Exhibit 3.1
CERTIFICATE OFDESIGNATIONS,
PREFERENCES AND RIGHTSOF
SERIES GCONVERTIBLE PREFERRED STOCK,
$0.00001 PARVALUEPER SHARE
ActiveCare,Inc., acorporation organizedand existing under thelaws of the State ofDelaware (the“Company”), hereby certifies that thefollowing resolution was adopted by theBoard ofDirectors of the Company (the“Board”) on November 1, 2016, inaccordance with the provisions of itsCertificate ofIncorporation (as amended, the“Certificate ofIncorporation”) and bylaws. Theauthorized series of the Company’spreviously-authorized preferred stockshall have thefollowing preferences,privileges, powersand restrictionsthereof, as follows:
RESOLVED, thatpursuant to the authority granted toand vested in the Board inaccordance with the provisions of theCertificateofIncorporation and bylaws of theCompany, theBoard herebyauthorizes aseries of theCompany’s previously authorizedpreferred stock (the“Preferred Stock”),and herebystates the designationand number ofshares, and fixes therelative rights, preferences, privileges, powersand restrictionsthereof as follows:
ActiveCare,Inc.
| | II. | DESIGNATION AND AMOUNT;DIVIDENDS |
A. Designation. Thedesignation ofsaid series ofpreferred stock shall beSeries GConvertible Preferred Stock, $0.00001par valueper share (the“Series GPreferred”).
B. Number ofShares. The number ofshares ofSeries GPreferred authorized shall be forty-three thousand two hundred twenty (43,220) shares. Each share of Series G Preferred shall have a stated value equal to $500 (as may be adjusted forany stockdividends, combinations or splits withrespect tosuch shares) (the“Series GStated Value”).
C. Dividends. Initially, there will be no dividends which accrue or are otherwise due or payable on the Series G Preferred. Any future terms with respect to dividends shall be determined by the Board consistent with the Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate of Designations, which the Board shall promptly file or cause to be filed.
| | III. | LIQUIDATIONPREFERENCE |
The Series G Preferred shall have no liquidation preference.
A. Conversion Amount.The Series G Preferred shall automatically convert into fully paid and non-assessable shares of Common Stock of the Company (“Conversion Shares”) at the Series G Stated Value of such shares, together with declared, accrued but unpaid dividends, if any (collectively, “Conversion Amount”) upon the occurrence of any of the events set forth in Section IV B. below. The number of Conversion Shares issuable upon such automatic conversion shall equal the Conversion Amount divided by the Conversion Price then in effect. The “Conversion Price” of the Series G Preferred shall initially be $22.50, subject to adjustment as set forth below. Nofractional shares of Common Stockshall be issued upon conversion of Series G Preferred.Inlieu of anyfractional share to which the holder wouldotherwise beentitled, the Company shallround up to thenearest wholeshare.In order to convertSeries GPreferred intoshares of Common Stock, theHolder shallsurrender thecertificateor certificatestherefor,duly endorsed, to theofficeof theCompany, and shall give written notice to the Companyat suchoffice that the holderelects toconvert the same, the number ofshares ofSeries GPreferred soconverted and acalculation of theConversion Price (with an advance copy of thecertificate(s) and thenoticebyfacsimile); provided, however, that the Company shall not beobligated to issue certificatesevidencing shares of Common Stockissuable uponsuch conversion unlesssuch sharesofSeries GPreferred are delivered to the Companyas providedabove, or the Holdernotifies the Company or itstransfer agent thatsuchcertificateshave been lost,stolenordestroyed and executesan agreement satisfactory to the Companyand itstransfer agent to indemnify the Company fromany lossincurred by it in connection withsuch certificates.
B. Automatic Conversion. The Series G Preferred will automatically convert into Conversion Shares (“Automatic Conversion”) upon (i) the Company’s receipt of Fifty Million Dollars (US$50,000,000) or more in gross revenue in a single fiscal year, (ii) the sale of the Company via asset purchase, stock sale, merger or other business combination in which the Company and/or its stockholders receive aggregate gross proceeds of Twenty-Five Million Dollars (US$25,000,000) or more, or (iii) the closing of an underwritten offering (the “Qualified Offering”) by the Company pursuant to which the Company receives aggregate gross proceeds of at least Ten Million Dollars (US$10,000,000) in consideration of the purchase of shares of Common Stock and/or which results in the listing of the Company’s common stock on the Nasdaq National Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT. Upon the triggering of an Automatic Conversion, all of the shares of Series G Preferred owned by such Holder will convert into Conversion Shares at the Conversion Price then in effect. Upon the triggering of Automatic Conversion, the Company shallsend written notice (the “AutomaticConversion Notice”) toeach holder ofrecordofSeries GPreferred specifying thedate (the“Effective Date”) uponwhich such conversionis tobecome effective (whichEffective Date shall not bemorethan thirty (30)days after theevent which causes such automatic conversion) and to surrender to the Company, in the manner and at the place designed in the Automatic Conversion Notice, the certificate or certificates, if applicable, representing the number of shares of Series GPreferred heldbysuch Holder.In the event of an Automatic Conversion as a result of a Qualified Offering, the Holder will execute and deliver, as a condition to the Company’s issuance and delivery of the shares underlying the Automatic Conversion, a lock-up agreement covering a period of 365 days beginning on the date of the Qualified Offering (the “Lock-up Period”), in form and substance reasonably required by the Company and/or the underwriter for the Qualified Offering. On or after the Effective Date, each holder of Series G Preferred shall surrender to the Company the certificate orcertificates representing theSeries GPreferred, if applicable, ownedbysuch holderas of theEffective Date in themanner and place set forth in theAutomatic Conversion Noticeand thereupon the Company shall,as soonas practicable thereafter, issueand deliver to theholdersof theSeries GPreferred either cash orcertificate(s) for the number of shares of Common Stock issuable in connection with such Automatic Conversion.
