to administer an offering pursuant to the Demand Registration, subject to the approval of the holders of a majority of the Registrable Securities, which will not be unreasonably withheld, delayed or
conditioned.
(e) The Company represents and warrants that it is not a party to, or otherwise subject to, any agreement, other than this
Agreement, granting registration rights to any other Person with respect to any securities of the Company, other than the Registration Rights Agreement, dated as of January 24, 2013, by and between the Company and Aspire Capital Fund, LLC.
3. Piggyback Registrations.
(a) Right to Piggyback. If the Company shall propose to register shares of Common Stock under the Securities Act (other than in a
registration statement relating solely to sales of securities to participants in a Company dividend reinvestment plan, or Form S-4 or S-8 or any successor form or in connection with an acquisition or exchange offer or an offering of securities
solely to the existing shareholders or employees of the Company), the Company (i) will give prompt written notice to all Holders of Registrable Securities of its intention to effect such a registration and (ii) subject to
Section 2(b), Section 3(b), Section 13 and the other terms of this Agreement, will include in such registration all Registrable Securities which are permitted under applicable securities laws to be included in the form of registration
statement selected by the Company and with respect to which the Company has received written requests for inclusion therein within 30 days after the receipt of the Company’s notice (each, a “Piggyback Registration”);
provided, however, that the Company shall not be obligated to include Registrable Securities of a Holder who is not an “affiliate” (as defined in Rule 144) of the Company (and has not been an affiliate of the Company for the
preceding three months) which are eligible for resale into the public market pursuant to the second sentence of Rule 144(b)(1)(i) (or any suc-
4
cessor rule). The Holders will be permitted to withdraw all or any part of the Registrable Securities from a Piggyback Registration at any time prior to the effective date of such Piggyback
Registration.
(b) Priority on Piggyback Registrations. If a Piggyback Registration is to be an underwritten offering, and the
managing investment bank advises the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability
of the offering, the Company will include in such registration:
i. first, the securities the Company proposes to sell for
its own account;
ii. second, the Registrable Securities issued or issuable upon conversion of shares of Series A Preferred
Stock requested to be included in such registration by the Series A Holders, pro rata among such Series A Holders of such Registrable Securities, on the basis of the number of such Registrable Securities requested to be included in
such registration by each of such Series A Holders; and
iii. third, the Registrable Securities requested to be included in
such registration by the Common Holders and any securities requested to be included in such registration by any other Person pursuant to a demand registration request, other than Persons having a lower priority of registration than the Common
Holders, pro rata among the Common Holders of such Registrable Securities and such other Persons, on the basis of the number of securities requested to be included in such registration by each of such Common Holders and such other
Persons; and
iv. thereafter, other securities requested to be included in such registration, as determined by the Company.
The Holders of any Registrable Securities to be included in an underwritten offering shall enter into an underwriting agreement (which
shall be in customary form, may include agreements as to indemnification and contribution, and shall provide that the representations and warranties by the Company to and for the benefit of such underwriters, shall also be made to and for the
benefit of such Holders). Notwithstanding (i) – (iv) above, the number of securities held by each Holder of Series A Preferred Stock to be included in such registration shall not be reduced to less than 20% of the total number of
securities to be included in such registration.
(c) Right to Terminate Registration. If at any time after giving written notice of
its intention to register any of its securities as set forth in Section 3(a) and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register
such securities, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and thereupon be relieved of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in connection therewith as provided herein).
(d) Selection
of Underwriters/Placement Agents. The Company will have the right to select the investment banker(s) and manager(s) to administer an offering pursuant to a Piggyback Registration, subject to the approval of the holders of a majority of the
Registrable Securities, which approval will not be unreasonably withheld, delayed or conditioned.
5
4. Expenses of Registration. Except as otherwise provided herein or as may otherwise be
prohibited by applicable law, all Registration Expenses incurred in connection with all registrations pursuant to Sections 2 and 3 hereof shall be borne by the Company. All Selling Expenses relating to securities registered on behalf of the Holders
of Registrable Securities shall be borne by such Holders.
