AMENDED
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES F CONVERTIBLE PREFERRED STOCK
OF
IMMUNOMEDICS, INC.
Immunomedics, Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Company by the Certificate of Incorporation, as amended, of the Company, and
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
(A) on December 7, 1998 the Company filed a Certificate of Designation,
designating the preferences and rights of the Series F Convertible Preferred
Stock (the "Original Designation"), (B) as of the date hereof no shares of
preferred stock have been issued pursuant to the Original Designation and (C)
the Board of Directors of the Company at a meeting duly held adopted resolutions
(i) authorizing a series of the Company's previously authorized preferred stock,
par value $.01 per share, and (ii) providing for the designations, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of 2,000 shares of Series F Convertible
Preferred Stock of the Company (which shall amend and restate the Original
Designation), as follows:
RESOLVED, that the Company is authorized to issue 2,000 shares
of Series F Convertible Preferred Stock (the "Preferred Shares"), par
value $.01 per share, which shall have the following powers,
designations, preferences and other special rights:
(1) Dividends. The Preferred Shares shall not bear and dividends.
(2) Holder's Conversion of Preferred Shares. A holder of
Preferred Shares shall have the right, at such holder's option, to convert the
Preferred Shares into shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), on the following terms and conditions:
(a) Conversion Right. Subject to Section 2(j),
at any time or times on or after the Issuance Date (as defined below), any
holder of Preferred Shares shall be entitled to convert any whole number of
Preferred Shares into fully paid and nonassessable shares (rounded to the
nearest whole share in accordance with Section 2(h)) of Common Stock, at the
Conversion Rate (as defined below); provided, however, that in no event shall
any holder be entitled to convert Preferred Shares in excess of that number of
Preferred Shares which, upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and
its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such conversion. For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Preferred Shares with respect to which the determination of
such proviso is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) conversion of the remaining, nonconverted
Preferred Shares beneficially owned by the holder and its affiliates, and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any warrants) subject
to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the holder and its affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 2(a), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of
1934, as amended.
(b) Conversion Rate. The number of shares
of Common Stock issuable upon conversion of each of the Preferred Shares
pursuant to Sections (2)(a) and 2(g) and Section 5 shall be determined according
to the following formula (the
"Conversion Rate"):
Conversion Amount
Conversion Price
For purposes of this Certificate of Designations, the following terms
shall have the following meanings:
(i) "Conversion Price" means, on a per
share basis, as of the Conversion Date (as defined below) or other date of
determination of the applicable Preferred Shares (A) the Variable Conversion
Price (as defined below) when the Variable Conversion Price is less than the
Trigger Price (as defined below) provided, however, that prior to the date which
is the earlier of ((alpha)) 365 days after the Initial Issuance Date (as defined
below) and ((beta)) a date on which a Triggering Event, a Major Transaction or
the public announcement of a pending Major Transaction (each as defined below)
occur, if the Variable Conversion Price on a Conversion Date is greater than 90%
of the Initial Fixed Price (as defined below) and less than the Trigger Price,
then the Conversion Price shall equal the Trigger Price, (B) the Trigger Price
when the Variable Conversion Price is equal to or greater than the Trigger Price
and less than or equal to 150% of the Trigger Price or (C) the Profit-Sharing
Conversion Price (as defined below) when the Variable Conversion Price is
greater than 150% of the Trigger Price;
(ii) "Variable Conversion Price" means, as
of any date of determination, the average of the 15 lowest Closing Bid Prices
(as defined below) of the Common Stock during the 45 consecutive trading days
immediately preceding a date of determination;
(iii) "Profit-Sharing Conversion Price"
means, as of any date of determination, the amount determined according to the
following formula:
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Profit-Sharing Conversion Price =
Trigger Price + Variable Conversion Price -(1.5 x Trigger Price)
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(iv) "Conversion Amount" means, on a per
share basis, the sum of (A) the
Additional Amount (as defined below), unless the Company has exercised its
option to pay such amount in cash, and (B) $10,000;
(v) "Additional Amount" means, on a per
share basis the result of the following formula: (.04)(N/365)($10,000);
(vi) "Initial Fixed Price" means, with
respect to (A) Preferred Shares issued on the Initial Issuance Date (I) on any
date prior to the Fixed Conversion Price Trigger Date, $4.00 and (II) on any
Conversion Date on or after the Fixed Conversion Price Trigger Date, the lesser
of the average of the Closing Bid Prices for the Common Stock during the 20
consecutive trading days immediately preceding (y) the Fixed Conversion Price
Trigger Date and (z) the date which is 180 days after the Initial Issuance Date
or (B) Preferred Shares issued after the Initial Issuance Date, the average of
the Closing Bid Prices of the Common Stock during the five consecutive trading
days immediately preceding the Put Share Notice Date (as defined in the
Securities Purchase Agreement), subject in each case to adjustment as provided
herein. Notwithstanding the foregoing, should there occur one or more Excluded
Redemption Events (as defined in Section 3) which results in a change to the
Initial Fixed Price of the Preferred Shares as in effect immediately prior to
the occurrence of such Excluded Redemption Events pursuant to Section 3, the
Initial Fixed Price shall mean the lesser of ((alpha)) the Initial Fixed Price
as defined above and ((beta)) the Initial Fixed Price following such Excluded
Redemption as determined pursuant to Section 3.
(vii) "Trigger Price" means 125% of the
Initial Fixed Price, as adjusted;
(viii) "Fixed Conversion Price Trigger Date"
means, the earlier of (I) the
date that is 180 days after the Initial Issuance Date and (II) if the
stockholders have not approved of the issuance of the Preferred Shares and the
Conversion Shares (as defined below) pursuant to Section 4(l) of the Securities
Purchase Agreement on or prior to the date which is 105 days after the Initial
Issuance Date, then the date which is 105 days after the Initial Issuance Date;
(ix) "N" means the number of days from, but
excluding, the Issuance Date
of the applicable Preferred Share through and including the Conversion Date or
the Maturity Date for the Preferred Shares for which conversion and/or
redemption is being elected, as the case may be;
(x) "Issuance Date" means, with respect to
each Preferred Share, the date of issuance of the applicable Preferred Share;
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(xi) "Initial Issuance Date" means the first
date on which any Preferred Shares are issued by the Company;
(xii) "Business Day" means any day other
than Saturday, Sunday or other day on which commercial banks in the City of New
York are authorized or required by law to remain closed;
(xiii) "Securities Purchase Agreement" means
that certain securities purchase agreement between the Company and the initial
holders of the Preferred Shares;
(xiv) "Registration Rights Agreement" means
that certain registration rights agreement between the Company and the initial
holders of the Preferred Shares relating to the filing of a registration
statement covering the resale of the Conversion Shares;
(xv) "Conversion Shares" means shares of
Common Stock issuable upon conversion of Preferred Shares and any shares of
Common Stock issuable as Registration Delay Payments (as defined in the
Registration Rights Agreement);
(xvi) "Closing Bid Price" means, for any
security as of any date, the last closing bid price for such security on The
Nasdaq National Market (as reported by Bloomberg Financial Markets
("Bloomberg")), or, if The Nasdaq National Market is not the principal
trading market for such security, the average of the high and low trading prices
on such date of such security on the principal securities exchange or trading
market where such security is listed or traded (as reported by Bloomberg), or if
the foregoing do not apply, the average of the high and low trading prices on
such date of such security in the over-the-counter market on the electronic
bulletin board for such security (as reported by Bloomberg). If the Closing Bid
Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as mutually determined by the Company and the holders of a
majority of the outstanding Preferred Shares (including for purposes of this
determination any Preferred Shares with respect to which the Closing Bid Price
is being determined). If the Company and the holders of Preferred Shares are
unable to agree upon the fair market value of the Common Stock, then such
dispute shall be resolved pursuant to Section 2(f)(iii). (All such
determinations to be appropriately adjusted for any stock dividend, stock split
or other similar transaction during such period);
(c) Company's Option to Pay Additional Amount in
Cash. Upon conversion pursuant to Sections 2(a) or 2(g) or Section 5, the
Company shall have the right to elect to pay the Additional Amount in cash, in
lieu of conversion to Common Stock. If the Company elects to pay the Additional
Amount in cash, such cash shall be paid simultaneously with the delivery to the
holder of the certificates representing the Common Stock issuable upon
conversion in accordance with Section 2(f) or upon the credit to the holder's or
its designees account with the Depository Trust Company. In order to exercise
its right to pay any Additional Amount in cash, the Company must advise each
holder of Preferred Shares in writing (the
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"Cash Dividend Notice") that the Additional Amount shall be paid in cash until
such time as the Company shall terminate the Cash Dividend Notice by providing
at least five Business Days prior written notice of such termination (the
"Termination Notice"). The Cash Dividend Notice shall set forth the effective
date of the Cash Dividend Notice, which date shall be at least five Business
Days after the date the Cash Dividend Notice is deemed to have been delivered
pursuant to Section 20. The Termination Notice shall be effective on the fifth
Business Day after the date the Termination Notice is deemed to have been
delivered pursuant to Section 20 unless a later date shall be specified in the
Termination Notice.
(d) Adjustment to Conversion Price -- Dilution
and Other Events. In order to prevent dilution of the rights granted under this
Certificate of Designations, the Initial Fixed Prices, the Trigger Price and the
Conversion Price will be subject to adjustment from time to time as provided in
this Section 2(d).
