EX-4.6 8 d254016dex46.htm SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Exhibit 4.6
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of this day of , 2010, by and between Cancer Genetics, Inc., a Delaware corporation (the “Company”), and the party listed on the Schedule of Purchaser attached hereto as Schedule I (the “Purchaser”). The Company and the Purchaser are sometimes referred to herein individually, as a “Party” and collectively, as the “Parties.”
1. AGREEMENT TO PURCHASE AND SELL SECURITIES; POTENTIAL CASH PENALTIES.
pursuant to this Agreement, each Purchaser shall be paid a cash penalty (the “Penalty”). The Penalty that shall be payable to each Purchaser shall be one percent (1.00%) of the original issue price of the Series B Preferred Stock, for the first thirty (30) day period following the expiration of the Merger Period in which the Merger shall not have been consummated (the “First Penalty Period”), and an additional two percent (2.00%) of the original issue price of the Series B Preferred Stock, for each successive thirty (30) day period following the First Penalty Period, pro rated daily up to a maximum Penalty amount of eleven percent (11.0%) per annum. Such Penalty shall be payable to each Purchaser semiannually on June 30 and December 31 of each year. (b) If the common stock of the Public Company is not traded on a national exchange or on the OTCBB upon closing of the Merger, the Company will file all required documents necessary for it to begin trading on a national exchange or the OTCBB, and commencing fifteen (15) months from the final Closing Date, if the shares of the Public Company are not trades on a national exchange or the OTCBB, then holders of the Series B Preferred Stock shall be entitled to a same cash fee as described above.
3.1 Organization, Qualifications and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as presently conducted by it, to enter into and perform this Agreement, the investors’ rights agreement with the Purchaser and the other parties named therein, in the form attached as Exhibit B (the “Amended and Restated Investors’ Rights Agreement”), the stockholders’ agreement with the Purchaser and the other parties named therein, in the form attached as Exhibit C (the “Amended and Restated Stockholders’ Agreement,” together with the Amended and Restated Investors’ Rights Agreement and this Agreement, the “Transaction Documents”), and to carry out the transactions contemplated by the Transaction Documents. The Company has full corporate power and authority to issue and deliver the Conversion Shares. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the failure to qualify would have a material adverse effect upon the business, assets, financial condition or results of operations of the Company (a “Material Adverse Effect”).
3.2 Capitalization. The capitalization of the Company immediately following the filing of the Amended and Restated Certificate of Incorporation with the Delaware Secretary of State shall consists of the following:
(b) Common Stock. A total of Twenty-Four Million (24,000,000) authorized shares of Common Stock, $0.0001 par value per share (the “Common Stock”), of which Six Million One Hundred Fifty Six Thousand Four Hundred Two (6,156,402) shares will be issued and outstanding.
(e) Pre-emptive Rights. Except as expressly contemplated by the Transaction Documents, no person has any preemptive right, right of first refusal or similar right to acquire capital stock of the Company in connection with the purchase and sale of the Purchased Shares or issuance of the Conversion Shares.
(i) Shareholders of the Company. A complete and correct schedule of the classes of the holders of the issued and outstanding capital stock of the Company, and the number of shares of capital stock beneficially owned by such classes, is set forth on Exhibit 3.2(i) attached hereto.
3.4 Authorization of Agreements, Etc.
(a) All corporate action on the part of the Company’s directors and stockholders necessary for: (i) the authorization, execution, delivery of, and the performance of all obligations of the Company under the Transaction Documents; (ii) the authorization, issuance, reservation for issuance and delivery of all of the Purchased Shares being sold under this Agreement and of the Conversion Shares; and (iii) the filing of the Amended and Restated Certificate of Incorporation has been taken or will be taken prior to the Closing.
(b) The Transaction Documents, when executed and delivered, will constitute, valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as may be limited by: (i) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors’ rights generally; and (ii) the effect of rules of law governing the availability of equitable remedies.
case of filings, be made within the time prescribed by law.
(a) Set forth in the Schedule of Exceptions is a list and brief description (if applicable) of (i) all domestic and foreign patents, patent rights, patent applications, trademarks, trademark applications, service marks, service xxxx applications, internet domain names, trade names and copyrights, and all applications for such which are in the process of being prepared, owned by or registered in the name of the Company, or of which the Company is a licensor or licensee or in which the Company has any right, and in each case a brief description (if applicable) of the nature of such right, and (ii) all licenses and other agreements with third parties (such licenses being herein referred to collectively as the “Third Party Licenses”) relating to any software, copyrights, technology, know-how or processes that the Company has been licensed or is otherwise authorized by such third parties to use, market, distribute or incorporate into products distributed or services provided by the Company (such software, technology, know-how and processes being collectively referred to as “Third Party Technology”), provided that the Company need not list on the Schedule of Exceptions any shrink-wrap or (“off-the-shelf”) software that is generally commercially available (“Shrinkwrap Software”).