5. Holdback Agreements.
(a) The Company agrees (i) if requested by the underwriters managing the offering, not to effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the 10-day period prior to, and during the 90-day period following, the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registration statements on Form S-4 or Form S-8 or any successor form), and (ii) to use its best
efforts to cause its officers and directors and each holder of at least 5% (on a fully-diluted basis) of its outstanding shares of Common Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock, purchased
from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such periods
(except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.
(b) If requested by the managing underwriter(s) in an underwritten offering of Common Stock or securities convertible for Common Stock of the
Company, each Holder agrees, unless such Holder is a participant in such offering, not to effect any offer, sale, distribution or transfer, including a sale pursuant to Rule 144 (or any similar provision then effect) under the Securities Act (except
as part of such underwritten registration), during the 10-day period prior to, and during the 90-day period in the case of any public offering of Common Stock (or (X) such longer period, if required by such underwriter, as is necessary to
enable such underwriter to issue a report or make a public appearance that relates to an earnings release or announcement by the Company during an additional 15-day period, or (Y) such shorter period, as
may be agreed to in writing by the Company and the Holders of at least 50% of the Registrable Securities) following, the effective date of such Registration Statement; provided, however, that (i) no Holder shall be required
to enter into more than two such agreements in any 12-month period and (ii) no Holder shall be required to enter into such an agreement unless all Persons entitled to registration rights who are not parties to this Agreement, all other Persons
selling shares in such offering, all Persons holding in excess of 5% (on a fully diluted basis) of the Company’s outstanding shares of Common Stock (other than that purchased in a registered public offering) and all executive officers and
directors of the Company shall also have agreed not to offer, sell, distribute a transfer under the circumstances and pursuant to the terms set forth in this Section 5(b).
6. Registration Procedures. Whenever the Holders of Registrable Securities have requested that any Registrable Securities be registered
pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Company will
under the time frames provided herein, or if not so provided, as expeditiously as possible:
(a) prepare and file with the Commission a
registration statement on any appropriate form for which the Company qualifies with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto, the Company will (i) furnish to the counsel selected by the Holders copies of all such documents proposed to be filed, which
docu-
6
ments will be subject to the review of such counsel, and (ii) notify each Holder of Registrable Securities covered by such registration of any stop order issued or threatened by the
Commission);
(b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be reasonably necessary to keep such registration statement effective for a period equal to the shorter of (i) 180 days and (ii) the time by which all securities covered by such registration statement
have been sold, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(d) use all reasonable efforts to register or qualify such Registrable
Securities under the securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for
this Section 6(d), (ii) subject itself to taxation in any jurisdiction or (iii) take any action that would subject it to general service of process in any such jurisdiction);
(e) promptly notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein
not misleading, and, the Company will prepare and deliver to each Holder a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; provided, however, that the Company shall be required to notify the Holders, but shall not be required to amend
the registration statement or supplement the prospectus for a period of up to three months if the Board determines in good faith that to do so would reasonably be expected to have a material adverse effect on any proposal or plan by the Company to
engage in any financing, acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction or would require the disclosure of any information that the Board
determines in good faith the disclosure of which would be materially detrimental to the Company, it being understood that the period for which the Company is obligated to keep the Registration Statement effective shall be extended for a number of
days equal to the number of days the Company delays amendments or supplements pursuant to this provision. Upon receipt of any notice pursuant to this Section 6(e), the Holders shall suspend all offers and sales of securities of the Company and
all use of any prospectus until advised by the Company that offers and sales may resume, and shall keep confidential the fact and content of any notice given by the Company pursuant to this Section 6(e);
7
(f) cause all such Registrable Securities to be listed on each securities exchange or quoted on
Nasdaq or other quotation medium, if any, on which similar securities issued by the Company are then listed or quoted;
(g) provide a
transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;
(h)
enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares);
