Attached files
| file | filename |
|---|---|
| 8-K - Infusion Brands International, Inc. | v189879_8k.htm |
| EX-10.5 - Infusion Brands International, Inc. | v189879_ex10-5.htm |
| EX-10.4 - Infusion Brands International, Inc. | v189879_ex10-4.htm |
| EX-10.1 - Infusion Brands International, Inc. | v189879_ex10-1.htm |
| EX-10.8 - Infusion Brands International, Inc. | v189879_ex10-8.htm |
| EX-10.7 - Infusion Brands International, Inc. | v189879_ex10-7.htm |
| EX-10.3 - Infusion Brands International, Inc. | v189879_ex10-3.htm |
| EX-10.6 - Infusion Brands International, Inc. | v189879_ex10-6.htm |
CERTIFICATE
OF DESIGNATIONS,
PREFERENCES
AND RIGHTS
of
SERIES
G CONVERTIBLE PREFERRED STOCK
of
OMNIRELIANT
HOLDINGS, INC.
OmniReliant Holdings, Inc., a
corporation organized and existing under the laws of the State of Nevada (“Corporation”), hereby
certifies that the Board of Directors of the Corporation (the “Board of Directors” or the
“Board”), pursuant to
authority of the Board of Directors as required by applicable corporate law, and
in accordance with the provisions of its certificate of incorporation and
bylaws, has and hereby authorizes a series of the Corporation’s previously
authorized Preferred Stock, par value $.00001 per share (the “Preferred Stock”), and hereby
states the designation and number of shares, and fixes the rights, preferences,
privileges, powers and restrictions thereof, as follows:
Capitalized
terms used and not otherwise immediately defined shall have the meanings set
forth in that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated June 30, 2010 or shall be defined in Section 8
below.
1. Designation, Amount, Stated
Value and Par Value. The series of preferred stock shall be designated as
its Series G Convertible Preferred Stock (the “Series G Preferred Stock”) and the
number of shares so designated shall be 5,000,000. The par value of
each issued share of Series G Preferred Stock shall be $.00001 per share, and
the stated value of each issued share of Series G Preferred Stock shall be
deemed to be $1.00 (the “Stated
Value”). The Series G Preferred Stock shall have a mandatory
redemption date of June 30, 2013 (the “Mandatory Redemption
Date”)
2. Dividends and
Distributions.
a. Dividends.
(i) Quarterly Cumulative
Preferred Dividends. Before any dividends shall be paid or set
aside for payment on any Junior Security of the Corporation, each Holder of the
Series G Preferred Stock shall be entitled to receive cash dividends payable on
the Stated Value of the Series G Preferred Stock at a rate of 8% per annum
(“Quarterly Preferred
Dividends”), which shall be cumulative, accrue daily from the Original
Issuance Date and be due and payable on the last day of March, June, September
and December of each year (each a “Quarterly Dividend Date”). Such
dividends shall accrue whether or not declared, and the accumulation of unpaid
dividends shall bear interest at a rate of 8% per annum. If a
Quarterly Dividend Date is not a Business Day, then the dividend shall be due
and payable on the Business Day immediately following such Quarterly Dividend
Date.
(ii) Additional
Dividend. If the Special Preferred Distribution payable
pursuant to Section 2(b) hereof has not been paid to Holders of the Series G
Preferred Stock by June 30, 2011, then, in addition to Quarterly Preferred
Dividends payable pursuant to Section 2(a)(i) hereof, each Holder of Series G
Preferred Stock shall be entitled to receive an additional one-time cash
dividend on June 30, 2011, in an amount equal to the Stated Value of the Series
G Prefered Stock for each share of Series G Preferred Stock then held by such
Holder (the “Additional
Dividend”). Such Additional Dividend shall accrue whether or
not declared, and the accumulation of any unpaid amount of such Additional
Dividend shall bear interest at a rate of 8% per annum.
b. Special Preferred
Distribution.
(i) Prior
to such time that the Corporation permits the exercise of any of the Management
Options, the Corporation shall declare and pay to each Holder of Series G
Preferred Stock with respect to each share of Series A Preferred Stock then held
by such Holder the Special Preferred Distribution (defined
below). Notwithstanding the foregoing, the exercise of the Management
Options shall not be prohibited if the Corporation has the funds to pay the
Special Preferred Distribution and (i) the Board of Directors elects not to
distribute the Special Preferred Distribution or (ii) it offers to
pay the Special Preferred Distribution, but the Holders of the Series G
Preferred Stock, in their sole discretion, elect to waive the payment of the
Special Preferred Distribution. Additionally, if the Special
Preferred Distribution is paid to the Holders of the Series G Preferred Stock in
part, the Management Options will become exercisable on a pro rata basis,
proportionate to the amount of payment made under the Special Preferred
Distribution.