(b) Except as set forth in the Schedule of Exceptions, to the Company’s knowledge, the Company is the sole owner or is the valid licensee and has the right, free and clear of all liabilities, charges, liens, pledges, mortgages, restrictions, adverse claims, security interests, rights of others and encumbrances (including, without limitation, distribution rights), to use all material patents, trademarks, copyrights, service marks, and applications and registrations therefor, and all trade names, internet domain names, web sites, customer lists, trade secrets, manufacturing or proprietary processes and formulae, inventions, know-how and other confidential and proprietary information, including, without limitation, the Third Party Technology and any Shrinkwrap Software used by it (collectively, “Intellectual Property”), necessary to permit the Company to conduct its business as presently conducted, and the Company is not limited or restricted in its ability to bring infringement actions in any federal court of the United States with respect to the patents, trademarks, copyrights and service marks listed on the Schedule of Exceptions. To the Company’s knowledge, no other person or entity is infringing, violating or misappropriating any of the Intellectual Property that the Company owns. The foregoing representation as it relates to Third Party Technology is limited to the Company’s interest pursuant to the Third Party Licenses, all of which are valid and enforceable and in full force and effect and which grant the Company such rights to Third Party Technology as are employed in or necessary to the business of the Company as conducted. All of the Company’s registered patents, trademarks and copyrights in any of the Company’s products or services and applications therefor, if any, are valid and in full force and effect, and consummation of the transactions contemplated hereby will not alter or impair any such rights.
(c) To the knowledge of the Company, none of the activities or business conducted by the Company or proposed to be conducted by the Company infringes, violates or constitutes a misappropriation of, or in the past infringed, violated or constituted a misappropriation of, any Intellectual Property of any other person or entity. The Company has not received any complaint, claim or notice alleging any infringement, violation or misappropriation, and to the knowledge of the Company, threatened by any third party against the Company for any such complaint, claim or notice. Except as set forth in the Schedule of Exceptions, no claim is pending or, to the Company’s knowledge, threatened to the effect that any such Intellectual Property owned or licensed by the Company, or which the Company otherwise has the right to use, is invalid or unenforceable by the Company.
(d) To the Company’s knowledge, all technical information developed by and belonging to the Company, which has not been patented, has been kept confidential. Except as set forth in the Schedule of Exceptions, the Company has not granted or assigned to any third party any right to
manufacture, assemble, reproduce, distribute, market, license or exploit any of its products or services or any adaptations, translations, or derivative works based on any of its products.
(e) Except as set forth in the attached Schedule of Exceptions, the Company is not under any contractual obligation to provide indemnification with respect to any form of intangible property, including any Intellectual Property (except Shrinkwrap Software used by the Company in the ordinary course of business).
(f) Anything contained herein to the contrary notwithstanding, no representation or warranty is being made hereunder by the Company with respect to any content or information accessible through hyperlinks from the Company’s web sites on the internet to third party web sites on the internet or such third parties’ Intellectual Property rights or other rights of any person related to such content or information.
(a) The Schedule of Exceptions lists all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar fringe or employee benefit plans, programs or arrangements, and any current or former employment or executive compensation or severance agreements, written or otherwise, for the benefit of, or relating to, any employee of the Company, any trade or business (whether or not incorporated) which is a member or which is under common control of the Company within the meaning of Section 414 of the Code (an “ERISA Affiliate”), or any Subsidiary (together, the “Company Employee Plans”).
(b) To the best knowledge of the Company: (i) each Company Employee
Plan has been maintained in substantial compliance with its terms, and all contributions, premiums or other payments due from the Company or any of its subsidiaries to (or under) any such Company Employee Plan have been fully paid or adequately provided for on the Financial Statements (as subsequently defined) for the most recently ended fiscal year; (ii) all accruals thereon have been made in accordance with applicable law; and (iii) there has been no amendment, written interpretation or announcement by the Company with respect to, or change in employee participation or coverage under, any Company Employee Plan that would increase materially the expense of maintaining such plans or arrangements, individually or in the aggregate, above the level of expense incurred with respect thereto for the most recently ended fiscal year.
(a) material adverse change in the Company’s business, condition, assets, liabilities or operations, and, to the best of the knowledge of the Company, no event has occurred that could reasonably be expected to have a Material Adverse Effect on the Company;
(b) transaction by the Company except in the ordinary course of business;
(c) capital expenditure by the Company, individually or in the aggregate, exceeding One Hundred Thousand Dollars ($100,000.00);
(d) indebtedness incurred or guaranteed for borrowed money or any other liabilities in excess of One Hundred Thousand Dollars ($100,000.00);
(e) acquisition or sale of any asset of the Company, except in the ordinary course of business;
(f) loan by the Company to any person or entity, or guaranty by the Company of any loan; or
(g) negotiations or agreement by the Company to do any of the things described in the preceding clauses (a) through (f).
practices.
