Prairie Operating Co 8-K, filed Nov 30, 2022
Prairie Operating Co. (PROP)
About this 8-K
Prairie Operating Co filed this 8-K on November 30, 2022.
Items reported
- Item 3.03: Change to shareholders' rights
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 5.07: Shareholder vote results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 Or 15(d) of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 3.03 Material Modification to Rights of Security Holders.
On November 23, 2022, the holders of (i) 218,089 of the 242,534 then outstanding shares of the Series A Preferred Stock, par value $0.0001 (the “Series A Preferred Stock”), of Creek Road Miners, Inc., a Delaware corporation (the “Company”), and (ii) approximately 88.2% of the voting power of the then outstanding capital stock of the Company, representing 438,729,769 out of 497,344,418 votes (based on the voting power of the capital stock entitled to vote), approved by written consent a Certificate of Designation and Restatement of Rights, Preferences and Restrictions of Series A Preferred Stock (the “Amended and Restated Designation”). Pursuant to the unanimous written consent of the Company’s Board of Directors (the “Board”) and such written consents, the Company filed the Amended and Restated Designation with the Delaware Secretary of State on November 23, 2022.
All capitalized terms not defined within this Current Report on Form 8-K have the meaning set forth in the Amended and Restated Designation, a copy of which is filed as an exhibit to this Current Report on Form 8-K and is incorporated herein by reference. The following summary of the material terms of the Amended and Restated Designation is not complete and is qualified in its entirety by reference to the full text thereof, a copy of which is filed herewith as Exhibit 3.1, and incorporated by reference in this Item 3.03.
Dividends
Under the Amended and Restated Designation, the Company’s common stock, par value $0.0001 per share (“Common Stock”), is no longer required to be listed on a national securities exchange for dividends on the Series A Preferred Stock to be payable in shares of Common Stock (in lieu of cash). The number of shares of Common Stock issuable as a dividend is now fixed at the (x) applicable dividend payment divided by (y) the Conversion Price (currently $0.175) and without reference to the 20-day volume weighted average price of the Common Stock. Overdue dividends accrue late fees at an interest rate equal to the lesser of 10% per annum (as opposed to 18% per annum) or the maximum rate permitted by applicable law.
Deemed Liquidation Events
In connection with certain Deemed Liquidation Events under the Amended and Restated Designation, the Company must provide notice to the holders of the Series A Preferred Stock one day (instead of 10 days) prior to the stockholders’ meeting called to approve such a transaction or the closing of such transaction, whichever is earlier. The Company is no longer required to cancel or postpone the closing of such a transaction to the extent the Company fails to comply with the requirements of the Amended and Restated Designation relating to such Deemed Liquidation Event.
Right to Convert
The Amended and Restated Designation permits any holder of Series A Preferred Stock to convert their shares into fully paid and non-assessable shares of Common Stock, as is determined by dividing the Aggregate Stated Value of the shares of Series A Preferred Stock by the Conversion Price. The initial Conversion Price per share of Series A Preferred Stock shall be $0.175 (rather than $0.25). The Company shall deliver the shares of Common Stock issuable upon conversion of the Series A Preferred Stock not later than the earlier of 10 trading days following the Conversion Date (instead of three trading days).
Company Redemption Right
The Amended and Restated Designation permits the Company to redeem some or all of the then outstanding Series A Preferred Stock for cash or, at the election of the Company’s Board in its sole discretion, shares of Common Stock, on the next business day following the delivery of notice to the holders of Series A Preferred Stock in an amount equal to the sum of (i) the product of (x) 100% of the Stated Value Per Share and (y) the number of shares of Series A Preferred Stock to be redeemed and (ii) any unpaid dividends.
Covenants
In the event that an issuance of shares of Common Stock results in an insufficient number of unissued, authorized shares of Common Stock to convert the Series A Preferred Stock in full, the Company now has a 90-day cure period to use its best efforts to authorize a sufficient number of shares of Common Stock to cover such shortfall.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information contained in Item 3.03. Material Modification to Rights of Security Holders of this Current Report on Form 8-K is incorporated herein by reference.
Item 5.07 Submission of Matters to a Vote of Security Holders.