(i) make available for inspection by the Holders of Registrable Securities included in the registration statement, any underwriter
participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all pertinent financial and other records, pertinent corporate documents and properties
of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such
registration statement and (ii) to participate in presentations to prospective purchasers as reasonably requested by any underwriter or placement agent;
(j) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 10(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of
the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any shares of Common Stock included in such
registration statement for sale in any jurisdiction, use its best efforts promptly to obtain the withdrawal of such order;
(l) obtain a
so-called “cold comfort” letter from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters;
(m) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; and
(n) if any such registration or comparable statement refers to any Holder by name or otherwise as the holder of any securities of the Company
and if in its sole and exclusive judgment, such Holder is or might be deemed to be an underwriter or a controlling person of the Company, such Holder shall have the right to require (i) the insertion therein of language, in form and substance
satisfactory to such Holder and presented to the Company in writing, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s
securities covered thereby and that such holding does not imply that such Holder shall assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not
required by the Securities Act or any
8
similar federal statute then in force, the deletion of the reference to such Holder; provided that with respect to this clause (ii) such Holder shall (a) furnish to the Company
an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company and (b) indemnify the Company against any loss or liability imposed upon and any reasonable expenses incurred by the Company as a
result of such deletion.
7. Obligations of Holders. Whenever any Registrable Securities are registered pursuant to a Demand
Registration, or a Piggyback Registration, the Holders shall be obligated to comply with the applicable provisions of the Securities Act, including the prospectus delivery requirements thereunder, and any applicable state securities or blue sky
laws. In addition, each Holder of Registrable Securities will be deemed to have agreed by virtue of its acquisition of such Registrable Securities that, upon receipt of any notice described in Section 6(e), such Holder will forthwith
discontinue disposition of such Registrable Securities covered by such registration statement or prospectus until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(e), or until it is
advised in writing by the Company that the use of the applicable prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such prospectus.
8. Indemnification.
(a)
The Company agrees to indemnify, to the fullest extent permitted by applicable law, each Holder of Registrable Securities, its officers and directors and each Person who controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities, expenses or any amounts paid in settlement of any litigation, investigation or proceeding commenced or threatened (collectively, “Claims”) to which each such indemnified party may become subject
under the Securities Act insofar as such Claim arose out of (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use therein or by such Holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto unless such Holder had
previously requested a sufficient number of copies of the same and the Company has failed to furnish such Holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify the
underwriters, their officers and directors and each Person who controls the underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities.
(b) In connection with any registration statements in which a Holder of Registrable Securities is participating, each such Holder will,
to the fullest extent permitted by applicable law, indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any and all Claims to which each such indemnified party
may become subject under the Securities Act insofar as such Claim arose out of (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that with respect to a Claim arising pursuant
to clause (i) or (ii) above, the material misstatement or omission is contained in the information such Holder provided to the Company pursuant to Section 11 hereof; provided, further, that the obligation to indemnify
will be in-
9
dividual to each Holder and will be limited to the amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (but the failure to provide such notice shall not release the indemnifying party of its obligation under paragraphs (a) and (b), unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) unless in such indemnified party’s reasonable judgment, based on written advice of counsel, a conflict of interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, based on written advice of
counsel, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.
(d) The indemnifying party shall not be liable to indemnify an indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party’s written consent (but such consent will not be unreasonably withheld, delayed or conditioned). Furthermore, the indemnifying party shall not, except with the prior written approval of each indemnified
party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect of such claim
or litigation without any payment or consideration provided by each such indemnified party.