4.2 Purchase for Investment; Purchaser Experience. The Purchaser:
(a) is (i) an “accredited investor” as defined in Rule 501 (a) promulgated under Regulation D of the Securities Act and was not organized for the specific purpose of acquiring the Purchased Shares, unless such person qualifies as an accredited Purchaser under subparagraph (a)(8) of Rule 501;
(b) is in a financial position to hold the Purchased Shares for an indefinite period of time and is able to bear the economic risk and withstand a complete loss of its investment in the Purchased Shares;
(c) has such knowledge and experience in financial and business matters that the Purchaser is capable of reading and interpreting financial statements and evaluating the merits and risks of the prospective investment in the Purchased Shares and has the net worth to undertake such risks;
(d) believes that the investment in the Purchased Shares is suitable for the Purchaser based upon the Purchaser’s investment objectives and financial needs, and the Purchaser has adequate means for providing for the Purchaser’s current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Purchased Shares;
(e) has been given access to full and complete information regarding the Company and has utilized such access to the Purchaser’s satisfaction for the purpose of obtaining information the Purchaser believes to be relevant in making its investment decision and, particularly, the Purchaser has either attended or been given reasonable opportunity to attend a meeting with representatives of the Company for the purpose of asking questions of, and receiving answers from, such representatives
concerning the Company and to obtain any additional information, to the extent reasonably available, the Purchaser believes to be relevant in making its investment decision;
(f) recognizes that an investment in the Purchased Shares involves a high degree of risk, including, but not limited to, the risk of economic losses from operations of the Company;
(g) realizes that (i) the purchase of the Purchased Shares and the Conversion Shares is a long-term investment; (ii) the purchaser of the Purchased Shares must bear the economic risk of investment for an indefinite period of time because the Purchased Shares have not been registered under the Securities Act, or under the securities laws of any state and, therefore, none of such securities can be sold unless they are subsequently registered under said laws or exemptions from such registrations are available, and there can be no assurance that any such registration will be effected at any time in the future; (iii) the Purchaser may not be able to liquidate the Purchaser’s investment in the event of an emergency or pledge any of such securities as collateral for loans; and (iv) the transferability of the Purchased Shares is restricted and (A) requires the written consent the Company and (B) legends will be placed on the certificate(s) representing the Purchased Shares referring to the applicable restrictions on transferability;
(h) has not retained any finder, broker, agent, financial advisor, Purchaser Representative (as defined in Rule 501(h) of Regulation D of the Securities Act) or other intermediary in connection with the transactions contemplated by this Agreement and agrees to indemnify and hold harmless the Company from any liability for any compensation to any such intermediary retained by the Purchaser and the fees and expenses of defending against such liability or alleged liability; and
(i) has relied upon its own financial advisors and counsel in determining the merits of investing in the Purchased Shares and understands that the Purchased Shares may never be publicly traded on any securities exchange.
(a) there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or
(b) the Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition, and, at the expense of the Purchaser or its transferee, with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such securities under the Securities Act.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be required: (i) for any transfer of any Purchased Shares or Conversion Shares in compliance with Rule 144 or Rule 144A under the Securities Act, or (ii) for any transfer of any Purchased Shares or Conversion Shares by a Purchaser that is a partnership or a corporation to (A) a partner of such partnership or stockholder of such corporation, (B) a controlled affiliate of such partnership or corporation, (C) a retired partner of such partnership who retires after the date hereof, (D) the estate of any such partner or stockholder, or (iii) for the transfer by gift, will or intestate succession by any Purchaser to his or her spouse or lineal descendants or ancestors or any trust for any of the foregoing; provided that in each of the foregoing cases the transferee agrees in writing to be subject to the terms of this Section 4 (other than Section 4.2(a)) to the same extent as if the transferee were an original Purchaser hereunder, or with consent of the Company.
by the Purchaser was incomplete and was intended only to give the Purchaser a general idea of the Company’s future intentions. The Purchaser acknowledges that the Company reserves the right to deviate from the plans set forth therein and that the Company is in the early stages of development and therefore its future plans are highly speculative. The Purchaser acknowledges that any projections contained in the business plan or confidential private placement memorandum: (a) were based on various assumptions by management, that may have changed or which may prove to be not correct and that such assumptions are inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and (b) were based upon assumptions with respect to future business decisions that are subject to change. The Purchaser acknowledges that the Purchaser was encouraged to consult with the management of the Company at greater length and in more depth concerning the Company’s future business plans and has done so to the extent desired.
5.3 Supporting Documents. The Purchaser shall have received copies of the following documents:
(a) the Amended and Restated Certificate of Incorporation, certified as of the Closing Date, by the Secretary of State of the State of Delaware, and a certificate of said Secretary, dated as of a recent date, as to the due incorporation and good standing of the Company; and
(b) Amended and Restated Investor’s Rights Agreement. The Amended and Restated Investor’s Rights Agreement shall have been executed and delivered by the Company, the Series B Preferred Stock, and the holders of at least a majority of the holders of the Series A Preferred Stock.
before the Closing, of each of the following conditions by the Purchaser:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”
within the meaning of that term as defined in Rule 144(a)(3). Whenever any of such restrictions terminate as to any Restricted Securities, the holder thereof will be entitled to receive from the Company, at the Company’s expense, new certificates representing such Shares, without the restrictive legend set forth in Section 7.3.
8.7 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws principles thereof.
8.8 Severability. If any provision of this Agreement is determined by any court or
arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the Parties. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement.
(a) If to the Purchaser, at its address as set forth on Schedule I to this Agreement, or at such other address as may have been furnished to the Company by it in writing.
(b) If to the Company at:
Cancer Genetics, Inc.