(i) Adjustment of Initial Fixed Price
upon Issuance of Common Stock. Except as provided in Section 2(d)(iv), if and
whenever on or after the Initial Issuance Date, the Company issues or sells, or
is deemed to have issued or sold, any shares of Common Stock (other than
Preferred Shares or shares of Common Stock issued upon conversion of Preferred
Shares or deemed to have been issued by the Company in connection with an
Approved Stock Plan (as defined below) or the Excluded Securities (as defined
below)) for a consideration per share less than a price (the "Applicable Price")
equal to a Trigger Price in effect immediately prior to such issuance or sale,
then immediately after such issue or sale, the Initial Fixed Price then in
effect, which relates to such Trigger Price, shall be reduced to an amount equal
to (a) if such issuance or sale or deemed issuance or sale was for a security
which has both a Variable Price (as defined below) and a Set Price (as defined
below) component and the holders of the Preferred Shares either did not exercise
their rights to participate, or were excluded from participating, in such
issuance or sale pursuant to Section 4(g) of the Securities Purchase Agreement,
then the product of (A) .80 and (B) such consideration per share received and
(b) if such issuance or sale or deemed issuance or sale was for a security other
than as described in the immediately preceding clause (a), then the product of
(y) the Initial Fixed Price in effect immediately prior to such issue or sale
and (z) the quotient determined by dividing (1) the sum of (I) the product of
the Applicable Price and the number of shares of Common Stock Deemed Outstanding
(as defined below) immediately prior to such issue or sale, and (II) the
consideration, if any, received by the Company upon such issue or sale
(excluding the consideration received or to be received from the holders of the
Preferred Shares pursuant to the exercise of their right to participate pursuant
to Section 4(g) of the Securities Purchase Agreement), by (2) the product of (I)
the Applicable Price and (II) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale (excluding those shares issued
or deemed to be issued to the holders of the Preferred Shares pursuant to the
exercise of their right to participate pursuant to Section 4(g) of the
Securities Purchase Agreement). For purposes of determining the adjusted Initial
Fixed Price under this Section 2(d)(i), the following shall be applicable:
(A) Issuance of Options. If
and whenever on or after the Initial Issuance Date, the Company in any
manner grants any rights or options to subscribe for or to purchase
Common Stock (other than the Excluded Securities or pursuant to an
Approved Stock Plan or upon conversion of the Preferred Shares) or any
stock or other securities convertible into or exchangeable for Common
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Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities is less than the Applicable
Price, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options at the time of issuance of
such Options (without regard to limitations on exercise, conversion or
exchange) shall be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For purposes of this
Section 2(d)(i)(A), the "price per share for which Common Stock is
issuable upon exercise of such Options or upon conversion or exchange
of such Convertible Securities" is determined by dividing (I) the
total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company
upon the exercise of all such Options at the time of issuance of such
Options (without regard to limitations on exercise, conversion or
exchange), plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange
thereof, by (II) the total maximum number of shares of Common Stock
issuable upon exercise of such Options at the time of issuance of such
Options (without regard to limitations on exercise, conversion or
exchange) or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. Except as set
forth in Section 2(d)(i)(C) below, no adjustment of the Initial Fixed
Prices shall be made upon the actual issuance of such Common Stock or
of such Convertible Securities upon the exercise of such Options or
upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(B) Issuance of Convertible
Securities. If and whenever on or after the Initial Issuance Date, the
Company in any manner issues or sells any Convertible Securities and
the price per share for which Common Stock is issuable upon such
conversion or exchange is less than the Applicable Price, then the
maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities at the time of issuance of
such Convertible Securities (without regard to limitations on
exercise, conversion or exchange) shall be deemed to be outstanding
and to have been issued and sold by the Company for such price per
share. For the purposes of this Section 2(d)(i)(B), the "price per
share for which Common Stock is issuable upon such conversion or
exchange" is determined by dividing (I) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof at the time of issuance of such
Convertible Securities (without regard to limitations on exercise,
conversion or exchange), by (II) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities at the time of issuance of such Convertible
Securities (without regard to limitations on exercise, conversion or
exchange). Except as set forth in Section 2(d)(i)(C) below, no
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adjustment of an Initial Fixed Prices shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustment of an Initial Fixed Prices had been or are to be made
pursuant to other provisions of this Section 2(d)(i), no further
adjustment of such Initial Fixed Prices shall be made by reason of
such issue or sale.
(C) Change in Option Price
or Rate of Conversion. If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable
for Common Stock change at any time, the Initial Fixed Price of any
Preferred Shares in effect at the time of such change shall be
readjusted to the Initial Fixed Price which would have been in effect
at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold; provided that no adjustment
shall be made if such adjustment would result in an increase of such
Initial Fixed Price then in effect.
(D) Certain Definitions. For
purposes of determining the adjusted Initial Fixed Price under this
Section 2(d)(i), the following terms have the meanings set forth
below:
(I) "Approved Stock Plan"
shall mean any contract, plan or agreement which is approved by the
Board of Directors of the Company, pursuant to which the Company's
securities (including stock appreciation rights, phantom stock rights
or other rights with equity features) may be issued to any employee,
officer, director, consultant or other service provider.
(II) "Common Stock Deemed
Outstanding" means, at any given time, the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of
Common Stock deemed to be outstanding pursuant to Sections 2(d)(i)(A)
and 2(d)(i)(B) hereof regardless of whether the Options or Convertible
Securities are actually exercisable at such time, but excluding any
shares of Common Stock issuable upon conversion of the Preferred
Shares.
(III) "Excluded Securities"
means any security of the Company issued after November 17, 1998 and
prior to December 31, 1998 pursuant to the terms of the Structured
Equity Line Flexible Financing Agreement, between Cripple Creek, a
Delaware limited liability company and the Company (as such agreement
is attached to the Securities Purchase Agreement as Exhibit E).
(IV) "Set Price" means,
with respect to the conversion, exchange, or exercise price of any
security, a price which has the possibility of not varying with the
market price of the Common Stock.
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(E) Effect on Initial Fixed
Price of Certain Events. For purposes of determining the adjusted
Initial Fixed Price under this Section 2(d)(i), the following shall be
applicable:
(I) Calculation of
Consideration Received. If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be the
net amount received by the Company therefor plus actual legal expenses
incurred pursuant to such issuance or sale of up to $50,000. In case
any Common Stock, Options or Convertible Securities are issued or sold
for a consideration other than cash, the amount of the consideration
other than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will
be the average of the Closing Bid Prices of such securities for the
five consecutive trading days immediately preceding the date of
receipt. In case any Common Stock, Options or Convertible Securities
are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the
Company and the holders of a majority of the Preferred Shares then
outstanding. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the
"Valuation Event") the Company shall use its best efforts to cause the
fair value of such consideration to be determined within 48 hours of
the tenth (10th) day following the Valuation Event by an independent,
reputable appraiser selected by the Company, which appraiser shall be
reasonably acceptable to two-thirds (_) of the holders of the
Preferred Shares. The determination of such appraiser shall be binding
upon all parties absent manifest error.
(II) Integrated Transactions.
In case any Option is issued in connection with the issue or sale of
other securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have
been issued for a consideration of $.01 and the aggregate
consideration received by the Company in such integrated transaction
shall be included in the adjustment calculation in Section 2(d)(i)
above.
(III) Treasury Shares. The
number of shares of Common Stock outstanding at any given time does
not include shares owned or held by or for the account of the Company,
and the disposition of any shares so owned or held will be considered
an issue or sale of Common Stock.
(IV) Record Date. If the
Company takes a record of the holders of Common Stock for the purpose
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of entitling them (1) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities, or (2)
to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(ii) Adjustment of Initial Fixed Price upon
Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, each Initial Fixed Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any time combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, each Initial
Fixed Price in effect immediately prior to such combination will be
proportionately increased.
(iii) Reorganization, Reclassification,
Consolidation, Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets to another Person (as defined below) or other transaction which
is effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock is referred to herein as
"Organic Change." Prior to the consummation of any Organic Change, the Company
will make appropriate provision (in form and substance reasonably satisfactory
to the holders of a majority of the Preferred Shares then outstanding) to insure
that each of the holders of the Preferred Shares will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
shares of Common Stock otherwise acquirable and receivable upon the conversion
of such holder's Preferred Shares, such shares of stock, securities or assets
that would have been issued or payable in such Organic Change with respect to or
in exchange for the number of shares of Common Stock which would have been
acquirable and receivable upon the conversion of such holder's Preferred Shares
had such Organic Change not taken place (without taking into account any
limitations or restrictions on the timing or amount of conversions). In any such
case, the Company will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the Preferred Shares
then outstanding) with respect to such holders' rights and interests to insure
that the provisions of this Section 2(d) and Section 2(e) will thereafter be
applicable to the Preferred Shares (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of each of the Initial Fixed
Prices to the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, if the value so reflected is less than such
Initial Fixed Price in effect immediately prior to such consolidation, merger or
sale and an immediate revision to the Initial Fixed Prices to reflect the price
of the common stock of the surviving entity and the market in which such common
stock is traded). The Company will not effect any such consolidation, merger or
sale, unless prior to the consummation thereof, the successor entity (if other
than the Company) resulting from consolidation or merger or the entity
purchasing such assets assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the Preferred Shares
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then outstanding), the obligation to deliver to each holder of Preferred Shares
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire. "Person" shall mean an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(iv) Adjustment of Variable Conversion
Price upon Issuance of Convertible Securities. If and whenever after the
Issuance Date, the Company in any manner issues or sells Convertible Securities
(other than Excluded Securities or any Convertible Securities issued in an
offering with respect to which the holders of the Preferred Shares purchased
Convertible Securities pursuant to their right to participate in such offering
pursuant to Section 4(g) of the Securities Purchase Agreement) that are
convertible into or exercisable or exchangeable for Common Stock at a price
which may vary with the market price of the Common Stock (the formulation for
such variable price being herein referred to as, the "Variable Price") and such
Variable Price is not calculated using the same formula used to calculate the
Variable Conversion Price in effect immediately prior to the time of such issue
or sale, the Company shall provide written notice thereof via facsimile and
overnight courier to each holder of the Preferred Shares ("Variable Notice") on
the date of issuance of such Convertible Securities. If the holders of Preferred
Shares representing at least two-thirds of the Preferred Shares then outstanding
provide written notice via facsimile and overnight courier (the "Variable Price
Election Notice") to the Company within five (5) Business Days of receiving a
Variable Notice that such holders desire to replace the Variable Conversion
Price then in effect with the Variable Price described in such Variable Notice,
then from and after the date of the Company's receipt of the Variable Price
Election Notice the Variable Conversion Price will automatically be replaced
with the Variable Price (together with such modifications to this Certificate of
Designations as may be required to give full effect to the substitution of the
Variable Price for the Variable Conversion Price), subject to further
adjustments as provided in this Certificate of Designations. A holder's delivery
of a Variable Price Election Notice shall serve as the consent required to amend
this Certificate of Designations pursuant to Section 15 below. In the event that
a holder delivers a Conversion Notice at any time after the Company's issuance
of Convertible Securities with a Variable Price but before such holder's receipt
of the Company's Variable Notice, then such holder shall have the option by
written notice to the Company to have the Conversion Price be equal to such
Variable Price for the conversion effected by such Conversion Notice, provided
that two-thirds of the preferred shares then outstanding have elected such
Variable Price to replace the existing Variable Conversion Price.
(v) Certain Events. If any event occurs
of the type contemplated by the provisions of this Section 2(d) but not
expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with
equity features other than pursuant to an Approved Stock Plan), then the
Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of the Preferred
Shares; provided, however, that no such adjustment will increase the Conversion
Price as otherwise determined pursuant to this Section 2(d).
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(vi) Adjustment of Initial Fixed Price
Upon Major Corporate Event Announcement. In the event (A) the Company makes a
public announcement that it intends to consolidate or merge with or into another
Person or engage in a business combination involving the issuance or exchange of
more than the Trigger Percentage (as defined below) of the Company's outstanding
Common Stock,(B) the Company makes a public announcement that it intends to sell
or transfer all or substantially all of the Company's assets, or (C) any Person
(including the Company) publicly announces a purchase, tender or exchange offer
for more than the Trigger Percentage of the Company's outstanding Common Stock
(the transactions described in clauses (A), (B) and (C) above are hereinafter
referred to as "Major Corporate Events" and the date of the announcement
referred to in clause (A), (B) or (C) is hereinafter referred to as the
"Announcement Date"), then the Initial Fixed Prices shall, effective upon the
Announcement Date and continuing through and including the Adjusted Conversion
Price Termination Date (as defined below), be equal to the Conversion Price
which would have been applicable for a conversion by the holder on the
Announcement Date. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in Section 2(b). For
purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with
respect to any proposed Major Corporate Event for which a public announcement as
contemplated by this Section 2(c)(vi) has been made, the date upon which the
Company or other Person (in the case of clause (C) above) consummates or
publicly announces the termination or abandonment of the proposed Major
Corporate Event which was the subject of the previous public announcement. The
"Trigger Percentage" means the lesser of (I) 50% and (II) the greater of (y) 30%
and (z) the percentage of shares outstanding held by David M. Goldenberg or his
spouse, their children and grandchildren or any trust which has as the sole
beneficiary any or all of the above individuals.