The information contained in Item 3.03. Material Modification to Rights of Security Holders of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| 3.1 | Certificate of Designation and Restatement of Rights, Preferences and Restrictions of Series A Preferred Stock of Creek Road Miners, Inc., filed with the Secretary of State of the State of Delaware on November 23, 2022. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE PAGE
Pursuant to the requirement of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Creek Road Miners, Inc. | ||
| a Delaware corporation | ||
| Dated: November 30, 2022 | By: | /s/ John D. Maatta |
| John D. Maatta, CEO | ||
Exhibit 3.1
CERTIFICATE OF DESIGNATION AND RESTATEMENT OF
RIGHTS, PREFERENCES AND RESTRICTIONS OF
SERIES A PREFERRED STOCK OF
CREEK ROAD MINERS, INC.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware, the undersigned officer of Creek Road Miners, Inc., a Delaware corporation (the “Corporation”), does hereby make this Amended and Restated Certificate of Designation (the “Certificate of Designation”) and does hereby certify that:
FIRST: The Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) confers upon the Board of Directors of the Corporation (the “Board of Directors”) the authority to prescribe the classes, series and the number of each class or series of stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of stock.
SECOND: the Board of Directors previously authorized the issuance of 500,000 shares of preferred stock designated as “Series A Preferred Stock,” par value $0.0001 per share, of the Corporation (the “Series A Preferred Stock”), with a stated value equal to $10 per share (the “Stated Value Per Share”), subject to increase as set forth below, such that the outstanding shares of Series A Preferred Stock shall have an aggregate stated value equal to the Stated Value Per Share multiplied by the outstanding number of shares of Series A Preferred Stock (the “Aggregate Stated Value”), and set forth that the powers, preferences and rights of the shares of such series, and the qualifications, limitations and restrictions thereof would be as provided in the Certificate of Designation and Restatement of Rights, Preferences and Restrictions of Series A Preferred Stock of the Corporation as filed with the Secretary of State of the State of Delaware on August 10, 2020 (the “Original Certificate of Designation”).
THIRD: 242,534 shares of Series A Preferred Stock have been issued and are outstanding as of the date hereof.
FOURTH: the Board of Directors determined, upon approval of the stockholders of the Corporation, to amend and restate the Original Certificate of Designation and provided that the powers, preferences and rights of the shares of such series, and the qualifications, limitations and restrictions thereof, be amended and restated in their entirety as set forth below.
FIFTH: the holders of a majority of the outstanding shares of Series A Preferred Stock and the holders of a majority of the voting power of the shares of the Corporation entitled to vote thereon determined to approve the amendment and restatement of the Certificate of Designation pursuant to Sections 228 of the General Corporation Law of the State of Delaware as approved by the Board of Directors and to allow for the powers, preferences and rights of the shares of such series, and the qualifications, limitations and restrictions thereof to be amended and restated in their entirety as follows:
1. Dividend Provisions.
(a) Dividends. The Corporation shall pay a cumulative dividend on the Series A Preferred Stock issued and outstanding at the rate of twelve percent (12%) per annum (the “Dividend Rate”) calculated by multiplying the Dividend Rate by the Aggregate Stated Value of the outstanding shares of Series A Preferred Stock and dividing by 365, and then multiplying the resulting number by the number of days elapsed since the Original Issue Date (as defined herein), less any dividends previously paid (the “Dividend Payment”), payable quarterly on January 1, April 1, July 1 and October 1 (each, a “Dividend Payment Date”), beginning on the first such date after the first issuance of a share or fraction of a share of the Series A Preferred Stock (the “Original Issue Date”). The Dividend shall be paid in cash, provided however that the Corporation may pay the Dividend in shares of common stock of the Corporation (the “Common Stock”) in its sole discretion upon the election of the Corporation’s Board of Directors. The Corporation may pay the Dividend with a combination of cash and shares of common stock. In the event the Corporation elects to pay the Dividend in shares of Common Stock (the “Dividend Shares”), the Corporation shall deliver to the holders such number of shares of Common Stock equal to the Dividend Payment divided by the Conversion Price (as defined below). In addition to the foregoing, the holders of Series A Preferred Stock shall participate in all dividends and other distributions (other than stock dividends in the nature of a stock split or the like, to the extent adjusted for elsewhere herein, and repurchases of securities by the Corporation not made on a pro rata basis) that are declared and paid on Common Stock on the same basis as if each share of Series A Preferred Stock had been converted into the largest number of shares of Common Stock into which each share of Series A Preferred Stock, as the case may be, may be converted pursuant to Section 3 on the record date established for the declaration of such dividends.
(b) Dividends Paid In Shares. Dividends may be paid in Dividend Shares only if, at the time of payment, the Corporation has not announced a transaction, the consummation of which would be considered a Deemed Liquidation Event.