(ii) If
the Special Preferred Distribution has not been paid to Holders of the Series A
Preferred Stock before the Mandatory Redemption Date, then each Holder of Series
G Preferred Stock shall be entitled to receive, with respect to each share of
Series G Preferred Stock then held by such Holder, the Special Preferred
Distribution on the Mandatory Redemption Date. Such Special Preferred
Distribution shall accrue whether or not declared on the Mandatory Redemption
Date, and the accumulation of any unpaid amount of such Special Preferred
Distribution shall bear interest at a rate of 8% per annum. For the
avoidance of doubt, the Special Preferred Distribtion with respect to each share
of Series A Prefered Stock outstanding on the Mandatory Redemption Date shall
become due and payable on such date regardless of whether such share is redeemed
by the Coporation on such date.
(iii) “Special Preferred
Distribution” means, with respect to each share of Series A Prefered
Stock, an amount equal to (A) the sum of (1) the product of the Stated Value of
such share multiplied by 8.12, plus (2) all accrued but upaid Quarterly
Preferred Dividends thereon, less (B) the amount of the Additional Dividend, if
any, paid on such share prior to the payment date of the Special Prefered
Distribution.
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c. Payment
Procedures. Dividends and distributions shall be payable to
holders of record, as they appear on the stock books of the Corporation on such
record dates as may be declared by the Board of Directors, not more than sixty
(60) days, nor less than ten (10) days preceding the payment dates of such
dividends. If the dividend on the Series G Preferred Stock shall not
have been paid or set apart in full for the Series G Preferred Stock when
payable, the aggregate deficiency shall be cumulative and shall be fully paid or
set apart for payment before any dividends shall be paid upon or set apart for,
or any other distributions paid made on, or any payments made on account of the
purchase, redemption or retirement of any Junior Security. When
dividends are not paid in full upon the shares or fractions of a share of Series
G Preferred Stock and any other Pari Passu Security, all dividends declared upon
this series and any other Pari Passu Security shall be declared, pro rata, so
that the amount of dividends declared per share or fraction of a share on this
Series G Preferred Stock and such other Pari Passu Security shall in all cases
bear to each other the same rates that accrued dividends per share on the shares
of Series G Preferred Stock and such other Pari Passu Security bear to each
other.
3. Voting.
a. Voting
Rights.
(i) Board of
Directors. So long as any shares of Series G Preferred Stock
are outstanding, the holders of outstanding shares of Series G Preferred Stock
shall, voting together as a separate class, be entitled to elect two Directors
to the Board (the “Series G
Directors”). The Series G Directors shall be elected by a
plurality vote of holders of Series G Preferred Stock, with the elected
candidates being the individuals receiving the greatest number of affirmative
votes (with each holder of Series G Preferred Stock entitled to cast one vote
for or against each candidate with respect to each share of Series G Preferred
Stock held by such holder) of the outstanding shares of Series G Preferred
Stock, with votes cast against such candidate and votes withheld having no legal
effect. The election of the Series G Directors shall
occur:
(1) at
the annual meeting of holders of capital stock;
(2) at
any special meeting of holders of capital stock if such meeting is called for
the purpose of electing directors;
(3) at
any special meeting of holders of Series G Preferred Stock called by holders of
not less than a majority of the outstanding shares of Series G Preferred Stock;
or
(4) by
the written consent of holders of the outstanding shares of Series G Preferred
Stock entitled to vote for Series G Directors in the manner and on the basis
specified above.
If, at
any time when the holders of Series G Preferred Stock are entitled to elect
Series G Directors, any such Series G Director should cease to be a Director for
any reason, the vacancy shall be filled only by the vote or written consent of
the holders of the outstanding shares of Series G Preferred Stock, voting
together as a separate class, in the manner and on the basis specified above or
as otherwise provided by law. The holders of outstanding shares of
Series G Preferred Stock shall also be entitled to vote in the election of all
other Directors of the Corporation together with holders of all other shares of
the Corporation’s outstanding capital stock entitled to vote thereon, voting as
a single class, with each outstanding share of Series G Preferred Stock entitled
to the number of votes specified in Section 3(a)(ii) hereof. The
holders of outstanding shares of Series G Preferred Stock, may, in their
discretion, determine not to elect Series G Directors as provided herein from
time to time, and during any such period the Board nonetheless shall be deemed
duly constituted.