(vii) Notices.
(A) As soon as practicable, but in
no event later than one (1) day after any adjustment of the Conversion
Price, the Company will give written notice thereof to each holder of
the Preferred Shares, setting forth in reasonable detail and
certifying the calculation of such adjustment.
(B) The Company will give written
notice to each holder of the Preferred Shares at least ten (10) days
prior to the date on which the Company closes its books or takes a
record (I) with respect to any dividend or distribution upon the
Common Stock, (II) with respect to any pro rata subscription offer to
holders of Common Stock, or (III) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation and in no
event shall such notice be provided to such holder prior to such
information being made known to the public.
(C) The Company will also give
written notice to each holder of the Preferred Shares at least ten
(10) days prior to the date on which any Organic Change, dissolution
or liquidation will take place and in no event shall such notice be
provided to such holder prior to such information being made known to
the public.
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(e) Purchase Rights. In addition to any
adjustments of the Conversion Price pursuant to Section 2(d), if at any time
after the Initial Issuance Date the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then the holders of the Preferred Shares will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Common Stock acquirable upon complete conversion of the
Preferred Shares (without taking into account any limitations or restrictions on
the timing or amount of conversions) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of the Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(f) Mechanics of Conversion. Subject to the
Company's inability to fully satisfy its obligations under a Conversion Notice
(as defined below) as provided for in Section 4:
(i) Holder's Delivery Requirements.
To convert Preferred Shares into full shares of Common Stock on any date (the
"Conversion Date"), the holder thereof shall (A) transmit by facsimile (or
otherwise deliver), for receipt on or prior to 6:00 p.m. Eastern Time, on such
date, a copy of a fully executed notice of conversion in the form attached
hereto as Exhibit I (the "Conversion Notice") to the Company or its designated
transfer agent (the "Transfer Agent"), and (B) if required by Section 2(f)(vii),
surrender to a common carrier, for delivery to the Company as soon as
practicable following such date, the original certificate(s) representing the
Preferred Shares being converted (or an indemnification undertaking with respect
to such shares in the case of their loss, theft or destruction) (the "Preferred
Stock Certificate(s)"). Such holders of the Preferred Shares shall use their
best efforts to provide a copy of the Conversion Notice to Company counsel on
the Conversion Date and verify by telephone that the Company has received the
Conversion Notice on the Conversion Date, but the Company's obligations pursuant
to this Certificate of Designations and the Transaction Documents (as defined in
the Securities Purchase Agreement) including, but not limited to this Section
2(f), shall remain in full force and effect regardless of such holder's
compliance with the requirements of this sentence.
(ii) Company's Response. Upon receipt by
the Company of a facsimile copy of a Conversion Notice, the Company shall (A)
promptly, but in no event later than 24 hours after such receipt, send, via
facsimile, a confirmation of receipt of such Conversion Notice to such holder
and (B) on or before the second Business Day following the date of receipt,
credit such aggregate number of shares of Common Stock to which the holder shall
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be entitled to the holder's or its designee's balance account with The
Depository Trust Company; provided, however, if the holder who submitted the
Conversion Notice requested physical delivery of any or all of the Conversion
Shares, then the Company shall, on or before the third Business Day following
receipt of the Conversion Notice, issue and surrender to a common carrier for
overnight delivery to the address specified in the Conversion Notice, a
certificate, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be entitled pursuant
to such request. If the number of Preferred Shares represented by the Preferred
Stock Certificate(s) submitted for conversion is greater than the number of
Preferred Shares being converted, then the Company shall, as soon as practicable
and in no event later than two Business Days after receipt of the Preferred
Stock Certificate(s) and at its own expense, issue and deliver to the holder a
new Preferred Stock Certificate representing the number of Preferred Shares not
converted.
(iii) Dispute Resolution. In the case of
a dispute as to the determination of the Closing Bid Price or the arithmetic
calculation of the Conversion Rate, the Company shall promptly issue to the
holder the number of shares of Common Stock that is not disputed and shall
submit the disputed determinations or arithmetic calculations to the holder via
facsimile within two (2) Business Day of receipt of such holder's Conversion
Notice. If such holder and the Company are unable to agree upon the
determination of the Closing Bid Price or arithmetic calculation of the
Conversion Rate within one (1) Business Day of such disputed determination or
arithmetic calculation being submitted to the holder, then the Company shall
within one (1) Business Day submit via facsimile (A) the disputed determination
of the Closing Bid Price to an independent, reputable investment bank, or (B)
the disputed arithmetic calculation of the Conversion Rate to its independent,
outside accountant. The Company shall use its best efforts to cause the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the holder of the
results no later than forty-eight (48) hours from the time it receives the
disputed determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent manifest error.
(iv) Record Holder. The person or persons
entitled to receive the shares of Common Stock issuable upon a conversion of
Preferred Shares shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on the Conversion Date.
(v) Company's Failure to Timely Convert.
If within five Business Days after the Company's or the Transfer Agent's (as
applicable) receipt of a facsimile copy of a Conversion Notice, the Company
shall fail to issue a certificate for the number of shares of Common Stock to
which a holder is entitled or to credit the holder's balance account with The
Depository Trust Company for such number of shares of Common Stock to which the
holder is entitled upon such holder's conversion of the Preferred Shares,
pursuant to Section 2(f)(ii), in addition to all other available remedies which
such holder may pursue hereunder and under the Securities Purchase Agreement
(including indemnification pursuant to Section 8 thereof), the Company shall pay
additional damages to such holder on each date after such fifth (5th) Business
Day that such conversion is not timely effected in an amount equal to 0.5% of
the product of (A) the sum of the number of shares of Common Stock not issued to
the holder on a timely basis pursuant to Section 2(f)(ii) and to which such
holder is entitled and (B) the Closing Bid Price of the Common Stock on the last
possible date which the Company could have issued such Common Stock to such
holder without violating Section 2(f)(ii).
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(vi) Company's Failure to Issue
Certificates. If within ten Business Days after the Company's receipt of the
Preferred Stock Certificates to be converted and the Conversion Notice the
Company shall fail to issue a new Preferred Stock Certificate representing the
number of Preferred Shares to which such holder is entitled, pursuant to Section
2(f)(ii), in addition to all other available remedies which such holder may
pursue hereunder and under the Securities Purchase Agreement (including
indemnification pursuant to Section 8 thereof), the Company shall pay additional
damages to such holder on each date after such tenth (10th) Business Day that
such delivery of such Preferred Stock Certificates is not timely effected in an
amount equal to 0.5% of the product of (A) the number of shares of Common Stock
issuable upon conversion of the Preferred Shares represented by such Preferred
Stock Certificate as of the last possible date which the Company could have
issued such Preferred Stock Certificate to such holder without violating Section
2(f)(ii) and (B) the Closing Bid Price of the Common Stock on the last possible
date which the Company could have issued such Preferred Stock Certificate to
such holder without violating Section 2(f)(ii).
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(vii) Book-Entry. Notwithstanding anything
to the contrary set forth herein, upon conversion of Preferred Shares in
accordance with the terms hereof, the holder thereof shall not be required to
physically surrender the certificate representing the Preferred Shares to the
Company unless the full number of Preferred Shares represented by the
certificate are being converted. The holder and the Company shall maintain
records showing the number of Preferred Shares so converted and the dates of
such conversions or shall use such other method, reasonably satisfactory to the
holder and the Company, so as not to require physical surrender of the
certificate representing the Preferred Shares upon each such conversion. In the
event of any dispute or discrepancy, such records of the Company shall be
controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if Preferred Shares represented by a certificate are converted as
aforesaid, the holder may not transfer the certificate representing the
Preferred Shares unless the holder first physically surrenders the certificate
representing the Preferred Shares to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the holder a new certificate of
like tenor, registered as the holder may request, representing in the aggregate
the remaining number of Preferred Shares represented by such certificate. The
holder and any assignee, by acceptance of a certificate, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of any
Preferred Shares, the number of Preferred Shares represented by such certificate
may be less than the number of Preferred Shares stated of the face thereof. Each
certificate for Preferred Shares shall bear the following legend:
ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE
TERMS OF THE COMPANY'S CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE PREFERRED SHARES REPRESENTED BY
THIS CERTIFICATE, INCLUDING SECTION 2(f)(vii) THEREOF. THE
NUMBER OF PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY
BE LESS THAN THE NUMBER OF PREFERRED SHARES STATED ON THE FACE
HEREOF PURSUANT TO SECTION 2(f)(vii) OF THE CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND RIGHTS.
(g) Mandatory Conversion. If any Preferred
Shares remain outstanding on the Maturity Date (as defined below), then all such
Preferred Shares shall be converted as of such date in accordance with this
Section 2 as if the holders of such Preferred Shares had given the Conversion
Notice on the Maturity Date; provided, however, that if a Triggering Event has
occurred and is continuing on the Maturity Date, then the Company shall, within
five Business Days following the Maturity Date (unless otherwise notified in
writing by the holder of such holder's request to have the Preferred Shares
converted into Common Stock), pay to each holder of Preferred Shares then
outstanding, in immediately available funds, an amount equal to the Triggering
Event Redemption Price. All holders of Preferred Shares shall, on the Maturity
Date, surrender all Preferred Stock Certificates, duly endorsed for
cancellation, to the Company, provided that the Company has complied with its
obligations under this Section 2(g) and 2(f). Notwithstanding the foregoing, if
-15-
the Common Stock is not designated for quotation on The Nasdaq National Market
or listed on The New York Stock Exchange, Inc. but such events do not constitute
a Triggering Event, then the Maturity Date shall be extended until the Common
Stock is so designated or listed. "Maturity Date" means the date which is five
years after the applicable Issuance Date unless extended (i) as described in the
immediately preceding sentence, (ii) pursuant to Section 3(v) of the
Registration Rights Agreement, which extension shall equal two (2) days for each
day of any Grace Period (as defined in the Registration Rights Agreement) or
(iii) pursuant to Section 4(n) of the Securities Purchase Agreement, which
extension shall equal two (2) days for each day of any Underwriting Back-Up
Period (as defined in the Securities Purchase Agreement).
(h) Fractional Shares. The Company shall not
issue any fraction of a share of Common Stock upon any conversion. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one Preferred Share by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of a fraction of
a share of Common Stock. If, after the aforementioned aggregation, the issuance
would result in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up or down to the
nearest whole share.
(i) Taxes. The Company shall pay any and all
taxes which may be imposed upon it with respect to the issuance and delivery of
shares of Common Stock upon the conversion of the Preferred Shares.