(c) Dividend Calculations. Dividends on the Series A Preferred Stock shall accrue commencing on the Original Issue Date, whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends. Dividends shall cease to accrue with respect to any Series A Preferred Stock converted, provided that the Corporation actually delivers the Conversion Shares (as defined below) within the time period required by Section 3 herein.
(d) Late Fee. All overdue accrued and unpaid Dividends to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 10% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue daily from the date such Dividends are due hereunder through and including the date of actual payment in full.
2. Liquidation.
(a) Payments to the Holders of Series A Preferred Stock. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary (a “Liquidation Event”), the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, for each share held an amount equal to the Stated Value Per Share, plus unpaid dividends, if any. If, upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive pursuant to this Section 2(a).
(b) Remaining Assets. After the full preferential amounts due the holders of the Series A Preferred Stock pursuant to Section 2(a) have been paid or set aside, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed to the holders of Common Stock ratably in proportion to the number of shares of Common Stock then held by each holder. Notwithstanding the above, for the purposes of determining the amount each holder of shares of Series A Preferred Stock is entitled to receive with respect to a Liquidation Event, each such holder shall be deemed to have converted such holder’s shares of Series A Preferred Stock immediately prior to the Liquidation Event if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such shares into Common Stock. If any such holder shall be deemed to have converted shares of Series A Preferred Stock into Common Stock pursuant to the foregoing, then such holder shall not be entitled to receive any distribution that would otherwise be made to holders of Series A Preferred Stock that have not converted.
(c) Certain Acquisitions.
(i) Deemed Liquidation. For purposes of this Section 2, a Liquidation Event shall be deemed to occur upon the occurrence of any of (a) an acquisition after the Original Issue Date by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Securities Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess of 33% of the voting securities of the Corporation, (b) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the Corporation or the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above (each, a “Deemed Liquidation Event”). The treatment of any particular transaction or series of related transactions as a Deemed Liquidation Event for purposes of this Section 2(c) may be waived by the vote, written consent or agreement of the holders of a majority of the outstanding shares of Series A Preferred Stock, voting together as a single class on an as-converted basis.
(ii) Valuation of Consideration. In the event of a Deemed Liquidation Event, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other similar restrictions on free marketability:
(1) If traded on a national securities exchange, the value shall be based on a formula approved by the Board of Directors and derived from the closing prices of the securities on such exchange over a specified time period;
(2) If actively traded over-the-counter, the value shall be based on a formula approved by the Board of Directors and derived from the closing prices of the securities on the over-the-counter market over a specified time period; and
(3) If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors.
(B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in Section 2(c)(ii)(A) to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors.
(iii) Notice of Transaction. The Corporation shall give each holder of record of Series A Preferred Stock written notice of any impending transaction not later than one (1) day prior to the stockholders’ meeting called to approve such transaction, or one (1) day prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 2, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than one (1) days after the Corporation has given the first notice provided for herein or sooner than one (1) days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened or eliminated upon the vote, written consent or agreement of the holders of Series A Preferred Stock, that are entitled to such notice rights or similar notice rights and that represent a majority of the voting power of all then outstanding shares of Series A Preferred Stock, voting together as a single class.
3. Conversion and Redemption. The holders of the Series A Preferred Stock shall have conversion rights (the “Conversion Rights”) and redemption rights (the “Redemption Rights”) as follows:
(a) Right to Convert. Subject to Section 3(b) and Section 3(i), each share of the Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Aggregate Stated Value of the shares of Series A Preferred Stock that holder elects to convert by the Conversion Price, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial “Conversion Price” per share of Series A Preferred Stock shall be $0.175 and shall be subject to adjustment as provided in Section 3(c) below. The holder shall effect conversions by delivering to the Corporation a Notice of Conversion (each, a “Notice of Conversion”) specifying therein the number of shares of Series A Preferred Stock to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. The Corporation shall deliver the shares of Common Stock issuable upon conversion of the Series A Preferred Stock (the “Conversion Shares”) pursuant to the Notice of Conversion not later than the earlier of ten (10) trading days following the Conversion Date (the “Share Delivery Date”).
(b) Mechanics of Conversion. Before any holder of Series A Preferred Stock shall be entitled to convert the same into shares of Common Stock, and to receive certificates therefor, such holder shall either (A) surrender the certificate or certificates therefor, duly endorsed, if any, at the office of the Corporation or of any transfer agent for the Series A Preferred Stock or (B) notify the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates, and shall give written notice to the Corporation at such office that such holder elects to convert the same.