(e) If the indemnification provided for in
this Section 8 is unavailable to an indemnified party under clauses (a) and (b) above in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect not only the relative benefits received by the Company, the
underwriters, the sellers of Registrable Securities and any other sellers participating in the registration statement from the sale of shares pursuant to the registered offering of securities for which indemnity is sought but also the relative fault
of the Company, the underwriters, the sellers of Registrable Securities and any other sellers participating in the registration statement in connection with the misstatement or omission which resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The relative benefits received by the Company, the underwriters, the sellers of Registrable Securities and any other sellers participating in the registration statement shall be deemed to be
based on the relative relationship of the total net proceeds from the offering (before deducting expenses) to the Company, the total underwriting commissions and fees from the offering (before deducting expenses) to the underwriters and the total
net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company, the underwriters, the sellers of Registrable
Securities and any other sellers participating in the registration statement shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the sellers of Registrable Securities and the parties’ knowledge, access to information and opportunity to correct or prevent such statement or omission; provided that in
no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the
10
proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
(f) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person of such indemnified party and will survive the transfer of the Registrable Securities.
9. Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten unless
such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided that no Holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such Holder and such Holder’s intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 8 hereof.
10. Transfer of Registration Rights. The rights granted to any Holder under this Agreement may be assigned to any Person in connection
with any transfer or assignment by a Holder of at least 20% of the Registrable Securities held by such Holder or to any transferee who is a partner or shareholder of such Holder, or to any entity which, directly or indirectly, controls, is
controlled by or is under common management with such Holder; provided, however, that: (a) such transfer is otherwise effected in accordance with applicable securities laws, (b) such transfer is not in violation of any
effective agreement between the Company and any of the Stockholders and (c) if not already a party hereto, the assignee or transferee agrees in writing prior to such transfer to be bound by the provisions of this Agreement.
11. Information by Holder. Each Holder shall furnish to the Company such written information regarding such Holder and any distribution
proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement and shall promptly notify the Company of any
changes in such information.
12. Exchange Act Compliance. The Company shall comply with all of the reporting requirements of the
Exchange Act then applicable to it, if any, and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of the Registrable Securities. The Company
shall cooperate with each Holder in supplying such information as may be necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144.
13. SEC Limitations.
(a) Notwithstanding the registration obligations set forth in Sections 2(a) and 3(a), if the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415 promulgated under the Securities Act, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the
Holders thereof and use its commercially reasonable efforts to file amendments to the initial registration state-
11
ment as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for
resale the Registrable Securities as a secondary offering; with respect to filing on Form S-3 or other appropriate form; provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with
the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.
(b) Notwithstanding any other provision of this Agreement, if the Commission or any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular registration statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater
portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
i. first, the Registrable Securities (excluding Registrable Securities issued or issuable upon conversion of shares of Series A
Preferred Stock) requested to be included in such registration by the Common Holders (or, if necessary, such Registrable Securities pro rata among such Common Holders based upon the number of such Registrable Securities owned by each
such Common Holder or such other arrangement agreed to among such Common Holders); and
ii. second, the Registrable
Securities issued or issuable upon conversion of shares of Series A Preferred Stock requested to be included in such registration by the Series A Holders (or, if necessary, such Registrable Securities pro rata among such Series A
Holders based upon the number of Registrable Securities issued or issuable upon conversion of shares of Series A Preferred Stock owned by each such Series A Holder or such other arrangement agreed to among such Series A Holders).
In the event of a cutback hereunder, the Company shall give the Holder at least five (5) business days prior written notice along with the calculations
as to such Holder’s allotment. In the event the Company amends the initial registration statement in accordance with the foregoing, the Company will use its reasonable best efforts to file with the Commission, as promptly as allowed by
Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not
registered for resale on the initial registration statement, as amended.
14. Miscellaneous.
(a) No Inconsistent Agreements. So long as any Holder owns any Registrable Securities, the Company will not enter into any agreement
that is inconsistent with or violates the rights granted hereunder to the Holders of Registrable Securities, including, without limitation, any agreement that would require the Company to register any of its securities with priority with respect to
registration over, the rights granted to the Holders hereunder, without the prior written consent of the Holders of a majority of the Registrable Securities issued or issuable upon conversion of the Series A Preferred Stock held by the Holders
(voting as a single class and on an as-converted to Common Stock basis). This Agreement amends and supersedes in its entirety the Investor Rights Agreement.