C. Certain Adjustments. In the event that the outstanding shares of Common Stock shall be subdivided (by forward stock split, stock dividend or other like occurrence) into a greater number of shares of Common Stock, and no equivalent subdivision or increase is made with respect to the Series G Preferred, the Conversion Price then in effect shall, concurrently with the effectiveness of such subdivision or other increase, be proportionately decreased. In the event that the outstanding shares of Common Stock shall be combined or consolidated into a lesser number of shares of Common Stock (by reverse split or otherwise), and no equivalent combination or consolidation is made with respect to the Series G Preferred, the Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.
Allshares of theSeries GPreferred shall rank (i) senior to theCompany’s Common Stockandany otherclass orseriesofcapital stock of the Company hereaftercreated, the terms ofwhich specifically provide thatsuch class orseries shall rank junior to theSeries GPreferred (each of thesecurities in clause (i) collectivelyreferred toas “JuniorSecurities”),(ii)pari passuwith the Company’s Series D and Series E classes of preferred stock, (iii)pari passu withanyclass orseries ofcapital stock of the Companyhereafter created and specificallyranking,by itsterms, onpar with theSeries GPreferred and (iv) junior to anyclassorseries ofcapital stock of the Companyhereafter created specificallyranking,by itsterms, senior to theSeries GPreferred, ineach case as to dividend distributions ordistributions ofassets uponliquidation, dissolutionor winding up of theCompany, whether voluntaryorinvoluntary.
Theholders of our Series GPreferred will votetogether with theholders of theCompany’s Common Stock onan as converted basis oneach matter submitted to a vote ofholders of CommonStock. The number of votes that may becast by a holder ofSeries GPreferred shall beequal to the number of ConversionShares issuable uponconversion ofsuch Holder’s Series GPreferred on therecord date fordetermining thosestockholders entitled to vote on thematter.
Inaddition, theaffirmative vote of the holders of a majority of theCompany’s outstanding Series G Preferred isrequired to (i)amend theCompany’s certificate ofincorporation orbylaws in a way that would beadverse to theholders of theCompany’s Series G Preferred, (ii)effect a liquidationevent, (iii)declare or paydividends (other currently outstanding preferred stock and Series G Preferred),and(iv)and issue anysecurities in parity or senior to therights of theSeries G Preferred withrespect todividend distributions ordistributions ofassets upon liquidation,dissolution or winding up of theCompany.
A. Status ofRedeemed Stock.Incaseanyshares ofSeries G Preferred shall beredeemed orotherwise repurchased or reacquired, theshares so redeemed,repurchased,orreacquired shall resume the status ofauthorized but unissued shares ofpreferred stock,and shall nolonger bedesignated asSeries G Preferred.
B. LostorStolen Certificates. Uponreceiptby the Companyof (i)evidence of the loss,theft, destruction ormutilation of anyPreferred Stock Certificate(s)and (ii) in the case of loss,theft or destruction, indemnity (with a bond or othersecurity) reasonably satisfactory to theCompany, or in thecase ofmutilation, thePreferred StockCertificate(s) (surrenderedforcancellation), the Companyshall execute and delivernew Preferred StockCertificates.
C. Waiver. Notwithstandingany provision in thisCertificateofDesignation to thecontrary,any provisioncontained herein andanyright of the holders ofSeries G Preferred granted hereundermay be waivedas toall shares ofSeries G Preferred (and theholders thereof) upon theunanimous written consent of the holders of theSeries G Preferred.
D. Notices.Anynotices required or permitted to begiven under theterms hereof shall besentbycertified orregistered mail(return receipt requested) ordelivered personally,by nationally recognized overnight carrier or by confirmed facsimile transmission, and shall be effective five (5)days after beingplaced in the mail, if mailed, orupon receipt orrefusal ofreceipt, ifdelivered personallyorby nationallyrecognized overnight carrier orconfirmed facsimile transmission, in each caseaddressed to a partyas set forth below, orsuch otheraddress and telephone and fax numberasmay be designated inwriting hereafter in thesame manner as setforth in thisSection.
If to theCompany:
ActiveCare, Inc.
1365 West Business Park Drive
Suite 100
Orem, Utah 84058
Attention: Jeffrey Peterson Telephone: (877) 219-6050
If to theholders ofSeries G Preferred, to theaddress listed in the Company’s booksand records.
INWITNESS WHEREOF, theundersigned has signed this certificateas of the 31stday of January, 2017.
| | ACTIVECARE, INC. |
| | | |
| | By: | /s/ Jeffrey Peterson |
| | Name: | Jeffrey Peterson |
| | Title: | ChiefExecutive Officer |
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