(c) Adjustments to Conversion Price for Dilutive Issuances.
(i) Special Definitions. For purposes of this Section 3(c), the following definitions shall apply:
(A) “Original Issue Date” shall mean the date on which shares of Series A Preferred Stock are first issued by the Corporation.
(B) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 3(c)(ii) below, deemed to be issued) by the Corporation after the Original Issue Date, other than (each of the following, an “Excluded Issuance”):
(1) shares of Common Stock issued upon conversion of the Series A Preferred Stock;
(2) shares of Common Stock issued or issuable to officers, directors or employees of, or consultants to, the Corporation pursuant to any duly adopted stock option plan or agreement or other similar plan or agreement approved by the Board of Directors;
(3) shares of Common Stock issued or issuable to landlords, equipment lessors, lenders or other financial institutions in a commercial transaction or arrangement approved by the Board of Directors;
(4) shares of Common Stock issuable upon exercise or conversion of any debenture, warrant, option or other convertible security outstanding prior to the Original Issue Date;
(5) shares issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested members of the Board of Directors, provided that such transactions is not primarily for the purpose of raising capital or to an entity whose primary business is investing in securities;
(6) shares for which an adjustment is made pursuant to Section 3(c)(v);
(7) Dividend Shares; or
(8) issuances deemed Excluded Issuances by the approval, written consent or agreement of holders of a majority of the Series A Preferred Stock.
(C) “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (as defined below).
(D) “Convertible Securities” shall mean any evidences of indebtedness, shares of Series A Preferred Stock or other securities convertible into or exchangeable for Common Stock.
(ii) Deemed Issue of Additional Shares of Common Stock. In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the following provisions shall apply:
(A) The maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities shall be deemed to be Additional Shares of Common Stock issued as of the time of the issuance of such Option or Convertible Security or, in case such a record date shall have been fixed, as of the close of business on such record date.
(B) Except as provided in paragraphs (C) and (D) below, no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities.
(C) If such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any change in the consideration payable to the Corporation or the number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof (other than a change resulting from the antidilution provisions of such Options or Convertible Securities), the Conversion Price, as applicable, computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto) and any subsequent adjustments based thereon shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; provided, however, that such recomputed Conversion Price shall not exceed the Conversion Price that would have been in effect had the original issuance of Options or Convertible Securities not been deemed to constitute an issuance of Additional Shares of Common Stock.
(D) Upon the expiration of any such Options or Convertible Securities, the Conversion Price to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock actually issued upon the exercise of such Options or Convertible Securities.
(iii) Adjustment of Conversion Price for Dilutive Issuances. In the event the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3(c)(ii)) after the Original Issue Date without consideration or for a consideration per share less than the Conversion Price per share of Series A Preferred Stock in effect immediately prior to such issuance (such lower price, the “Base Conversion Price”), then the Conversion Price shall be reduced to a price (rounded to the nearest cent) equal to the Base Conversion Price.
(iv) Determination of Consideration. For purposes of this Section 3(c), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property. Such consideration shall:
(1) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof;
(2) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and
(3) in the event Additional Shares of Common Stock are issued together with other securities or other assets of the Corporation for consideration that covers both, be the proportion of such consideration allocated to such Additional Shares of Common Stock, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 3(c)(ii) relating to Options and Convertible Securities shall be equal to:
(1) the total amount, if any, received or receivable by the Corporation as consideration for the issuance of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, divided by
(2) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.
(C) Issuances for No Consideration. If the Corporation receives no consideration for Additional Shares of Common Stock, then the Corporation shall be deemed to have received an aggregate of $0.01 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued.
(v) Other Adjustments to Conversion Price.
(A) Subdivisions, Combinations or Consolidations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided, combined or consolidated, by stock split, reverse stock split or similar event, into a greater or lesser number of shares of Common Stock after the Original Issue Date, the Conversion Price in effect immediately prior to such subdivision, combination or consolidation shall, concurrently with the effectiveness of such subdivision, combination or consolidation, be proportionately adjusted.
(B) Common Stock Dividends and Distributions. If, after the Original Issue Date, the Corporation at any time or from time to time issues, or fixes a record date for determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then in each such event, as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, the Conversion Price that is then in effect shall be decreased by multiplying the Conversion Price then in effect by a fraction, (x) the numerator of which is the number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (y) the denominator of which is the number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend or distribution is not paid in full on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this Section 3(c)(v)(B) to reflect the actual payment of such dividend or distribution.