000 Xxxxx 00 Xxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
with a copy to:
Xxxxxxx & Xxxx, LLP
00 Xxxxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
under or by reason of this Agreement.
[Signature Page to Follow]
COMPANY | ||||
CANCER GENETICS, INC. | ||||
By: | ||||
Name: | Xxxxx X. Xxxxxx | |||
Title: | General Counsel | |||
PURCHASER | ||||
If an individual: | ||||
[Signature] | ||||
[Print name] | ||||
If an entity, insert name of entity: | ||||
By: | ||||
Name: | ||||
Title: |
List of Schedules
Schedule I | - | Schedule of Purchaser | ||
Schedule II | - | Schedule of Exceptions | ||
Schedule 3.2(i) | - | Classes of Shareholders of the Company | ||
Schedule 3.21 | - | Financial Statements | ||
List of Exhibits | ||||
Exhibit A | - | Amended and Restated Certificate of Incorporation | ||
Exhibit B | - | Amended and Restated Investors’ Rights Agreement | ||
Exhibit C | - | Amended and Restated Stockholders’ Agreement |
SCHEDULE I
Schedule of Purchaser
If an individual is the purchaser, insert name:
_____________________________
If an individual is the purchaser, insert address:
_____________________________
_____________________________
_____________________________
If an entity is the purchaser, insert name:
_____________________________
If an entity is the purchaser, insert address:
_____________________________
_____________________________
_____________________________
Insert number of shares purchased and total purchase price | Price Per Share | Number of Shares | Total Purchase Price | |||||
$ | 5.00 |
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CANCER GENETICS, INC.
Under Section 242 and 245 of the General Corporation Law of the State of Delaware
Cancer Genetics, Inc. (hereinafter called the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “GCL”), does hereby certify as follows:
1. The name of the Corporation is Cancer Genetics, Inc.
2. The date of filing of the Corporation’s original certificate of incorporation is April 8, 1999 (the “Certificate of Incorporation”). The Certificate of Incorporation was amended and restated on April 17, 2007 (the “April 2007 Amended and Restated Certificate of Incorporation”).
3. This amended and restated certificate of incorporation (“Amended and Restated Certificate of Incorporation”), which restates, integrates and further amends the April 2007 Amended and Restated Certificate of Incorporation of the Corporation, has been duly adopted in accordance with Section 242 and 245 of the GCL.
4. The Certificate of Incorporation hereby is amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is Cancer Genetics, Inc.
SECOND: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. The Corporation is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained.
THIRD: The office of the Corporation is to be located in the County of Bergen, State of New Jersey.
FOURTH: Its registered office in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 , Xxxxxx of New Castle.
FIFTH: The total number of shares of ail classes of stock that the Corporation shall have authority to issue is 32,000,000 shares, which shall consist of two classes: (i) common stock, par value $0.0001 per share (“Common Stock”); and (ii) preferred stock, par value $0,0001 per share (“Preferred Stock”). The total number of shares of each class of capital stock which the Corporation shall have authority to issue is 24,000,000 shares of Common Stock and 8,000,000 shares of Preferred Stock. The rights, preferences, privileges and restrictions granted to and imposed on the Common Stock and Preferred Stock are as follows:
1. Common Stock
1.1 Relative Rights
Each share of Common Stock shall have the same relative rights as and be identical in all respects to all the other shares of Common Stock.
1.2 Dividends
Whenever there shall have been paid, or declared and set aside for payment to the holders of shares of any class of stock having preference over the Common Stock as to the payment of dividends, the full amount of dividends and of sinking fund or retirement payments, if any, to which such holders are respectively entitled in preference to the Common Stock, then dividends may be paid on the Common Stock and on any class or series of stock entitled to participate therewith as to dividends, out of any assets legally available for the payment of dividends thereon, but only when, as and if declared by the board of directors of the Corporation (the “Board of Directors”).
1.3 Dissolution, Liquidation, Winding Up
In the event of any dissolution, liquidation, or winding up of the Corporation, whether voluntary or involuntary, the holders of the Common Stock, and holders of any class or series of stock entitled to participate therewith, in whole or in part, as to the distribution of assets in such event, shall become entitled to participate in the distribution of any assets of the Corporation remaining after the Corporation shall have paid, or provided for payment of, all debts and liabilities of the Corporation and after the Corporation shall have paid, or set aside for payment, to the holders of any class of stock having preference over the Common Stock in the event of dissolution, liquidation or winding up the full preferential amounts, if any, to which they are entitled.
1.4 Voting Rights.
Each holder of shares of Common Stock shall be entitled to attend all special and annual meetings of the stockholders of the Corporation and, share for share and without regard to class, together with the holders of all other classes of stock entitled to attend such meetings and to vote (except any class or series of stock having special voting rights), to cast one vote for each outstanding share of Common Stock so held upon any matter or thing (including, without limitation, the election of one or more directors) properly considered and acted upon by the stockholders.