(j) Conversion Restrictions. The right of a
holder of Preferred Shares to convert Preferred Shares pursuant to this Section
2 shall be limited as set forth below. Without the prior consent of the Company,
a holder of Preferred Shares shall not be entitled to (i) convert any Preferred
Shares during the period beginning on and including the Initial Issuance Date
and ending on and including the Fixed Conversion Price Trigger Date and (ii)
with respect to the Preferred Shares issued on the Initial Issuance Date (a) if
the Initial Fixed Price of such Preferred Shares is greater than or equal to
$4.00 (subject to adjustment for any stock split, stock dividend,
recapitalization or other equitable adjustment), convert more than 25% of such
Preferred Shares issued to such holder, during any calendar month (starting with
the first calendar month which ends after the Fixed Conversion Price Trigger
Date), at a Conversion Price less than 90% of such Initial Fixed Price or (b) if
the Initial Fixed Price of such Preferred Shares is less than $4.00 (subject to
adjustment for any stock split, stock dividend, recapitalization or other
equitable adjustment), convert more than 33% of such Preferred Shares issued to
such holder, during any calendar month (starting with the first calendar month
which ends after the Fixed Conversion Price Trigger Date), at a Conversion Price
less than 90% of such Initial Fixed Price or (iii) if the Initial Fixed Price is
equal to or greater than $4.00, then the holders of the Preferred Shares shall
not convert the Preferred Shares at a Conversion Price which is less than 50% of
the Initial Fixed Price unless the Closing Bid Price for any twenty (20)
consecutive day period is less than 50% of the Initial Fixed Price; provided the
number of Preferred Shares permitted to be converted each calendar month
pursuant to (i) and (ii) above shall be cumulative in that any shares permitted
to be converted in any calendar month and not so converted shall be carried over
into successive calendar months until so converted. Notwithstanding the
foregoing, the conversion restrictions set forth in this Section 2(j) shall not
apply (A) on and after any date on which the Common Stock is not listed on The
Nasdaq National Market or The New York Stock Exchange, Inc. or has been
-16-
suspended from trading (excluding suspensions of not more than one day resulting
from business announcements), or any such delisting or suspension is threatened
or pending (including, without limitation, the Company is not in compliance with
published listing requirements), (B) on or after any date on which there shall
have occurred an event constituting a Major Transaction (as defined in Section
3(c)), Triggering Event (as defined in Section 3(d)) or a Material Adverse
Change (as defined below), (C) on or after any date on which there shall have
been an announcement of a pending Major Transaction, (D) on or after any date on
which the Company issues or sells or is deemed to have issued or sold (I)
securities which result in a reduction of any Initial Fixed Price pursuant to
Section 2(d)(i) or (II) Convertible Securities that are convertible into or
exercisable or exchangeable for Common Stock at a Variable Price, or (E) on or
after the date the Company delivers a Lock-Up Request Notice (as defined in the
Securities Purchase Agreement), a Notice of Conversion at Company's Election (as
defined in Section 5) or a Notice of Redemption at Company's Election (as
defined in Section 7). "Material Adverse Change" means any change, event, result
or happening not in the normal course of the Company's business or operations
involving, directly or indirectly, the Company or any of its subsidiaries
resulting in a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(k) Adjustment of Conversion Restrictions
upon Issuance of Convertible Securities. Except as provided below, if the
Company in any manner issues or sells Convertible Securities that are
convertible into Common Stock (other than Excluded Securities or any Convertible
Securities issued in an offering with respect to which the holders of the
Preferred Shares purchased Convertible Securities pursuant to their right to
participate in such offering pursuant to Section 4(g) of the Securities Purchase
Agreement) and are subject to (i) restrictions on the amount of shares that can
be converted, or (ii) no restrictions on the amount of shares that can be
converted (the restriction on conversions or lack thereof being herein referred
to as the "Conversion Restriction"), and such Conversion Restriction is not
formulated using the same time periods and percentages used in Section 2(j),
then the Company shall provide written notice thereof via facsimile and
overnight courier to each holder of the Preferred Shares ("Conversion
Restriction Notice") on the date of issuance of such Convertible Securities. If
the holders of Preferred Shares representing at least two-thirds of the
Preferred Shares then outstanding which remain subject to the restrictions in
Section 2(j) provide written notice via facsimile and overnight courier (the
"Conversion Restriction Election Notice") to the Company within five (5)
Business Days of receiving a Conversion Restriction Notice that such holders
desire to replace the conversion restrictions set forth in Section 2(j) then in
effect with the Conversion Restriction described in such Conversion Restriction
Notice, then from and after the date of the Company's receipt of the Conversion
Restriction Election Notice the conversion restrictions set forth in Section
2(j) automatically will be replaced with the Conversion Restrictions (together
with such modifications to this Certificate of Designations as may be required
to give full effect to the substitution of the Conversion Restrictions for the
conversion restrictions set forth in Section 2(j)).
(3) Redemption at Option of Holders.
(a) Redemption Option Upon Major Transaction.
In addition to all other rights of the holders of Preferred Shares contained
herein, simultaneous with or after the occurrence of a Major Transaction (as
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defined below), each holder of Preferred Shares shall have the right, at such
holder's option, to require the Company to redeem all or a portion of such
holder's Preferred Shares at a price per Preferred Share equal to the greater of
(i) 125% of the Liquidation Value (as defined in Section 11); and (ii) the
product of (A) the Conversion Rate at such time, and (B) the Closing Bid Price
on the date of the public announcement of such Major Transaction or the next
date on which the exchange or market on which the Common Stock is traded is open
if such public announcement is made (X) after 12:00 p.m. Eastern Time, on such
date or (Y) on a date on which the exchange or market on which the Common Stock
is traded is closed (the "Major Transaction Redemption Price").
(b) Redemption Option Upon Triggering Event.
In addition to all other rights of the holders of Preferred Shares contained
herein, simultaneous with or after the occurrence of a Triggering Event (as
defined below), each holder of Preferred Shares shall have the right, at such
holder's option, to require the Company to redeem all or a portion of such
holder's Preferred Shares at a price per Preferred Share equal to the greater of
(i) 125% of the Liquidation Value; and (ii) the product of (A) the Conversion
Rate at such time, and (B) the greater of (I) the Closing Bid Price on the
trading day immediately preceding such Triggering Event or (II) the Closing Bid
Price on the date of the holder's delivery to the Company of a Notice of
Redemption at Option of Buyer Upon Triggering Event (as defined below) or, if
such date of delivery is not a trading day, the next date on which the exchange
or market on which the Common Stock is traded is open (the "Triggering Event
Redemption Price" and, collectively with the Major Transaction Redemption Price,
the "Redemption Price").
(c) "Major Transaction". Subject to the Excluded
Redemption Events (as defined below) pursuant to Section 3(h), a "Major
Transaction" shall be deemed to have occurred at such time as any of the
following events:
(i) the consolidation, merger or other
business combination of the Company with or into another Person (other than (A)
a consolidation, merger or other business combination in which holders of the
Company's voting power immediately prior to the transaction continue after the
transaction to hold, directly or indirectly, the voting power of the surviving
entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities, or (B) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company) (a "Change of
Control Transaction");
(ii) the sale or transfer of all or
substantially all of the Company's assets; or
(iii) a purchase, tender or exchange
offer made to and accepted by the holders of more than the Trigger Percentage
of the outstanding shares of Common Stock.
(d) "Triggering Event". Subject to the
Excluded Redemption Events pursuant to Section 3(h), a "Triggering Event" shall
be deemed to have occurred at such time as any of the following events:
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(i) the failure of the Registration
Statement (as defined in the Registration Rights Agreement) to be declared
effective by the SEC on or prior to the date that is 150 days after the Initial
Issuance Date;
(ii) while the Registration Statement
is required to be maintained effective pursuant to the terms of the Registration
Rights Agreement, except for any Allowable Grace Period (as defined in the
Registration Rights Agreement), the effectiveness of the Registration Statement
lapses for any reason (including, without limitation, the issuance of a stop
order) or is unavailable to the holder of the Preferred Shares for sale of the
Registrable Securities (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, and such lapse
or unavailability continues for a period of ten consecutive trading days;
(iii) suspension from listing or delisting
of the Common Stock from The Nasdaq National Market or The New York Stock
Exchange, Inc. for a period of five consecutive days;
(iv) the Company's notice to any holder
of Preferred Shares, including by way of public announcement, at any time, of
its intention not to comply with proper requests for conversion of any Preferred
Shares into shares of Common Stock, including due to any of the reasons set
forth in Section 4(a) below;
(v) the Company shall have failed to
make any Excluded Redemption Event Daily Payment (as defined below) in a timely
manner in accordance with Section 3(i) or the Company shall have failed to give
an Excluded Redemption Option Election Notice (as defined below) within one (1)
day of receipt of the Holders' Excluded Redemption Event Notice (as defined
below); or
(vi) the Company breaches any
representation, warranty, covenant or other term or condition of the Securities
Purchase Agreement, the Registration Rights Agreement, this Certificate of
Designations or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated thereby or hereby,
except to the extent that such breach would not have a Material Adverse Effect
(as defined in Section 3(a) of the Securities Purchase Agreement) and except, in
the case of a breach of a covenant which is curable, only if such breach
continues for a period of at least ten days.
(e) Mechanics of Redemption at Option of Buyer
Upon Major Transaction. No sooner than 15 days nor later than 10 days prior to
the consummation of a Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver written notice
thereof via facsimile and overnight courier (a "Notice of Major Transaction") to
each holder of Preferred Shares. At any time during the period beginning after
receipt of a Notice of Major Transaction (or, in the event a Notice of Major
Transaction is not delivered at least 10 days prior to a Major Transaction, at
any time on or after the date which is 10 days prior to a Major Transaction) and
ending on the date of such Major Transaction, any holder of the Preferred Shares
then outstanding may require the Company to redeem all or a portion of the
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holder's Preferred Shares then outstanding by delivering written notice thereof
via facsimile and overnight courier (a "Notice of Redemption at Option of Buyer
Upon Major Transaction") to the Company, which Notice of Redemption at Option of
Buyer Upon Major Transaction shall indicate (i) the number of Preferred Shares
that such holder is submitting for redemption, and (ii) the applicable Major
Transaction Redemption Price, as calculated pursuant to Section 3(a).
(f) Mechanics of Redemption at Option of Buyer
Upon Triggering Event. Within one (1) day after the occurrence of a Triggering
Event, the Company shall deliver written notice thereof via facsimile and
overnight courier (a "Notice of Triggering Event") to each holder of Preferred
Shares. At any time during the period beginning after the earlier of a holder's
receipt of a Notice of Triggering Event and such holder becoming aware of a
Triggering Event and ending on the date which is thirty (30) days after a
holder's receipt of a Notice of Triggering Event, any holder of Preferred Shares
then outstanding may require the Company to redeem all or a portion of the
holder's Preferred Shares then outstanding by delivering written notice thereof
via facsimile and overnight courier (a "Notice of Redemption at Option of Buyer
Upon Triggering Event") to the Company, which Notice of Redemption at Option of
Buyer Upon Triggering Event shall indicate (i) the number of Preferred Shares
that such holder is submitting for redemption, and (ii) the applicable
Triggering Event Redemption Price, as calculated pursuant to Section 3(b).
