participate in such distributions. Notwithstanding the foregoing, if in the event of a dissolution or winding up of the Company in connection with a Chapter 7 bankruptcy, the assets of the Company available for distribution to its stockholders shall be insufficient to pay the Liquidation Amount, the Holders, with respect to their shares of Series O Preferred Stock, shall be entitled to receive out of such assets the same amount that each share of the Common Stock would receive as if each outstanding share of Series O Preferred Stock were, immediately prior to the applicable record date, fully converted (disregarding solely for such purposes any conversion or exchange limitations hereunder) to shares of Common Stock at the conversion ratio for each whole share of Preferred Stock (the “Conversion Ratio”), which is equal to $8.01 (the “Stated Value”) divided by the applicable Conversion Price.
For each share of Series O Preferred Stock, the “Conversion Price” shall be, unless otherwise provided in this Certificate of Designation, equal to the Minimum Price as of the applicable Conversion Date (as defined below). “Minimum Price” means, with respect to a given date, the lower of: (i) the Closing Price (as defined in the Certificate of Designation) of the Common Stock immediately preceding such date or (ii) the average Closing Price of the Common Stock for the five (5) Trading Days (as defined in the Certificate of Designation) immediately preceding such date.
Each of the following events shall be considered a “Deemed Liquidation Event”: (A) a merger or consolidation in which the Company is a constituent party and in which the stockholders of the Company immediately prior to such merger or consolidation do not continue to hold a majority of the voting power of the Company or any successor entity following such merger or consolidation; or (B) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.
Conversion Rights
At any time prior to December 31, 2026, the Company may, in its sole discretion, elect to convert all (and not part) of the then outstanding shares of Series O Preferred Stock to Conversion Shares at the Conversion Ratio (the “Optional Conversion”); provided, however, that in no event may Conversion Shares be issued to any Holder that would cause such Holder, together with its affiliates, to beneficially own shares of Common Stock in excess of the Maximum Percentage (as defined below) immediately after giving effect to the issuance of the Conversion Shares. The Company shall effect the Optional Conversion by providing Holders with the Company Conversion Notice (as defined in the Certificate of Designation), which shall specify, inter alia, the date on which such conversion is to be effected (the “Optional Conversion Date”). On the Optional Conversion Date, each outstanding share of Series O Preferred Stock will automatically convert (subject to the Maximum Percentage limitation) into such whole number of fully paid and non-assessable shares of Common Stock as is determined by the Conversion Ratio.
If no Optional Conversion occurs pursuant to the terms of the Certificate of Designation, then on December 31, 2026 (the “Automatic Conversion Date” and together with an Optional Conversion Date, the “Conversion Date”), each outstanding share of Series O Preferred Stock will automatically convert (subject to the Maximum Percentage limitation) into such whole number of fully paid and non-assessable shares of Common Stock as is determined by the Conversion Ratio (the “Automatic Conversion” and together with the Optional Conversion, the “Conversion”).
For any issuance of Conversion Shares that would cause a breach of the Maximum Percentage limitation, the Company may issue, in lieu of such number of Conversion Shares in excess of the Maximum Percentage, one or more pre-funded warrants (each, a “Pre-Funded Warrant”) exercisable into, in aggregate, such number of Conversion Shares in excess of the Maximum Percentage to the Holder; provided, however, that the terms of such Pre-Funded Warrants shall provide that they may not be exercised to such extent as to cause the Holder, together with its affiliates, to beneficially own shares of Common Stock in excess of the Maximum Percentage immediately after giving effect to such exercise. Each Pre-Funded Warrant is exercisable in part or in full immediately at an exercise price of $0.001 per share, and may be exercised at any time until such Pre-Funded Warrant is exercised in full, subject to the Maximum Percentage limitation described above.