12
(b) Remedies. Any Person having rights under any provision of this Agreement will be
entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance
and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement; provided, however, that in no event shall any Holder have the right to enjoin, delay or interfere with any offering of
securities by the Company, if such enjoinment, delay, or interference is not required to reasonably prevent the violation of any breach of any provision of this Agreement or any law or regulation by the Company with respect to any such offering,
after reasonable notice and the opportunity to cure are provided to the Company.
(c) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Holders of a majority of the Registrable Securities; provided, however, that without the prior written
consent of all the Holders, no such amendment or waiver shall reduce the foregoing percentage required to amend or waive any provision of this Agreement.
(d) Successors and Assigns. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of Holders of Registrable Securities are also for the benefit
of, and enforceable by, any permitted transferee of Registrable Securities, in accordance with Section 10 hereof.
(e)
Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be in any way affected or impaired thereby.
(f) Counterparts and Facsimile. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be
deemed to be an original instrument, but all such counterparts together shall constitute one agreement. This Agreement may be signed and delivered to the other party by facsimile transmission or other electronic means; such transmission shall be
deemed a valid signature.
(g) Descriptive Headings. The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(h) Governing Law;
Disputes. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters, in accordance with the internal laws of the
Commonwealth of Massachusetts (without reference to the conflicts of law provisions thereof that would require the application of laws of any other jurisdiction).
(i) Notices. All notices, demands and requests of any kind to be delivered to any party in connection with this Agreement shall be in
writing and shall be deemed to have been duly given if personally or hand delivered or if sent by internationally-recognized overnight courier or by regis-
13
tered or certified mail, return receipt requested and postage prepaid, or by facsimile transmission, addressed as follows:
If to the Company, to:
BG
Medicine, Inc.
880 Winter Street, Suite 210
Waltham, MA 02451
Attention:
President
Facsimile: 781-895-1119
with a copy to:
Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attention:
William T. Whelan, Esq.
Facsimile: (617) 542-2241
if to a Holder, then to such Holder’s address listed on Schedule A.
or to such other address as the party to whom notice is to be given may have furnished to the other party hereto in writing in accordance with provisions of
this Section 14(i). Any such notice or communication shall be deemed to have been effectively given (i) in the case of personal or hand delivery, on the date of such delivery, (ii) in the case of an internationally-recognized
overnight delivery courier, on the second business day after the date when sent or earlier upon receipt of evidence of acceptance of delivery, (iii) in the case of mailing, on the fifth business day following that day on which the piece of mail
containing such communication is posted and (iv) in the case of facsimile transmission, on the date of telephone confirmation of receipt.
(j) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement of the parties with regard to the
subject matter hereof and supersedes all prior agreements and understandings among the parties with respect thereto.
[Signature pages
follows]
14
IN WITNESS WHEREOF, the parties have executed this Fifth Amended and Restated Investor
Rights Agreement as of the date first written above.
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| COMPANY: |
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| BG MEDICINE, INC. |
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| By: |
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/s/ Paul R. Sohmer, M.D. |
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Name: |
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Paul R. Sohmer, M.D. |
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Title: |
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President and Chief Executive Officer |
IN WITNESS WHEREOF, the parties have executed this Fifth Amended and Restated Investor
Rights Agreement as of the date first written above.