2. Preferred Stock
2.1 Designation.
(a) Series A Convertible Preferred Stock and Series B Convertible Preferred Stock. The Preferred Stock shall be divided into series. The first series of Preferred Stock is designated and known as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”) and shall consist of Five Hundred Eighty-Eight Thousand (588,000) shares. The second series of Preferred Stock is designated and known as “Series B Convertible Preferred Stock” (the “Series B Preferred Stock”) and shall consist of Two Million (2,000,000) shares.
(b) Designation of Additional Series of Preferred Stock. Except as otherwise provided in this Amended and Restated Certificate of Incorporation, the Board of Directors is expressly authorized to provide for the issue of all, or any, of the remaining shares of Preferred Stock in one or more series, and to fix the number of shares and to determine such voting powers, full or limited, or no voting powers, and such designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereon, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such shares and as may be permitted by the GCL. Except as otherwise provided in this Amended and Restated Certificate of Incorporation, and any other agreements to which the Corporation is a party, the Board of Directors is also expressly authorized to increase the number of shares of any series of Preferred Stock, other than the Series A Preferred Stock and Series B Preferred Stock subsequent to the issuance of shares of that series or to decrease (but not below the number of shares of such series then outstanding), the number of shares of any series of Preferred Stock subsequent to the issuance of shares of that series. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status of authorized but unissued shares of Preferred Stock.
2.2 Rank.
The Series A Preferred Stock and the Series B Preferred Stock shall, with respect to dividend rights, and rights on liquidation, dissolution and winding up of the affairs of the Corporation, rank senior to the Common Stock and to all other classes and series of equity securities of the Corporation hereafter issued which are not by their terms expressly senior to, or on parity with, the Series A Preferred Stock and the Series B Preferred Stock with respect to dividend rights, and rights on liquidation, dissolution and winding up of the affairs of the Corporation.
3. Dividend Rights
3.1 The holders of the then outstanding Series A Preferred Stock and Series B Preferred Stock shall be entitled to receive dividends, when, as and if declared by the Board of Directors on the Common Stock, out of any funds and assets of the Corporation legally available therefore.
3.2 Whenever a dividend provided for in this Section 3 shall be payable in property other than cash, the value of such dividend shall be deemed to be the fair market value of such property as determined in good faith by the Board of Directors.
4. Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets that may be legally distributed to the Corporation’s stockholders (the “Available Funds and Assets”) shall be distributed to stockholders in the following manner:
4.1 Series A Preferred Stock and Series B Preferred Stock. The holder of each share of Series A Preferred Stock and Series B Preferred Stock then outstanding shall be entitled to be paid, out of the Available Funds and Assets, and prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any Available Funds and Assets on any shares of the Common Stock, an amount per share equal to the per share purchase price of the Series A Preferred Stock and Series B Preferred Stock, as the case may be (the “Original Issue Price”) (as adjusted for stock splits, stock dividends, combinations or the like) (the “Liquidation Preference”). If upon any liquidation, dissolution or winding up of the Corporation, the Available Funds and Assets shall be insufficient to permit the payment to holders of the Series A Preferred Stock and Series B Preferred Stock of their full preferential amount described in this Section 4.1, the entire Available Funds and Assets shall be distributed among the holders of the then outstanding Series A Preferred Stock and Series B Preferred Stock on a proportionate basis, calculated by dividing by the Original Issue Price paid by a holder of Series A Preferred Stock or Series B Preferred Stock, by the aggregate Original Issue Price paid by the holders of the Series A Preferred Stock and the Series B Preferred Stock In lieu of the Liquidation Preference, the holders of Series A Preferred Stock and Series B Preferred Stock may elect to convert their Series A Preferred Stock and Series B Preferred Stock into shares of Common Stock pursuant to Section 6, in which case they will share ratably in the distribution of the assets of the Corporation pursuant to Section 4.2 hereof.
4.2 Remaining Assets. If there are any Available Funds and Assets remaining after the payment or distribution (or the setting aside for payment or distribution) to me holders of the Series A Preferred Stock and Series B Preferred Stock of the Liquidation Preference described above in this Section 4, then all such remaining Available Funds and Assets shall be distributed pro rata among the holders of the Common Stock.
4.3 Merger or Sale of Assets. Any (a) reorganization, consolidation or merger (or similar transaction or series of transactions) of the Corporation with or into any other corporation or corporations in which the holders of the Corporation’s outstanding shares immediately before such transaction or series of related transactions do not, immediately after such transaction or series of related transactions, retain stock representing a majority of the voting power of the surviving corporation (or its parent corporation if the surviving corporation is wholly owned by the parent corporation) of such transaction or series of related transactions, or (b) a sale of all, or substantially all, of the assets of the Corporation shall each be deemed to be a liquidation, dissolution or winding up of the Corporation as those terms are used in this Section 4 unless holders of a majority of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock each vote as a class that this Section 4.3 shall not apply.
4.4 Non-Cash Consideration.
(a) If any assets of the Corporation distributed to shareholders in connection with any liquidation, dissolution, or winding up of the Corporation are other than cash or securities, then the value of such assets shall be their fair market value as determined by the Board of Directors, in good faith.
