The Series B Preferred Stock will be entitled to dividends on an
as-if-converted
basis in the same form as any dividends actually paid on shares of Common Stock or other securities. In addition, until the earlier of the date there are no
shares of Series B Preferred Stock outstanding, or one year from the effective date of this registration statement, the conversion price in respect of the Series B Preferred Stock is also subject to anti-dilution protection adjustment in the event
the Company issues securities at an effective price less than the initial conversion price thereof, subject to certain exceptions. If the Stockholder Approval is not obtained, the shares of Series B Preferred Stock will not become convertible, and
will remain outstanding in accordance with the terms of the Series B Designation of Rights.
Except as otherwise required by law, the
holders of Series B Preferred Stock will have no right to vote on matters submitted to a vote of the Companys stockholders. Without the prior written consent of 75% of the outstanding shares of Series B Preferred Stock, however, the Company
may not: (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend the Series B Designation of Rights; (b) amend the Companys certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the holders of Series B Preferred Stock; (c) increase the number of authorized shares of Series B Preferred Stock; or (d) enter into any agreement with respect to any of the
foregoing.
In the event of the dissolution and winding up of the Company, the proceeds available for distribution to the Companys
stockholders shall be distributed
pari passu
among the holders of the shares of Common Stock and Series B Preferred Stock, pro rata based upon the number of shares held by each such holder, as if the outstanding shares of Series B Preferred
Stock were converted into shares of Common Stock.
Shares Issued to a Selling Stockholder in Connection with the Warrant Exercise Agreement
On March 8, 2018, the Company entered into the Warrant Exercise Agreement with the Warrant Holder to purchase up to an aggregate of
2.4 million shares of Common Stock, at an exercise price of $2.00 per share (the
Original Warrant
). Pursuant to the terms of the Warrant Exercise Agreement, the Warrant Holder agreed to exercise, from time to time and in
accordance with the terms of the Original Warrant, including certain beneficial ownership limitations set forth therein, the Original Warrant for cash (the
Warrant Exercise
). As a result of the Warrant Exercise, the Company
received gross proceeds of $3.4 million on March 8, 2018 from the exercise of 1.7 million shares under the Original Warrant, and expects to receive additional gross proceeds of up to $1.4 million thereafter from additional
exercises of the remaining shares under the Original Warrant following Stockholder Approval. The Company expects to use the net proceeds from the exercise of the Original Warrant for general corporate and working capital purposes and to fund
strategic initiatives.
Pursuant to the terms of the Warrant Exercise Agreement, and in order to induce the Warrant Holder to exercise the
Original Warrant, the Company issued the New Warrants to the Warrant Holder. The New Warrants entitle the Warrant Holder to purchase a number of shares of Common Stock equal to 75% of the number of shares of Common Stock received by the Warrant
Holder upon the full cash exercise of the Original Warrant (i.e., 75% of 2,400,000 shares of Common Stock, or 1,800,000 shares of Common Stock). The terms of the New Warrants are substantially similar to the terms of the Private Placement Warrants,
and have an exercise price of $3.50 per share.
The New Warrants will become exercisable following Stockholder Approval, are subject to
certain ownership limitations, and expire five years after the date of Stockholder Approval.
Registration Rights Agreement
In connection with the Private Placement, the Merger, and the Warrant Exercise Agreement, the Company entered into a registration rights
agreement (as amended, the
Registration Rights Agreement
) with the Purchasers, the former stockholders of SafeOp, and the Warrant Holder (collectively, the
Holders
), effective as of the Closing. Pursuant to the
Registration Rights Agreement, the Company agreed to prepare and file a
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