(g) Payment of Redemption Price. Upon the
Company's receipt of a Notice(s) of Redemption at Option of Buyer Upon
Triggering Event or a Notice(s) of Redemption at Option of Buyer Upon Major
Transaction from any holder of Preferred Shares, the Company shall promptly, but
in no event later than one (1) day following such receipt, notify each holder of
Preferred Shares by facsimile of the Company's receipt of such Notice(s) of
Redemption at Option of Buyer Upon Triggering Event or Notice(s) of Redemption
at Option of Buyer Upon Major Transaction and each holder which has sent such a
notice shall promptly submit, if required by Section(2)(f)(vii), to the Company
or its Transfer Agent such holder's Preferred Stock Certificates which such
holder has elected to have redeemed. The Company shall deliver the applicable
Triggering Event Redemption Price, in the case of a redemption pursuant to
Section 3(f), to such holder within five (5) Business Days after the Company's
receipt of a Notice of Redemption at Option of Buyer Upon Triggering Event and,
in the case of a redemption pursuant to Section 3(e), the Company shall deliver
the applicable Major Transaction Redemption Price simultaneous with the
consummation of the Major Transaction; provided that, if required by Section
2(f)(vii), a holder's Preferred Stock Certificates shall have been so delivered
to the Company; provided further that if the Company is unable to redeem all of
the Preferred Shares to be redeemed, the Company shall redeem an amount from
each holder of Preferred Shares being redeemed equal to such holder's pro-rata
amount (based on the number of Preferred Shares held by such holder relative to
the number of Preferred Shares outstanding) of all Preferred Shares being
redeemed. If the Company shall fail to redeem all of the Preferred Shares
submitted for redemption (other than pursuant to a dispute as to the arithmetic
calculation of the Redemption Price), in addition to any remedy such holder of
Preferred Shares may have under this Certificate of Designation, the Securities
Purchase Agreement and the Registration Rights Agreement, the applicable
Redemption Price payable in respect of such unredeemed Preferred Shares shall
bear interest at the rate of 1.5% per month (prorated for partial months) until
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paid in full. Until the Company pays such unpaid applicable Redemption Price in
full to a holder of Preferred Shares submitted for redemption, such holder shall
have the option (the "Void Optional Redemption Option") to, in lieu of
redemption, require the Company to promptly return to such holder(s) all of the
Preferred Shares that were submitted for redemption by such holder(s) under this
Section 3 and for which the applicable Redemption Price has not been paid, by
sending written notice thereof to the Company via facsimile (the "Void Optional
Redemption Notice"). Upon the Company's receipt of such Void Optional Redemption
Notice(s) prior to payment of the full applicable Redemption Price to such
holder, (i) the Notice(s) of Redemption at Option of Buyer Upon Triggering Event
or the Notice(s) of Redemption at Option of Buyer Upon Major Transaction, as the
case may be, shall be null and void with respect to those Preferred Shares
submitted for redemption and for which the applicable Redemption Price has not
been paid, (ii) the Company shall promptly, but in no event later than one (1)
day following such receipt, return any Preferred Shares submitted to the Company
by each holder for redemption under this Section 3(g) and for which the
applicable Redemption Price has not been paid and (iii) the Initial Fixed Price
of such returned Preferred Shares shall be adjusted to the lesser of (A) the
Initial Fixed Price as in effect on the date on which the Void Optional
Redemption Notice(s) is delivered to the Company and (B) the lowest Closing Bid
Price during the period beginning on the date on which the Notice(s) of
Redemption of Option of Buyer Upon Major Transaction or the Notice(s) of
Redemption at Option of Buyer Upon Triggering event, as the case may be, is
delivered to the Company and ending on the date on which the Void Optional
Redemption Notice(s) is delivered to the Company; provided that no adjustment
shall be made if such adjustment would result in an increase of the Initial
Fixed Price then in effect. Notwithstanding the foregoing, in the event of a
dispute as to the determination of the Closing Bid Price or the arithmetic
calculation of the Redemption Price, such dispute shall be resolved pursuant to
Section 2(f)(iii) above with the term "Redemption Price" being substituted for
the term "Conversion Rate". A holder's delivery of a Void Optional Redemption
Notice and exercise of its rights following such notice shall not effect the
Company's obligations to make any payments which have accrued prior to the date
of such notice. Payments provided for in this Section 3 shall have priority to
payments to other stockholders in connection with a Major Transaction.
(h) Events Excluded from Redemption Provisions.
Notwithstanding anything to the contrary set forth in Section 3, Section 4(a)(I)
or Section 4(a)(II), the following events shall be excluded from the definitions
of Major Transaction and Triggering Event (individually, an "Excluded Redemption
Event" and, collectively, the "Excluded Redemption Events"):
(i) the failure of the Registration
Statement to be declared effective by the SEC on or prior to the date that is
150 days after the Initial Issuance Date, provided that the Company has used its
best efforts to have such Registration Statement declared effective by the SEC;
(ii) while the Registration Statement
is required to be maintained effective pursuant to the terms of the Registration
Rights Agreement, except for any Allowable Grace Period, the effectiveness of
the Registration Statement lapses for any reason (including, without limitation,
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the issuance of a stop order) or is unavailable to the holder of the Preferred
Shares for sale of the Registrable Securities in accordance with the terms of
the Registration Rights Agreement, and such lapse or unavailability continues
for a period of ten consecutive trading days, provided that the Company has used
its best efforts to maintain the effectiveness of such Registration Statement
and has not taken voluntary action or voluntarily failed to take any action
which has directly or indirectly caused the Registration Statement to lapse or
become unavailable for the sale of all the Registrable Securities pursuant to
the terms of the Registration Rights Agreement;
(iii) suspension from listing or delisting
of the Common Stock from The Nasdaq National Market or The New York Stock
Exchange, Inc. for a period of five or more consecutive days, provided that the
Company (A) has used its best efforts to maintain the listing of the Common
Stock on such exchange and has not taken any voluntary action or has voluntarily
failed to take any action which has resulted in the delisting of the Common
Stock or the suspension of the Common Stock from trading or (B) has voluntarily
delisted or suspended trading of the Common Stock because either (I) the holders
of the Preferred Shares have exercised their rights under Section 4(e) to have
the Common Stock delisted or (II) the Company is not permitted to issue shares
of Common Stock to a holder of Preferred Shares upon conversion of such
Preferred Shares due to the Exchange Cap and the Company delists the Common
Stock so that the Exchange Cap limitations no longer apply; and
(iv) a purchase, tender or exchange offer
made to and accepted by the holders of more than the Trigger Percentage of the
outstanding shares of Common Stock which is not approved or recommended by the
Company's Board of Directors or a proxy or consent solicitation (other than by
or on behalf of the Company) which results in a Change of Control Transaction
where such proxy or consent solicitation is not approved or recommended by the
Company's Board of Directors.
As soon as practicable but in no event later than one (1) day after the
occurrence of an Excluded Redemption Event, the Company shall deliver written
notice thereof via facsimile and overnight courier (a "Company's Excluded
Redemption Event Notice") to each holder of Preferred Shares. At any time during
the period beginning after the earlier of the holders' receipt of a Company's
Excluded Redemption Event Notice and such holders becoming aware of an Excluded
Redemption Event and ending on the date which is thirty (30) days after the
holders' receipt of a Company's Excluded Redemption Event Notice, the holders of
at least two-thirds of the Preferred Shares then outstanding may require the
Company to satisfy its obligations under Section 3(i) by delivering written
notice thereof via facsimile and overnight courier (a "Holders' Excluded
Redemption Event Notice") to the Company. The Company shall within one (1) day
of its receipt of the Holders' Excluded Redemption Event Notice provide each
holder with written notice via facsimile and overnight courier (a "Excluded
Redemption Option Election Notice") which notice shall specify the option which
the Company has elected to exercise pursuant to and in accordance with Section
3(i).
(i) Rights of the Holders of the Preferred
Shares upon the Occurrence of an Excluded Redemption Event. In addition to any
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other remedies the holders of the Preferred Shares may have at law or in equity,
if an Excluded Redemption Event occurs and the holders of the Preferred Shares
have provided the Company with a Holders' Excluded Redemption Event Notice, then
the Company, at its option, shall either (A) pay to each holder of Preferred
Shares the Trigger Event Redemption Price for each outstanding share of
Preferred Stock held by such holder pursuant to and in accordance with Section
3(g) or (B) if:
(i) the Excluded Redemption Event is
pursuant to Section 3(h)(i), then (I) beginning on and including the first day
following the receipt by the Company of a Holders' Excluded Redemption Event
Notice, the Company shall pay to each holder of Preferred Shares an Excluded
Redemption Event Daily Payment (as defined below) on each day that such Excluded
Redemption Event continues, provided, however, that the Company shall not be
obligated to make an Excluded Redemption Event Daily Payment for more than 15
days in any 365 day period and (II) immediately upon the occurrence of such an
Excluded Redemption Event (and from time to time as applicable), the Initial
Fixed Price of the Preferred Shares shall be adjusted to equal the lesser of (y)
the Initial Fixed Price in effect for such Preferred Shares on the date which is
150 days after the Initial Issuance Date or (z) the product of ((alpha)) the
Payment Limitation Reduction Percentage (as defined below) multiplied by
((beta)) .80 multiplied by ((gamma)) the lowest Variable Conversion Price during
the period beginning on and including the date which is 150 days after the
Initial Issuance Date and ending on and including the date the Registration
Statement is declared effective by the SEC;
(ii) the Excluded Redemption Event is
pursuant to Section 3(h)(ii), then (I) beginning on and including the first day
following the receipt by the Company of a Holders' Excluded Redemption Event
Notice, the Company shall pay to each holder of Preferred Shares an Excluded
Redemption Event Daily Payment on each day that such Excluded Redemption Event
continues, provided, however, that the Company shall not be obligated to make an
Excluded Redemption Event Daily Payment for more than 15 days in any 365 day
period and (II) immediately upon the occurrence of such an Excluded Redemption
Event (and from time to time as applicable), the Initial Fixed Price of the
Preferred Shares shall be adjusted to equal the lesser of (y) the Initial Fixed
Price in effect for such Preferred Shares on the date of the initial occurrence
of the Excluded Redemption Event (the "Occurrence Date") or (z) the product of
((alpha)) the Payment Limitation Reduction Percentage multiplied by ((beta)) .80
multiplied by ((gamma)) the lowest Variable Conversion Price during the period
beginning on and including the Occurrence Date and ending on and including the
date that the Company cures such Excluded Redemption Event;
(iii) the Excluded Redemption Event is
pursuant to Section 3(h)(iii), then beginning on and including the first day
following the receipt by the Company of a Holders' Excluded Redemption Event
Notice, the Company shall pay to each holder of Preferred Shares an Excluded
Redemption Event Daily Payment on each day that such Excluded Redemption Event
continues, provided, however, that the Company shall not be obligated to make an
Excluded Redemption Event Daily Payment for more than 15 days in any 365 day
period, and further provided, the Company may elect, in lieu of the forgoing, by
providing each holder of Preferred Shares with written notice of its election
pursuant to this Section 3(i)(iii) via facsimile on the Occurrence Date to
adjust the Initial Fixed Price of the Preferred Shares, effective immediately
upon the occurrence of such Excluded Redemption Event (and from time to time as
applicable), to equal the product of (y) .80 multiplied by (z) 85% of the lesser
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of (A) the Initial Fixed Price of the Preferred Shares as in effect on the
Occurrence Date and (B) the lowest Variable Conversion Price during the period
beginning on and including the Occurrence Date and ending on the 45th trading
day following the Occurrence Date (provided that such 45 trading day period will
be extended by one trading day for each day on which there is no closing sales
price or closing trade price reported by Bloomberg or no bid prices of any
market makers reported by the National Quotation Bureau, Inc. in the "pink
sheets" for the Company's securities);
(iv) the Excluded Redemption Event is
pursuant to Section 3(h)(iv), then (I) then beginning on and including the first
day following the receipt by the Company of a Holders' Excluded Redemption Event
Notice, the Company shall pay to each holder of Preferred Shares an Excluded
Redemption Event Daily Payment on each day that such Excluded Redemption Event
continues, provided, however, that the Company shall not be obligated to make an
Excluded Redemption Event Daily Payment for more than 10 days in any 365 day
period and (II) immediately upon the occurrence of such an Excluded Redemption
Event (and from time to time as applicable), the Initial Fixed Price of the
Preferred Shares shall be adjusted to equal the lesser of (y) the Initial Fixed
Price in effect for such Preferred Shares on the Occurrence Date or (z) the
product of ((alpha)) the Payment Limitation Reduction Percentage multiplied by
((beta)) .80 multiplied by ((gamma)) the lowest Variable Conversion Price during
the period beginning on and including the date on which the purchase, tender or
exchange offer or a proxy or consent solicitation (referred to in Section
3(h)(vi)) was first publically announced and ending on and including the date
such purchase, tender or exchange offer or proxy or consent solicitation was
publicly announced as being consummated, abandoned or terminated.