(b) If any assets of the Corporation distributed to shareholders in connection with any liquidation, dissolution or winding up of the Corporation are securities then the value of such assets shall be determined by the Board of Directors in good faith:
(i) The method of valuation of securities not subject to investment letter or other similar restrictions on free marketability shall be as follows:
(A) unless otherwise specified in a definitive agreement for the acquisition of the Corporation, if the securities are then traded on a national securities exchange or listed on the Nasdaq National Market (or a similar national quotation system), then the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the thirty (30) day period ending three (3) days prior to the distribution; and
(B) if (A) above does not apply but the securities are actively traded over-the-counter, then, unless otherwise specified in a definitive agreement for the acquisition of the Corporation, the value shall be deemed to be the average of the closing bid prices over the thirty (30) calendar day period ending three (3) trading days prior to the distribution; and
(C) if there is no active public market, then the value shall be the fair market value thereof, as determined in good faith by the Board of Directors.
(ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability shall be to make an appropriate discount from the market value determined as above in Section 4.4(b)(i)(A)(B) or (C) to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors.
5.1 Series A Preferred Stock and Series B Preferred Stock. Each bolder of shares of Series A Preferred Stock and Series B Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which such shares of Preferred Stock could be converted pursuant to the provisions of Section 6 below as of the record date for the determination of the stockholders entitled to vote on such matters or, if no such record date is established, the date such vote is taken or any written consent of stockholders is solicited.
(a) amend or change the rights, preferences or privileges of the Series A Preferred Stock or Series B Preferred Stock; or
(b) create any other class of capital stock of the Corporation having rights, preferences or privileges senior to, or on parity with, the shares of Series A Preferred Stock or Series B Preferred Stock.
(a) At the option of the holder thereof, each share of Series A Preferred Stock and Series B Preferred Stock shall be convertible, at any time, or from time to time, into fully paid and nonassessable shares of Common Stock as provided herein.
(b) Each holder of Series A Preferred Stock and Series B Preferred Stock who elects to convert the same into shares of Common Stock shall surrender the certificate(s) therefor, duly endorsed, at the office of the Corporation or any transfer agent for the Series A Preferred Stock, Series B Preferred Stock or Common Stock, and shall give written notice to the Corporation at such office that such holder elects to convert the same and shall state therein the number of shares of Preferred Stock being converted. Thereupon the Corporation shall promptly issue and deliver at such office to such holder a certificate(s) for the number of shares of Common Stock to which such holder is entitled upon such conversion. Such conversion shall be deemed to have been made immediately prior to fee close of business on the date of such surrender of the certificate(s) representing the shares of Series A Preferred Stock and Series B Preferred Stock to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock on such date. If a conversion election under this Section 6.1 is made in connection with an underwritten offering of the Corporation’s securities, or registration in connection with a reverse merger, pursuant to the Securities Act of 1933, as amended (the “Securities Act”) (which underwritten offering does not cause an automatic conversion pursuant to Section 6.2 to take place), the conversion may, at the option of the holder tendering shares of Series A Preferred Stock and Series B Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of the Corporation’s securities pursuant to such offering, in which event the holders making such election who are entitled to receive Common Stock upon conversion of their Series A Preferred Stock and Series B Preferred Stock shall not be deemed to have converted such shares of Series A Preferred Stock and Series B Preferred Stock until immediately prior to the closing of such sale of the Corporation’s securities in fee offering.
(a) Each share of Series A Preferred Stock and Series B Preferred Stock shall automatically be converted into fully paid and nonassessable shares of Common Stock, as provided herein, upon the earlier of (i) the closing of an underwritten public offering pursuant to an effective registration statement in connection with an initial public offering with gross proceeds of $25,000,000 or more, or (ii) the date which is twelve months following the consummation of a reverse merger of the Company with a public company that files reports wife the SEC under fee Securities Exchange Act of 1934 and the shares are sellable under Rule 144, or (iii) the date of effectiveness of a registration statement of all of the common shares issuable upon the conversion of the Series B Preferred Stock, provided, however, to the extent that any underlying shares cannot be registered then the Series B Preferred stock shall convert only to fee extent of the registered convertible portion or (iv) upon the vote of the holders of not Jess than a sixty-six and two-thirds percent (66 2/3rd%) of fee then outstanding shares of Series A Preferred Stock and Series B Preferred Stock, each voting as a separate class.
(b) Upon the occurrence of any event specified in Section 6.2(a) (i), (ii), or (iii), the outstanding shares of Series A Preferred Stock and Series B Preferred Stock shall be converted into Common Stock automatically without the need for any further action by fee holders of such shares and whether or not the certificates representing such shares arc surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless fee certificates evidencing such shares of Series A Preferred Stock and Series B Preferred Stock are either delivered to the Corporation or its transfer agent as provided below, or the holder notifies the Corporation or its transfer agent feat such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. Upon the occurrence of such automatic conversion of the Series A Preferred Stock and Series B Preferred Stock, fee holders of Series A Preferred Stock and Series B Preferred Stock shall surrender the certificates representing such shares at the office of the Corporation or any transfer agent for fee Series A Preferred Stock, Series B Preferred Stock or Common Stock. Thereupon, there shall be issued and delivered 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 Series A Preferred Stock and Series B Preferred Stock surrendered were convertible on the date on which such automatic conversion occurred.