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| HOLDERS: |
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| FLAGSHIP VENTURES: |
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| APPLIED GENOMIC TECHNOLOGY CAPITAL FUND, L.P.; |
| AGTC ADVISORS FUND, L.P. |
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| Each by its General Partner, AGTC Partners, L.P. |
| By its General Partner, NewcoGen Group Inc. |
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| By: |
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/s/ Noubar B. Afeyan, Ph.D. |
|
|
Noubar B. Afeyan, Ph.D. |
|
|
President |
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| FLAGSHIP VENTURES FUND 2007, L.P. |
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| By its General Partner, Flagship Ventures 2007 General Partner, LLC |
|
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| By: |
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/s/ Noubar B. Afeyan, Ph.D. |
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|
Noubar B. Afeyan, Ph.D. |
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|
Manager |
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| ONELIBERTY VENTURES 2000 L.P.; |
| ONELIBERTY ADVISORS FUND 2000 L.P. |
| Each by its General Partner, OneLiberty Partners 2000, LLC |
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| By: |
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/s/ Edwin M. Kania, Jr. |
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Edwin M. Kania, Jr. |
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Managing Member |
2
IN WITNESS WHEREOF, the parties have executed this Fifth Amended and Restated Investor
Rights Agreement as of the date first written above.
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| By: |
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/s/ Stelios Papadopoulos |
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STELIOS PAPADOPOULOS |
3
Schedule A
Stockholders
ONELIBERTY VENTURES
2000, L.P.
ONELIBERTY ADVISORS 2000, L.P.
c/o Edwin M.
Kania, Jr.
One Memorial Drive, 7th Floor
Cambridge, MA
02142
APPLIED GENOMIC TECHNOLOGY CAPITAL FUND, L.P.
AGTC
ADVISORS FUND, L.P.
FLAGSHIP VENTURES FUND 2007, L.P.
c/o
Noubar B. Afeyan, Ph.D.
One Memorial Drive, 7th Floor
Cambridge, MA 02142
STELIOS PAPADOPOULOS
3 Somerset Drive South
Great Neck, NY 11020
4
Exhibit 99.1
BG Medicine Announces Payoff of Secured Term Loan
WALTHAM, Mass., July 15, 2015 (GLOBE NEWSWIRE) — BG Medicine, Inc. (Nasdaq:BGMD), the developer of the BGM Galectin-3® Test, announced today that it has paid off its secured term loan facility with General Electric Capital Corporation and Comerica Bank.
The secured term loan in the aggregate principal amount of $10 million was funded to BG Medicine in February 2012. BG Medicine has been making
monthly principal and interest payments on this loan since August 2013. With today’s payoff, all security interests that had been granted to the secured lenders are now released and discharged.
“The payoff of the secured term loan facility and elimination of the associated cash burn was an important milestone for BG Medicine and will allow us to
invest additional operating cash to grow our business,” said Paul R. Sohmer, M.D., President and Chief Executive Officer of BG Medicine. “Fulfilling this key objective was an essential step in our plan to redirect critical resources to
support our role in the U.S. market introduction of automated galectin-3 testing, which became available in the U.S. earlier this month.”
About BG Medicine, Inc.
BG Medicine,
Inc. (Nasdaq:BGMD), the developer of the BGM Galectin-3® Test, is focused on the development and delivery of diagnostic solutions to aid in the clinical management of heart failure and
related disorders. For additional information about BG Medicine, heart failure and galectin-3 testing, please visit www.BG-Medicine.com.
The BG Medicine Inc. logo is available for download here.
Forward-Looking Statements
This press release contains
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the anticipated benefits of the payoff of the secured term loan facility on our
ability to grow our business. These forward-looking statements are neither promises nor guarantees of future performance, and are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, which could cause
actual results to differ materially from those contemplated in these forward-looking statements. These risks and uncertainties include, among other things, the factors discussed under the heading “Risk Factors” contained in BG
Medicine’s annual report and quarterly reports filed with the Securities and Exchange Commission. All information in this press release is as of the date of the release, and BG Medicine disclaims any obligation to update the
information contained in this press release as new information becomes available.
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| CONTACT: |
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Stephen Hall, EVP & Chief Financial Officer |
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(781) 890-1199 |
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