(C) Other Distributions. In case the Corporation shall distribute to holders of its Common Stock shares of its capital stock (other than shares of Common Stock and other than as otherwise subject to adjustment pursuant to this Section 3(c)), stock or other securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights (excluding options to purchase and rights to subscribe for Common Stock or other securities of the Corporation convertible into or exchangeable for Common Stock), or shall fix a record date for determination of holders of Common Stock entitled to receive such a distribution, then, in each such case, provision shall be made so that the holders of the Series A Preferred Stock shall be entitled to receive, upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities, evidences of indebtedness, assets, options or rights, as applicable, that they would have received had their Series A Preferred Stock been converted into Common Stock on the date of such event (or on the record date with respect thereto, if such record date is fixed) and had they thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 3 with respect to the rights of the holders of the Series A Preferred Stock.
(D) Recapitalizations and Reorganizations. In the case of any capital recapitalization or reorganization (other than a subdivision, combination or other recapitalization provided for elsewhere in this Section 3 or a Deemed Liquidation Event provided for in Section 2), or the fixing of any record date for determination of holders of Common Stock affected by such recapitalization or reorganization, provision shall be made so that the holders of Series A Preferred Stock shall be entitled to receive, upon conversion thereof, the type and number of shares of stock or other securities or property of the Corporation or otherwise that they would have received had their Series A Preferred Stock been converted into Common Stock on the date of such event (or on the record date with respect thereto, if such record date is fixed) and had they thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 3 with respect to the rights of the holders of the Series A Preferred Stock. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 to the end that the provisions of this Section 3 shall be applicable after the recapitalization or reorganization to the greatest extent practicable.
(vi) No Adjustment of Conversion Price. No adjustment in the Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives approval, written consent or agreement from the holders of a majority of the then outstanding shares of Series A Preferred Stock, voting together as a single class, agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.
(vii) Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable holder by the Share Delivery Date, the holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall promptly return to the holder any original Series A Preferred Stock certificate delivered to the Corporation and the holder shall promptly return to the Corporation the Conversion Shares issued to such holder pursuant to the rescinded Conversion Notice.
(viii) Obligation Absolute; Partial Liquidated Damages. The Corporation’s obligations to issue and deliver the Conversion Shares upon conversion of the Series A Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by the holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to the holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action the Corporation may have against the holder. If the Corporation fails for any reason to deliver to the holder such Conversion Shares pursuant to Section 3(c) by the Share Delivery Date, the Corporation shall pay to the holder, in cash, as liquidated damages and not as a penalty, for each share of Series A Preferred Stock being converted, $10 per trading day (increasing to $20 per trading day on the fifth (5th) trading day after such liquidated damages begin to accrue) for each trading day after such Share Delivery Date until such Conversion Shares are delivered or holder rescinds such conversion.
(d) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion of any share or shares of the Series A Preferred Stock and the number of shares of Common Stock to be issued shall be rounded down to the nearest whole share. The number of shares issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 3, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price then in effect for the Series A Preferred Stock, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of Series A Preferred Stock.
(e) Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or any other right, the Corporation shall mail to each holder of Series A Preferred Stock, at least five (5) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; provided, however, that such notice period may be shortened upon the vote, written consent or agreement of holders of Series A Preferred Stock that are entitled to such notice rights or similar notice rights and that represent a majority of the voting power of all then outstanding shares of Series A Preferred Stock voting together as a single class.
(f) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series A Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Amended and Restated Certificate of Incorporation.
(g) Notices. Any notice required by the provisions of this Section 3 to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at its address appearing on the books of the Corporation. Notice may also be given by any other reliable or generally accepted means, including by facsimile or other electronic transmission or by a nationally recognized overnight courier service, provided, that if notice is to be given by facsimile or other electronic transmission, this Corporation must comply with the requirements of Section 232 of the Delaware General Corporation Law.
(h) Right to Redeem (Holder). Each share of the Series A Preferred Stock shall be redeemable at the option of the holder, at any time after the date of issuance of such share, for the payment of cash by the Corporation to the holder equal to the Aggregate Stated Value of the shares of Series A Preferred Stock that holder elects to redeem (the “Redemption Payment Amount”). The holder shall effect redemptions by delivering to the Corporation a Notice of Redemption (each, a “Notice of Redemption”) specifying the number of shares of Series A Preferred Stock to be redeemed. The Corporation shall pay to the holder the Redemption Payment Amount within 30 days of receiving the corresponding Notice of Redemption.