(a) the numerator of which shall be the number of shares of Common Stock issued and outstanding immediately prior to such Common Stock Event, and
(b) the denominator of which shall be the number of shares of Common Stock issued and outstanding immediately after such Common Stock Event.
The Conversion Price for the Series A Preferred Stock and the Series B Preferred Stock shall be readjusted in the same manner upon the happening of each subsequent Common Stock Event. As used herein, the term the “Common Stock Event” shall mean at any time or from time to time after the date on which the first share of Series A Preferred Stock is issued by the Corporation (the “Original Issue Date”), (i) the issue by the Corporation of additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock, or (iii) a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock.
6.8 Sale of Shares Below Conversion Price.
(i) If at any time, or from time to time, after the Original Issue Date of the Series A Preferred Stock, the Corporation issues or sells, or is deemed by the provisions of this Section 6.8 to have issued or sold, Additional Shares of Common Stock, otherwise than in connection with a Common Stock Event as provided in Section 6.4, a dividend or distribution as provided in Section 6.5, a recapitalization, reclassification or other change as provided in Section 6.6, or a reorganization, merger or consolidation as provided in Section 6.7, for an Effective Price (as defined in Section 6.8(c)(v)) that is less than the Conversion Price of the Series A Preferred Stock in effect immediately prior to such issue or sale (or deemed issue or sale), then, and in each such case, the Conversion Price of the Series A Preferred Stock shall be reduced, as of the close of business on the date of such issue or sale to the price obtained by multiplying such Conversion Price of the Series A Preferred Stock by a fraction:
(A) The numerator of which shall be the sum of (I) the number of Common Stock Equivalents Outstanding (as hereinafter defined) immediately prior to such issue or sale of Additional Shares of Common Stock, plus (2) the quotient obtained by dividing:
(x) the Aggregate Consideration Received (as hereinafter defined) by the Corporation for the total number of Additional Shares of Common Stock so issued or sold (or deemed so issued and sold), by
(y) the Conversion Price of the Series A Preferred Stock in effect immediately prior to such issue or sale; and
(B) The denominator of which shall be the sum of (1) the number of Common Stock Equivalents Outstanding immediately prior to such issue or sale, plus (2) the number of Additional Shares of Common Stock so issued or sold (or deemed so issued and sold).
(ii) If at any time or from time to time after the Original Issue Date of the Series B Preferred Stock, the Corporation issues or sells, or is deemed by the provisions of this Section 6.8 to have issued or sold, Additional Shares of Common Stock, otherwise than in connection with a Common Stock Event as provided in Section 6.4, a dividend or distribution as provided in Section 6.5, a recapitalization, reclassification or other change as provided in Section 6.6, or a reorganization, merger or consolidation as provided in Section 6.7, for an Effective Price (as defined in Section 6.8(c)(v)) that is less than the Conversion Price for the Series B Preferred Stock in effect immediately prior to such issue or sale (or deemed issue or sale), then, and in each such case, the Conversion Price of the Series B Preferred Stock shall be reduced, as of the close of business on the date of such issue or sale to the price paid for each share of Additional Shares of Common Stock issued or sold (or deemed so issued or sold).
(c) Certain Definitions. For the purpose of making any adjustment required under this Section 6.8:
(i) The “Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Corporation, whether or not subsequently reacquired or retired by the Corporation, other than:
(A) any shares of Common Stock issued or issuable upon conversion of the outstanding shares of the Series A Preferred Stock and Series B Preferred Stock;
(B) any shares of Common Stock (or Rights or Options (as defined in clause (vi)) granted or issued hereafter by the Board of Directors to employees, officers, directors, contractors, consultants or advisers to, the Corporation or any subsidiary pursuant to incentive agreements, stock purchase or stock option plans, stock bonuses or awards, warrants, contracts or other arrangements that arc approved by the Board of Directors pursuant to the Stock Option Plan as defined herein, provided however, (other than 100,000 shares (in the form of options or other awards)) that any such awards under the Stock Option Plans are at a price of not less than the Conversion Price of the Series B Preferred Stock;
(C) any shares of the Corporation’s Common Stock or Preferred Stock (or Rights or Options) issued or issuable to parties that are (i) non affiliated strategic partners investing in connection with a material commercial transaction with the Corporation or (ii) up to 30,000 shares issuable non affiliated third party providing the Corporation with equipment leases, cash price reductions, under arrangements, in each case, approved by the Corporation’s Board of Directors;
(D) Intentionally Omitted.
(E) any shares of Common Stock or Preferred Stock issuable upon exercise of any options, warrants or rights to purchase any securities of the Corporation outstanding as of the date of this Amended and Restated Certificate of Incorporation and any securities issuable upon the conversion thereof;
(F) any shares of Common Stock issued pursuant to a transaction described in Section 6.4 hereof;
(G) any shares of Common Stock issued or issuable in a public offering prior to or in connection with which all outstanding shares of Preferred Stock will be converted to Common Stock; and
(H) any shares of Common Stock or Preferred Stock (or Rights or
Options), issued or issuable hereafter that are (1) approved by the Board of Directors, and (2) approved by the vote of the holders of a at least 66 and 2/3 percent of the Series A Preferred Stock and the Series B Preferred Stock, each voting as a single class, as being excluded from the definition of “Additional Shares of Common Stock” under this Section 6.8(b).