"Excluded Redemption Event Daily Payment" shall mean the payment to each holder
of Preferred Shares, by the Company, of an amount in cash per Preferred Share
equal to one percent (1%) of the Liquidation Value. "Payment Limitation
Reduction Percentage" shall mean (I) 85%, with respect to any Excluded
Redemption Event other than the first Excluded Redemption Event to occur during
any 365 day period, provided that the Company shall have made an Excluded
Redemption Event Daily Payment on at least 15 days in such 365 day period or
(II) 100%, otherwise.
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(4) Inability to Fully Convert.
(a) Holder's Option if Company Cannot Fully
Convert. If, upon the Company's receipt of a Conversion Notice or on the
Maturity Date, the Company can not issue shares of Common Stock registered for
resale under the Registration Statement for any reason, including, without
limitation, because the Company (I) does not have a sufficient number of shares
of Common Stock authorized and available, (II) is otherwise prohibited by
applicable law or by the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or its Securities, including without limitation the Exchange Cap (as
defined in Section 14 below), from issuing all of the Common Stock which is to
be issued to a holder of Preferred Shares pursuant to a Conversion Notice or
(III) fails to have a sufficient number of shares of Common Stock registered for
resale under the Registration Statement, then the Company shall issue as many
shares of Common Stock as it is able to issue in accordance with such holder's
Conversion Notice and pursuant to Section 2(f) and, with respect to the
unconverted Preferred Shares, the holder, solely at such holder's option, can
elect to:
(i) require the Company to redeem from
such holder those Preferred Shares for which the Company is unable to issue
Common Stock in accordance with such holder's Conversion Notice ("Mandatory
Redemption") at a price per Preferred Share (the "Mandatory Redemption Price")
equal to the product of (A) the Conversion Rate and (B) the Closing Bid Price as
of such Conversion Date;
(ii) if the Company's inability to fully
convert Preferred Shares is pursuant to Section 4(a)(III), require the Company
to issue restricted shares of Common Stock in accordance with such holder's
Conversion Notice and pursuant to Section 2(f);
(iii) void its Conversion Notice and retain
or have returned, as the case may be, the nonconverted Preferred Shares that
were to be converted pursuant to such holder's Conversion Notice (provided that
a holder's voiding its Conversion Notice shall not effect the Company's
obligations to make any payments which have accrued prior to the date of such
notice); or
(iv) if the Company's inability to fully
convert Preferred Shares is pursuant to the Exchange Cap described in Section
4(a)(II), require the Company to issue shares of Common Stock in accordance with
such holder's Conversion Notice and pursuant to Section 2(f) at a Conversion
Price equal to the average of Closing Bid Prices of the Common Stock for the
five consecutive trading days preceding such holder's Notice in Response to
Inability to Convert (as defined below) or such other market price that
satisfies the applicable exchange or trading market.
(b) Mechanics of Fulfilling Holder's Election.
Upon receipt of a facsimile copy of a Conversion Notice from such holder which
cannot be fully satisfied as described in Section 4(a), the Company shall
promptly but in no event later than one (1) day following such receipt send via
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facsimile to a holder of Preferred Shares, a notice of the Company's inability
to fully satisfy such holder's Conversion Notice (the "Inability to Fully
Convert Notice"). Such Inability to Fully Convert Notice shall indicate (i) the
reason why the Company is unable to fully satisfy such holder's Conversion
Notice, (ii) the number of Preferred Shares which cannot be converted and (iii)
the applicable Mandatory Redemption Price. Such holder shall notify the Company
of its election pursuant to Section 4(a) above by delivering written notice via
facsimile to the Company ("Notice in Response to Inability to Convert") by the
later of (A) the date which is 30 days after such holder's receipt of the
Inability to Fully Convert Notice and (B) the second (2nd) Business Day
following the date on which the Company provides such holder written notice it
has cured its inability to fully convert.
(c) Payment of Redemption Price. If such holder
shall elect to have its shares redeemed pursuant to Section 4(a)(i), the Company
shall pay the Mandatory Redemption Price in cash to such holder within ten days
of the Company's receipt of the holder's Notice in Response to Inability to
Convert. If the Company shall fail to pay the applicable Mandatory Redemption
Price to such holder on a timely basis as described in this Section 4(c) (other
than pursuant to a dispute as to the determination of the arithmetic calculation
of the Redemption Price), in addition to any remedy such holder of Preferred
Shares may have under this Certificate of Designations, the Securities Purchase
Agreement and the Registration Rights Agreement, such unpaid amount shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full. Until the full Mandatory Redemption Price is paid in full to such
holder, such holder may void the Mandatory Redemption with respect to those
Preferred Shares for which the full Mandatory Redemption Price has not been paid
and (i) receive back such Preferred Shares and (ii) the Initial Fixed Price of
such returned Preferred Shares shall be adjusted to the lesser of (A) the
Initial Fixed Price in effect on the date on which the holder voided the
Mandatory Redemption and (B) the lowest Closing Bid Price during the Period
beginning on the Conversion Date and ending on the date the holder voided the
Mandatory Redemption. Notwithstanding the foregoing, if the Company fails to pay
the applicable Mandatory Redemption Price within such ten-day period due to a
dispute as to the determination of the arithmetic calculation of the Redemption
Price, such dispute shall be resolved pursuant to Section 2(f)(iii) with the
term "Redemption Price" being substituted for the term "Conversion Rate".
(d) Pro-rata Conversion and Redemption. In the
event the Company receives a Conversion Notice, Notice of Redemption at Option
of Buyer Upon Major Transaction or Notice of Redemption at Option of Buyer Upon
Triggering Event from more than one holder of Preferred Shares on the same day
and the Company can convert and/or redeem some, but not all, of the Preferred
Shares pursuant to this Section 4, the Company shall convert and redeem from
each holder of Preferred Shares electing to have Preferred Shares converted and
redeemed at such time an amount equal to such holder's pro-rata amount (based on
the number of Preferred Shares held by such holder relative to the number of
Preferred Shares outstanding) of all Preferred Shares being converted and
redeemed at such time.
(e) Forced Delisting. If the Company's inability
to fully convert Preferred Shares is pursuant to the Exchange Cap and the
stockholders have not voted to approve issuances in excess of the Exchange Cap,
and if so directed by the holders of at least two-thirds of the Preferred Shares
then outstanding, the Company shall promptly, but in no event later than three
(3) Business Days after receiving such directions, delist the Common Stock from
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the exchange or automated quotation system on which the Common Stock is traded
and have the Common Stock, at such holders' option, traded on the electronic
bulletin board or the "pink sheets."
(5) Conversion at the Company's Election. During the three (3)
Business Days (a "Conversion Election Period") which immediately follow at least
twenty (20) consecutive trading days during which the Closing Bid Price of the
Common Stock on each trading day during such twenty (20) consecutive trading
days is not less than 200% of the Trigger Price, the Company shall have the
right, in its sole discretion, to require that any or all of such outstanding
Preferred Shares be converted ("Conversion at Company's Election") at the
Conversion Rate; provided that the Conditions to Conversion at the Company's
Election (as set forth below) are satisfied. The Company shall exercise its
right to Conversion at Company's Election by providing each holder of Preferred
Shares written notice ("Notice of Conversion at Company's Election") during a
Conversion Election Period and at least 15 trading days prior to the date
selected by the Company for conversion ("Company's Election Conversion Date").
If the Company elects to require conversion of some, but not all, of such
Preferred Shares, the Company shall convert an amount from each holder of
Preferred Shares equal to such holder's pro rata amount (based on the number of
such Preferred Shares held by such holder relative to the number of such
Preferred Shares outstanding on date of the Company's delivery of the Notice of
Conversion at Company's Election) of all Preferred Shares the Company is
requiring to be converted. The Notice of Conversion at Company's Election shall
indicate (x) the number of Preferred Shares the Company has selected for
conversion, (y) the Company's Election Conversion Date, which date shall be not
less than 15 or more than 30 trading days after each holder's receipt of such
notice, and (z) each holder's pro rata share of outstanding Preferred Shares the
Company is requiring to be converted. All Preferred Shares selected for
conversion in accordance with the provision of this Section 5 shall be converted
as of the Company's Election Conversion Date in accordance with Section 2 as if
the holders of such Preferred Shares selected by the Company to be converted had
given the Conversion Notice on the Company's Election Conversion Date. If
required by Section 2(f)(vii), all holders of Preferred Shares shall thereupon
and within two Business Days after the Company's Election Conversion Date
surrender all Preferred Stock Certificates selected for conversion, duly
endorsed for cancellation, to the Company. "Conditions to Conversion at the
Company's Election" means the following conditions: (i) on each day during the
period beginning 30 days prior to the date of the Company's Notice of Conversion
at Company's Election and ending on and including the Company's Election
Conversion Date, the Registration Statement shall be effective and available for
the sale of no less than 125% of the sum of (A) the number of Conversion Shares
then issuable upon the conversion of all outstanding Preferred Shares (without
regard to any limitations on conversion herein or elsewhere), including the
Conversion Shares to be issued pursuant to this Conversion at the Company's
Election, and (B) the number of Conversion Shares that are then held by the
holders of the Preferred Shares; (ii) on each day during the period beginning 30
days prior to the date of the Company's Notice of Conversion at Company's
Election and ending on and including the Company's Election Conversion Date, the
Common Stock is designated for quotation on The Nasdaq National Market or listed
on The New York Stock Exchange, Inc. and is not suspended from trading
(excluding suspensions of not more than one day resulting from business
announcements); (iii) on each day during the 20 consecutive trading days
immediately preceding the date of the receipt by the holders of Preferred Shares
of the Notice of Conversion at Company's Election, the Closing Bid Price of the
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Common Stock is at least 200% of the Trigger Price; (iv) on each day during the
period beginning on and including the date of the receipt by the holders of
Preferred Shares of the Notice of Conversion at Company's Election and ending on
and including the Company's Election Conversion Date, the Closing Bid Price of
the Common Stock is at least 200% of the Trigger Price; (v) during the period
beginning on the Initial Issuance Date and ending on and including the Company's
Election Conversion Date, the Company shall have delivered all Conversion Shares
upon conversion of the Preferred Shares to the holders of Preferred Shares on a
timely basis as set forth in Section 2(f)(ii) of this Certificate of
Designations; provided, however, that for purposes of this Section 5 only, the
Company shall be deemed to have satisfied the condition set forth in this clause
(v) if on not more than two occasions the Company failed to meet the
requirements of Section 2(g)(ii) by no more than three days; (vi) neither a
Triggering Event nor any event that with the passage of time would constitute a
Triggering Event (assuming it was not cured) shall have occurred; (vii) the
Company shall not give a Notice of Conversion at Company's Election prior to the
date which is the Fixed Conversion Price Trigger Date; and (viii) the Company
otherwise has satisfied its obligations in all material respects and is not in
default in any material respect under this Certificate of Designations, the
Securities Purchase Agreement and the Registration Rights Agreement.