(i) Right to Redeem (Corporation). Subject to the provisions of this Section 3(i), at any time after the Original Issue Date and subject to the approval of the Board of Directors, the Corporation may deliver a notice to the holders of Series A Preferred Stock (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the then outstanding Series A Preferred Stock for cash or shares of Common Stock of the Corporation in an amount equal to the Optional Redemption Amount (as hereinafter defined) on the next business day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date,” such one business day period, the “Optional Redemption Period” and such redemption, the “Optional Redemption”), provided, however, that, at the election of the Corporation’s Board of Directors in its sole discretion, the Corporation may pay such Optional Redemption Amount in shares of Common Stock valued at the Conversion Price. The Optional Redemption Amount is payable in full on the Optional Redemption Date. The Corporation’s determination to pay an Optional Redemption shall be applied ratably to all of the holders of the then outstanding Series A Preferred Stock. “Optional Redemption Amount” means the sum of (i) the product of (x) 100% of the Stated Value Per Share and (y) the number of shares of Series A Preferred Stock to be redeemed and (ii) any unpaid Dividends. In the event the Corporation elects to pay the Optional Redemption Amount in shares of Common Stock, the Corporation shall deliver to the holders such number of shares of Common Stock equal to the Optional Redemption Amount divided by the Conversion Price.
4. Voting Rights. Each share of Series A Preferred Stock shall have the voting power of 2000 shares of Common Stock.
5. Protective Provisions.
(a) At any time when shares of Series A Preferred Stock are outstanding, except where the vote or written consent of the holders of a greater number of shares of Series A Preferred Stock is required by law or by the Certificate of Incorporation, and in addition to any other vote required by law or the Certificate of Incorporation, without the written consent of the holders of at least a majority of the votes represented by the then outstanding shares of Series A Preferred Stock, given in writing or by vote at a meeting, the Corporation will not:
(i) amend, alter or repeal any provision of this Certificate of Designation and Restatement to change the rights of the Series A Preferred Stock;
(ii) create or authorize the creation of any additional class or series of shares of stock which ranks senior to the Series A Preferred Stock as to dividends or the distribution of assets on the liquidation, dissolution or winding up of the Corporation, or increase the authorized amount of any additional class or series of shares of stock which ranks senior to such Series A Preferred Stock as to dividends or the distribution of assets on the liquidation, dissolution or winding up of the Corporation, or create or authorize any obligation or security convertible into shares of any series of Series A Preferred Stock or into shares of any other class or series of stock which ranks senior to such Series A Preferred Stock as to dividends or the distribution of assets on the liquidation, dissolution or winding up of the Corporation, whether any such creation, authorization or increase shall be by means of amendment to this Certificate of Incorporation or by merger, consolidation or otherwise;
(iii) create, or authorize the creation of, or issue, or authorize the issuance of, any debt security of the Corporation which by its terms is convertible into or exchangeable for any equity security of the Corporation, if such equity security ranks senior to the Series A Preferred Stock as to dividends or the distribution of assets on the liquidation, dissolution or winding up of the Corporation;
(iv) issue shares of Common Stock which issuance would result in the Corporation having an insufficient number of shares of Common Stock necessary to deliver upon the conversion of the Series A Preferred Stock in full, provided in the event of any such shortfall, the Corporation shall use its best efforts to authorize such sufficient number of shares of Common Stock necessary to deliver upon the Conversion of the Series A Preferred Stock in full within ninety (90) days ;
(v) purchase or redeem, or set aside any sums for the purchase or redemption of, or pay any dividend or make any distribution on, any shares of stock other than the Series A Preferred Stock, except for dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and other than shares of Common Stock repurchased from employees, advisors, officers, directors or consultants or service providers of the Corporation at the original purchase price thereof; or
(vi) permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Sections 5(a)(i) through 5(a)(v), purchase or otherwise acquire such shares at such time and in such manner.
The number of shares of Series A Preferred Stock is 500,000, 242,534 of which have been issued.
IN WITNESS WHEREOF, this Certificate of Designation and Restatement has been signed by an authorized officer of the Corporation as of November 23, 2022.
| By: | /s/ John D. Maatta | |
| Name: | John D. Maatta | |
| Title: | Chief Executive Officer |