(ii) The “Aggregate Consideration Received” by the Corporation for any issue or sale (or deemed issue or sale) of securities shall (A) to the extent it consists of cash, be computed at the gross amount of cash received by the Corporation before deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Corporation in connection with such issue or sale and without deduction of any expenses payable by the Corporation, (B) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in a manner consistent with Section 4.4, and (C) if Additional Shares of Common Stock, Convertible Securities or Rights or Options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Corporation for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such Additional Shares of Common Stock, Convertible Securities or Rights or Options.
(iii) The “Common Stock Equivalents Outstanding” shall mean the number of shares of Common Stock that is equal to the sum of (A) all shares of Common Stock of the Corporation that are outstanding at the time in question, plus (B) all shares of Common Stock of the Corporation issuable upon conversion of all shares of Preferred Stock or other Convertible Securities that are outstanding at the time in question, plus (C) all shares of Common Stock of the Corporation that are issuable upon the exercise of Rights or Options that are outstanding at the time in question assuming the full conversion or exchange into Common Stock of all such Rights or Options that are Rights or Options to purchase or acquire Convertible Securities.
(iv) The “Convertible Securities” shall mean stock or other securities convertible into or exchangeable for shares of Common Stock.
(v) The “Effective Price” of Additional Shares of Common Stock shall mean the quotient determined by dividing the total number of Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold, by the Corporation under this Section 6.8, into the Aggregate Consideration Received, or deemed to have been received, by the Corporation under this Section 6.8, for the issue of such Additional Shares of Common Stock; and
(vi) The “Rights or Options” shall mean warrants, options or other rights to purchase or acquire shares of Common Stock or Convertible Securities.
(vii) The “Stock Option Plan” shall mean the stock option plan of the Corporation as in effect of the date hereof, pursuant to which the Corporation has been permitted to reserve 2,750,000 shares of Common Stock of the Company.
(i) if the minimum amounts of such consideration cannot be ascertained, but are a function of antidilution or similar protective clauses, men the Corporation shall be deemed to have received the minimum amounts of consideration without reference to such clauses;
(ii) if the minimum amount of consideration payable to the Corporation upon the exercise of Rights or Options or the conversion or exchange of Convertible Securities is reduced over time or upon the occurrence or non-occurrence of specified events other than by reason of antidilution or similar protective adjustments, then the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; and
(iii) if the minimum amount of consideration payable to the Corporation upon the exercise of such Rights or Options or the conversion or exchange of Convertible Securities is subsequently increased, then the Effective Price shall again be recalculated using the increased minimum amount of consideration payable to the Corporation upon the exercise of such Rights or Options or the conversion or exchange of such Convertible Securities.
No further adjustment of the Conversion Price, adjusted upon the issuance of such Rights or Options or Convertible Securities, shall be made as a result of the actual issuance of shares of Common Stock on the exercise of any such Rights or Options or the conversion or exchange of any such Convertible Securities. If any such Rights or Options or the conversion rights represented by any such Convertible Securities shall expire without having been fully exercised, then the Conversion Price as adjusted upon the issuance of such Rights or Options or Convertible Securities shall be readjusted to the Conversion Price which would have been in effect had an adjustment been made on the basis that the only shares of Common Stock so issued were the shares of Common Stock, if any, that were actually issued or sold on the exercise of such Rights or Options or rights of conversion or exchange of such Convertible Securities, and such shares of Common Stock, if any, were issued or sold for the consideration actually received by the Corporation upon such exercise, plus the consideration, if any, actually received by the Corporation for the granting of all such Rights or Options, whether or not exercised, plus the consideration received for issuing or selling all such Convertible Securities actually converted or exchanged, plus the consideration, if any, actually received by the Corporation (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion or exchange of such Convertible Securities, provided that such readjustment shall not apply to prior conversions of Series A Preferred Stock and Series B Preferred Stock
SIXTH: The following provisions, each of which are subject to the limitations set forth herein and in such other agreements to which the Corporation is a party, are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
(a) The number of directors of the Corporation shall be such as from time to time shall be fixed by, or in the manner provided in the by-laws.
(b) The Board of Directors of the Corporation shall have the power to adopt, amend or repeal the by-laws of the Corporation; provided, however, that the fact that such power has been conferred upon the Board of Directors shall not divest the Corporation’s stockholders of the power, nor limit their power to adopt, amend or repeal the by-laws of the Corporation.
(c) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this certificate, end to any by-laws from time to time made by the stockholders; provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-laws had not been made.
SEVENTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
EIGHTH: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented.
NINTH: Subject to the limitations set forth herein and in such other agreements to which the Corporation is a party, from time to time, any of the provisions of this Amended and Restated Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights and powers at any time conferred herein on stockholders, directors and officers are subject to the provisions of this Article EIGHTH.
[Signature Page To Follow]
CANCER GENETICS, INC. | ||
By: | /s/ Panna Sharma | |
Name: Panna Sharma | ||
Title: President and Chief Executive Officer |