Notwithstanding the above, any holder of Preferred Shares may convert such
shares (including Preferred Shares selected for conversion) into Common Stock
pursuant to Section 2(a) on or prior to the date immediately preceding the
Company's Election Conversion Date.
(6) Company's Right to Redeem in Lieu of Conversion. Subject to
the terms and conditions of this Section 6 below, at any time after the Initial
Issuance Date, and so long as the Company has provided appropriate notice as
described below, the Company may elect to redeem Preferred Shares submitted for
conversion in lieu of converting such Preferred Shares, provided that the
Conversion Price for such Preferred Shares on the Conversion Date is less than a
price (the "Redemption in Lieu of Conversion Trigger Price") equal to 90% of the
Initial Fixed Price, which relates to such Preferred Shares, (appropriately
adjusted for any stock split, stock dividend, combination or other similar
transaction) (a "Company Redemption in Lieu of Conversion"). If the Company
elects to redeem some, but not all, of the Preferred Shares submitted for
conversion, the Company shall redeem a number of Preferred Shares from each
holder of Preferred Shares submitted for conversion on the applicable date equal
to such holder's pro-rata amount (based on the number of Preferred Shares held
by such holder relative to the number of Preferred Shares outstanding) of all
Preferred Shares submitted for conversion which the Company elects to redeem.
(a) Redemption Price of Company Redemption in
Lieu of Conversion. The "Redemption Price of Company Redemption in Lieu of
Conversion" shall be an amount per Preferred Share equal to 105% of the
Liquidation Value of such Preferred Shares.
(b) Mechanics of Company Redemption in Lieu of
Conversion. The Company shall exercise its right to redeem by delivering written
notice by facsimile and overnight courier ("Notice of Company Redemption in Lieu
of Conversion") to (i) each holder of the Preferred Shares and (ii) the Transfer
Agent. Such Notice of Company Redemption in Lieu of Conversion shall indicate
(A) the maximum, if any, aggregate number of Preferred Shares which the Company
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will redeem for Company Redemption in Lieu of Conversion and (B) confirm the
time period during which the Company may effect Company Redemption in Lieu of
Conversion, which period shall begin on and include the date which is five
Business Days after the date of receipt by all of the holders' of the Notice of
Redemption in Lieu of Conversion and shall end on the date set forth in the
Notice of Company Redemption in Lieu of Conversion (the "Redemption in Lieu of
Conversion Period"). If the Company elects to limit the number of Preferred
Shares which it will redeem during the Redemption in Lieu of Conversion Period,
the Company shall allocate for redemption from each holder of Preferred Shares a
number of Preferred Shares equal to such holder's pro-rata amount (based on the
number of Preferred Shares held by such holder on the date of the Notice of
Company Redemption in Lieu of Conversion relative to the total number of
Preferred Shares outstanding on such date). The Company may terminate a
Redemption in Lieu of Conversion Period at any time with respect to Preferred
Shares which have not been submitted for conversion by delivering written notice
of such termination to each holder of Preferred Shares by facsimile and
overnight courier at least five Business Days prior to the effective date of
such termination. Notwithstanding anything to the contrary in this Section 6,
the Company shall convert Preferred Shares pursuant to Section 2 if such
Preferred Shares are submitted for conversion (i) before the beginning, or after
the effective date of the termination, of the Redemption in Lieu of Conversion
Period, (ii) for a Conversion Price greater than or equal to the Redemption in
Lieu of Conversion Trigger Price or (iii) are in excess of such holder's pro
rata allocation of the maximum number of Preferred Shares the Company indicated
that it would redeem in its Notice of Company Redemption in Lieu of Conversion.
(c) Payment of Redemption Price. The Company
shall pay the applicable Redemption Price of Company Redemption in Lieu of
Conversion to the holder of the Preferred Shares being redeemed in cash by wire
transfer within five Business Days after the applicable Conversion Date on which
such Preferred Shares are submitted for conversion. If the Company shall fail to
pay the applicable Redemption Price of Company Redemption in Lieu of Conversion
to such holder on a timely basis as described in this Section 6(c), in addition
to any remedy such holder of Preferred Shares may have under this Certificate of
Designations and the Securities Purchase Agreement, such unpaid amount shall
bear interest at the rate of 1.5% per month until paid in full. Until the
Company pays such unpaid applicable Redemption Price of Company Redemption in
Lieu of Conversion full to each holder, each holder of Preferred Shares
submitted for redemption pursuant to this Section 6 and for which the applicable
Redemption Price of Company Redemption in Lieu of Conversion has not been paid,
shall have the option to, in lieu of redemption, (A) to require the Company to
promptly return to each holder all of the Preferred Shares that were submitted
for redemption by such holder under this Section 6 and for which the applicable
Redemption Price of Company Redemption in Lieu of Conversion has not been paid
or (B) to convert those Preferred Shares for which the applicable Redemption
Price of the Company Redemption in Lieu of Conversion has not been paid at a
Conversion Price equal to the lesser of (I) the Conversion Price applicable to
such conversion on the date on which such Preferred Shares were originally
presented for conversion and (II) the Conversion Price which would have been in
effect if such Preferred Shares were presented for conversion on the Business
Day immediately following the last day on which the Company could have effected
a timely Company Redemption in Lieu of Conversion, by sending written notice
thereof to the Company via facsimile (the "Void Company Redemption Notice").
Upon the Company's receipt of such Void Company Redemption Notice(s), requesting
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the return of the Preferred Shares, prior to payment of the full applicable
redemption price to each holder, (i) the Company's Redemption in Lieu of
Conversion shall be null and void with respect to those Preferred Shares
submitted for redemption and for which the applicable redemption price has not
been paid and with respect to any Preferred Shares submitted in the future for
conversion in the same Redemption in Lieu of Conversion Period, (ii) the Company
shall promptly, but in no event later than one (1) day following such receipt,
return any Preferred Shares submitted to the Company by each holder for
redemption under this Section 6 and for which the applicable Redemption Price of
Company Redemption in Lieu of Conversion has not been paid and (iii) the Fixed
Conversion Price of such returned Preferred Shares shall be adjusted to the
lesser of (I) the Conversion Price applicable to such conversion on the date on
which such Preferred Shares were originally presented for conversion and (II)
the lowest Conversion Price which would have been in effect if such Preferred
Shares were presented for conversion on any Business Day during the period
beginning on the Business Day immediately following the last day on which the
Company could have effected a timely Company Redemption in Lieu of Conversion
and ending on the date of the Company's receipt of the applicable Void Company
Redemption Notice. Notwithstanding the foregoing, if the Company fails to pay
the applicable Redemption Price of Company Redemption in Lieu of Conversion to a
holder within the time period described in this Section 6(d) due to a dispute as
to the arithmetic calculation of the Redemption Price of Company Redemption in
Lieu of Conversion, such dispute shall be resolved pursuant to Section 2(f)(iii)
above with the term "Redemption Price of Company Redemption in Lieu of
Conversion" being substituted for the term "Conversion Rate." If the Company
fails to timely effect a Company Redemption in Lieu of Conversion in accordance
with this Section 6, the Company shall not be allowed to submit another Notice
of Company Redemption in Lieu of Conversion without the prior written consent of
the holders of at least two-thirds of the Preferred Shares then outstanding.
(d) Company Must Have Immediately Available Funds
or Credit Facilities. The Company shall not be entitled to send any Notice of
Company Redemption in Lieu of Conversion pursuant to Section 6(b) above and
begin the redemption procedure under this Section 6, unless it has:
(i) the full amount of the Redemption Price
of Company Redemption in Lieu of Conversion in cash, available in a demand or
other immediately available account in a bank or similar financial institution;
(ii) credit facilities, with a bank or
similar financial institutions that are immediately available and unrestricted
for use in redeeming the Preferred Shares, in the full amount of the Redemption
Price of Company Redemption in Lieu of Conversion;
(iii) a written agreement with a standby
underwriter or qualified buyer ready, willing and able to purchase from the
Company a sufficient number of shares of stock to provide proceeds necessary to
redeem any Preferred Shares that are not converted prior to a Company Redemption
in Lieu of Conversion; or
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(iv) a combination of the items set forth in
the preceding clauses (i), (ii)
and (iii), aggregating the full amount of the Redemption Price of Company
Redemption in Lieu of Conversion.
(7) Redemption at the Company's Election. At any time or times
on or after the Initial Issuance Date the Company shall have the right, in its
sole discretion, to require that all, but not less than all, of the outstanding
Preferred Shares be redeemed ("Redemption at Company's Election") at a price per
share which would provide a 20% annualized return on the Liquidation Value
("Company's Election Redemption Price"); provided that the Conditions to
Redemption at the Company's Election (as set forth below) are satisfied. The
Company shall exercise its right to Redemption at Company's Election by
providing each holder of Preferred Shares written notice ("Notice of Redemption
at Company's Election") at least 20 trading days prior to the date of
consummation of such redemption ("Company's Election Redemption Date"). The
Notice of Redemption at Company's Election shall indicate the Company's Election
Redemption Date. If the Company has exercised its right of Redemption at
Company's Election and the conditions to such Redemption at Company's Election
have been satisfied, then all Preferred Shares outstanding at the Company's
Election Redemption Date shall be redeemed as of the Company's Election
Redemption Date by payment by the Company to each holder of Preferred Shares of
the Company's Election Redemption Price. If required by Section 2(f)(vii), all
holders of Preferred Shares shall thereupon and within two Business Days after
the Company's Election Redemption Date, or such earlier date as the Company and
each holder of Preferred Shares mutually agree, surrender all outstanding
Preferred Stock Certificates, duly endorsed for cancellation, to the Company. If
the Company fails to pay the full Company's Election Redemption Price with
respect to any Preferred Shares then the Redemption at Company's Election shall
be null and void with respect to such Preferred Shares and the holder of such
Preferred Shares shall be entitled to all the rights of a holder of outstanding
Preferred Shares set forth in this Certificate of Designations. "Conditions to
Redemption at the Company's Election" means the following conditions: (i) during
the period beginning on the Initial Issuance Date and ending on and including
the Company's Election Redemption Date, the Company shall have delivered
Conversion Shares upon conversion of the Preferred Shares to the holders of the
Preferred Shares on a timely basis as set forth in Section 2(f)(ii) of this
Certificate of Designations; provided, however, that for purposes of this
Section 6 only, the Company shall be deemed to have satisfied the condition set
forth in this clause (i) if on not more than two occasions the Company failed to
meet the requirements of Section 2(g)(ii) by no more than three days; (ii) on
each day during the period beginning 30 days prior to the date of Notice of
Redemption at Company's Election and ending on and including the Company's
Election Redemption Date, the Registration Statement shall be effective and
available for the sale of no less than 125% of the sum of (A) the number of
Conversion Shares then issuable upon the conversion of all outstanding Preferred
Shares (without regard to any limitations on conversion herein or elsewhere),
including the Conversion Shares to be issued pursuant to this Redemption at the
Company's Election, and (B) the number of Conversion Shares that are then held
by the holders of the Preferred Shares; (iii) on each day during the period
beginning 30 days prior to the date of Notice of Redemption at Company's
Election and ending on and including the Company's Election Redemption Date, the
Common Stock is designated for quotation on The Nasdaq National Market or listed
on The New York Stock Exchange, Inc. and is not suspended from trading
(excluding suspensions of not more than one day resulting from business
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announcements); (iv) during the period beginning on the Initial Issuance Date
and ending on and including the Company's Election Redemption Date, there shall
not have occurred either (A) the consummation of a Major Transaction or a public
announcement of a pending Major Transaction which has not been abandoned or
terminated or (B) a Triggering Event; and (v) the Company otherwise has
satisfied its obligations in all material respects and is not in default in any
material respect under this Certificate of Designations, the Securities Purchase
Agreement and the Registration Rights Agreement. Notwithstanding the above, any
holder of Preferred Shares may convert such shares (including Preferred Shares
selected for redemption) into Common Stock pursuant to Section 2(a) on or prior
to the date immediately preceding the Company's Election Redemption Date.
(8) Reissuance of Certificates. Subject to Section 2(f)(vii),
in the event of a conversion or redemption pursuant to this Certificate of
Designations of less than all of the Preferred Shares represented by a
particular Preferred Stock Certificate, the Company shall promptly cause to be
issued and delivered to the holder of such Preferred Shares a preferred stock
certificate representing the remaining Preferred Shares which have not been so
converted or redeemed.
(9) Reservation of Shares. The Company shall, so long as any
of the Preferred Shares are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all of the
Preferred Shares then outstanding (without regard to any limitations on
conversions); provided that the number of shares of Common Stock so reserved
shall at no time be less than 200% of the number of shares of Common Stock for
which the Preferred Shares are at any time convertible. The initial number of
shares of Common Stock reserved for conversions of the Preferred Shares and each
increase in the number of shares so reserved shall be allocated pro rata among
the holders of the Preferred Shares based on the number of Preferred Shares held
by each holder at the time of issuance of the Preferred Shares or increase in
the number of reserved shares, as the case may be. In the event a holder shall
sell or otherwise transfer any of such holder's Preferred Shares, each
transferee shall be allocated a pro rata portion of the number of reserved
shares of Common Stock reserved for such transferor. Any shares of Common Stock
reserved and which remain allocated to any person or entity which does not hold
any Preferred Shares shall be allocated to the remaining holders of Preferred
Shares, pro rata based on the number of Preferred Shares then held by such
holder.
(10) Voting Rights. Holders of Preferred Shares shall have no
voting rights, except as required by law, including but not limited to the
General Corporation Law of the State of Delaware, and as expressly provided in
this Certificate of Designations.
(11) Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Preferred Shares shall be entitled to receive in cash out of
the assets of the Company, whether from capital or from earnings available for
distribution to its stockholders (the "Preferred Funds"), before any amount
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shall be paid to the holders of any of the capital stock of the Company of any
class junior in rank to the Preferred Shares in respect of the preferences as to
the distributions and payments on the liquidation, dissolution and winding up of
the Company, an amount per Preferred Share equal to the sum of (i) $10,000 and
(ii) the Additional Amount (such sum being referred to as the "Liquidation
Value"); provided that, if the Preferred Funds are insufficient to pay the full
amount due to the holders of Preferred Shares and holders of shares of other
classes or series of preferred stock of the Company that are of equal rank with
the Preferred Shares as to payments of Preferred Funds (the "Pari Passu
Shares"), then each holder of Preferred Shares and Pari Passu Shares shall
receive a percentage of the Preferred Funds equal to the full amount of
Preferred Funds payable to such holder as a liquidation preference, in
accordance with their respective Certificate of Designations, Preferences and
Rights, as a percentage of the full amount of Preferred Funds payable to all
holders of Preferred Shares and Pari Passu Shares. The purchase or redemption by
the Company of stock of any class, in any manner permitted by law, shall not,
for the purposes hereof, be regarded as a liquidation, dissolution or winding up
of the Company. Neither the consolidation or merger of the Company with or into
any other Person, nor the sale or transfer by the Company of less than
substantially all of its assets, shall, for the purposes hereof, be deemed to be
a liquidation, dissolution or winding up of the Company. No holder of Preferred
Shares shall be entitled to receive any amounts with respect thereto upon any
liquidation, dissolution or winding up of the Company other than the amounts
provided for herein; provided that a holder of Preferred Shares shall be
entitled to all amounts previously accrued with respect to amounts owed
hereunder.
(12) Preferred Rank; Participation. All shares of Common Stock
shall be of junior rank to all Preferred Shares in respect to the preferences as
to distributions and payments upon the liquidation, dissolution and winding up
of the Company. The rights of the shares of Common Stock shall be subject to the
preferences and relative rights of the Preferred Shares. Without the prior
express written consent of the holders of not less than two-thirds of the then
outstanding Preferred Shares, the Company shall not hereafter authorize or issue
additional Preferred Shares or other capital stock that is of rank senior to or
pari passu with the Preferred Shares in respect of the preferences as to
distributions and payments upon the liquidation, dissolution and winding up of
the Company. Without the prior express written consent of the holders of not
less than two-thirds of the then outstanding Preferred Shares, the Company shall
not hereafter authorize or make any amendment to the Company's Certificate of
Incorporation or bylaws, or file any resolution of the board of directors of the
Company with the Secretary of State of the State of Delaware containing any
provisions, which would adversely affect or otherwise impair the rights or
relative priority of the holders of the Preferred Shares relative to the holders
of the Common Stock or the holders of any other class of capital stock. In the
event of the merger or consolidation of the Company with or into another
corporation, the Preferred Shares shall maintain their relative powers,
designations and preferences provided for herein and no merger shall result
inconsistent therewith.
(13) Restriction on Redemption and Cash Dividends with respect
to Other Capital Stock. Until all of the Preferred Shares have been converted or
redeemed as provided herein, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, its Common Stock
without the prior express written consent of the holders of not less than
two-thirds of the then outstanding Preferred Shares.
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(14) Limitation on Number of Conversion Shares.
Notwithstanding any other provision herein, the Company shall not be obligated
to issue any shares of Common Stock upon conversion of the Preferred Shares if
the issuance of such shares of Common Stock would exceed that number of shares
of Common Stock which the Company may issue upon Conversion of the Preferred
Shares (the "Exchange Cap") without breaching the Company's obligations, if any,
under the rules or regulations of The Nasdaq Stock Market or such exchange on
which the stock is then traded, except that such limitation shall not apply in
the event that the Company (a) obtains the approval of its stockholders as
required by applicable rules and regulations of The Nasdaq Stock Market or such
other exchange on which the stock is then traded for issuances of Common Stock
in excess of such amount, (ii) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the holders of a majority of the Preferred Shares
then outstanding or (iii) the required number of holders of the Preferred Shares
exercised their rights pursuant to Section 4(e) to have the Company remove the
Common Stock from quotation in the Nasdaq National Market or such other exchange
on which the stock is then traded. Until such approval or written opinion is
obtained or such action has been taken by the required number of holders, no
purchaser of Preferred Shares pursuant to the Securities Purchase Agreement (the
"Purchasers") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap
amount multiplied by (ii) a fraction, the numerator of which is the number of
Preferred Shares issued to such Purchaser pursuant to the Securities Purchase
Agreement and the denominator of which is the aggregate amount of all the
Preferred Shares issued to the Purchasers pursuant to the Securities Purchase
Agreement (the "Cap Allocation Amount"). In the event that any Purchaser shall
sell or otherwise transfer any of such Purchaser's Preferred Shares, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any holder of Preferred Shares shall
convert all of such holder's Preferred Shares into a number of shares of Common
Stock which, in the aggregate, is less than such holder's Cap Allocation Amount,
then the difference between such holder's Cap Allocation Amount and the number
of shares of Common Stock actually issued to such holder shall be allocated to
the respective Cap Allocation Amounts of the remaining holders of Preferred
Shares on a pro rata basis in proportion to the number of Preferred Shares then
held by each such holder.
(15) Vote to Change the Terms of or Issue Preferred Shares.
The affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of not less than two-thirds of the
then outstanding Preferred Shares, shall be required for (a) any change to this
Certificate of Designations or the Company's Certificate of Incorporation which
would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Preferred Shares, or (b) any issuance of Preferred
Shares other than pursuant to the Securities Purchase Agreement.
(16) Lost or Stolen Certificates. Upon receipt by the Company
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing the Preferred
Shares, and, in the case of loss, theft or destruction, of an indemnification
undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company
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shall execute and deliver new preferred stock certificate(s) of like tenor and
date; provided, however, the Company shall not be obligated to re-issue
preferred stock certificates if the holder contemporaneously requests the
Company to convert such Preferred Shares into Common Stock.
(17) Remedies, Characterizations, Other Obligations, Breaches
and Injunctive Relief. The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designations. The Company covenants to each holder of Preferred Shares that
there shall be no characterization concerning this instrument other than as
expressly described herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the holder thereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Company (or
the performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holders of the
Preferred Shares and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the holders of the Preferred Shares shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
(18) Specific Shall Not Limit General; Construction. No
specific provision contained in this Certificate of Designations shall limit or
modify any more general provision contained herein. This Certificate of
Designations shall be deemed to be jointly drafted by the Company and all
holders of Preferred Shares and shall not be construed against any person as the
drafter hereof.
(19) Failure or Indulgence Not Waiver. No failure or delay on
the part of a holder of Preferred Shares in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
(20) Whenever notice is required to be given, it shall be
given in accordance with Section 9(f) of the Securities Purchase Agreement.
* * * * * *
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IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by Robert J. DeLuccia, its President and Chief
Executive Officer as of December __, 1998.
IMMUNOMEDICS, INC.
By:
Name: Robert J. DeLuccia
Title: President and Chief
Executive Officer
EXHIBIT I
IMMUNOMEDICS, INC.
CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (the "Certificate of Designations"). In
accordance with and pursuant to the Certificate of Designations, the undersigned
hereby elects to convert the number of shares of Series G Convertible Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of Immunomedics, Inc.,
a Delaware corporation (the "Company"), indicated below into shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, by
tendering the stock certificate(s) representing the Preferred Shares specified
below as of the date specified below.
Date of Conversion:____________________________________________________
Number of Preferred Shares to be converted:____________________________
Stock certificate no(s). of Preferred Shares to be converted:__________
Please confirm the following information:
Conversion Price:______________________________________________________
Number of shares of Common Stock
to be issued:__________________________________________________________
Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:
Issue to:______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
Facsimile Number:______________________________________________________
Authorization:_________________________________________________________
By:________________________
Title:_____________________
Dated:_________________________________________________________________
Account Number:
(if electronic book entry transfer):_________________________________
Transaction Code Number
(if electronic book entry transfer):_________________________________
THIS FORM MUST BE SENT CONCURRENTLY TO COMPANY COUNSEL
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby
directs American Stock Transfer & Trust Company to issue the above indicated
number of shares of Common Stock in accordance with the Transfer Agent
Instructions dated December ___, 1998 from the Company and acknowledged and
agreed to by American Stock Transfer & Trust Company.
IMMUNOMEDICS, INC.
By:
Name: Robert J. DeLuccia
Title: President and Chief
Executive Officer