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(ii) Other
Matters. Except as otherwise provided herein or as otherwise
required by law, each holder of the shares of Series G Preferred Stock shall
have the right to the number of votes equal to the number of Conversion Shares
then issuable upon conversion of the Series G Preferred Stock held by such
Holder in all matters as to which holders of Common Stock are required or
permitted to vote, and with respect to such vote, such Holder shall have full
voting rights and powers equal to the voting rights and powers of the holders of
Common Stock, and shall be entitled, notwithstanding any provision in these
Articles as amended hereby, to vote, together with the holders of Common Stock
as a single class, with respect to any question upon which holders of Common
Stock have the right to vote. To the extent permitted under applicable corporate
law, but subject to Section 3(b) below,
the Corporation’s shareholders may take action by the affirmative vote of a
majority of all shareholders of this Corporation entitled to vote on an
action. Without limiting the generality of the foregoing the
Corporation may take any of the actions by the affirmative vote of the
holders of a majority of the Series G Preferred Stock and the Common Stock and
other voting Common Stock Equivalents, voting together as one class, with each
holder of Series G Preferred Stock having the number of votes set forth
above.
b. Limitations on Corporate
Actions. Notwithstanding anything to the contrary in Section 3(a)
above, as long as any shares of Series G Preferred Stock are outstanding, the
Corporation agrees that it shall be bound by its covenants set forth in Sections
4.13 and 4.14 of the Securities Purchase Agreement.
4. Liquidation, Dissolution, or
Winding-Down.
a. Payments to Holders of
Series G Preferred Stock. Upon any liquidation, dissolution or
winding-down of the Corporation, whether voluntary or involuntary (a “Liquidation”), the holders of
the shares of Series G Preferred Stock shall be paid in cash, before any payment
shall be paid to the holders of Common Stock, or any other Junior Security, an
amount for each share of Series G Preferred Stock held by such holder equal to
the sum of the Stated Value thereof plus all accrued but unpaid dividends
thereon (such applicable amount payable with respect to a share of Series G
Preferred Stock sometimes being referred to as the “Individual Series G Preferred
Liquidation Preference Payment” and with respect to all shares of Series
G Preferred Stock in the aggregate sometimes being referred to as the “Aggregate Series G Liquidation
Preference Payment”). If, upon such liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary, the assets
to be distributed among the holders of shares of Series G Preferred Stock shall
be insufficient to permit payment to the holders of Series G Preferred Stock of
an aggregate amount equal to the Aggregate Series G Liquidation Preference
Payment, then the entire assets of the Corporation to be so distributed shall be
distributed ratably among the holders of Series G Preferred Stock (based on the
Individual Series G Preferred Liquidation Preference Payments due to the
respective holders of Series G Preferred Stock).
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b. Payments to Holders of a
Junior Security. After the payment of all preferential amounts
required to be paid to the holders of the Series G Preferred Stock and any other
Senior Security or Pari Passu Security, the holders of any Junior Security then
outstanding shall be entitled to receive the remaining assets of the Corporation
available for distribution to its stockholders as otherwise set forth in the
Corporation’s certificate or articles of incorporation.
5. Conversion. The
holders of Series G Preferred Stock shall have the conversion rights as
follows.
a. Right to
Convert. Each share of Series G Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the Original
Issue Date, and without the payment of additional consideration by the holder
thereof, into such number of fully-paid and nonassessable shares of Common Stock
as is determined by dividing the Stated Value per share, by the Series G
Conversion Price in effect at the time of conversion. The “Series G Conversion
Price” shall
be ten cents ($0.10); provided, however, that the Series G Conversion Price, and
the rate at which shares of Series G Preferred Stock may be converted into
shares of Common Stock, shall be subject to adjustment as provided in Section 6
below. Shares of Series G Preferred Stock converted into Common Stock
or redeemed in accordance with the terms hereof shall be canceled and shall not
be reissued.
b. Holders
shall effect conversions by providing the Corporation with the form of
conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each
Notice of Conversion shall specify the number of shares of Series G Preferred
Stock to be converted, the number of shares of Series G Preferred Stock owned
prior to the conversion at issue, the number of shares of Series G Preferred
Stock owned subsequent to the conversion at issue and the date on which such
conversion is to be effected, which date may not be prior to the date the
applicable Holder delivers by facsimile such Notice of Conversion to the
Corporation (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 to the Corporation is deemed
delivered hereunder. To effect conversions of shares of Series G
Preferred Stock, a Holder shall not be required to surrender the certificate(s)
representing such shares of Series G Preferred Stock to the Corporation unless
all of the shares of Series G Preferred Stock represented thereby are so
converted, in which case such Holder shall deliver the certificate representing
such shares of Series G Preferred Stock promptly following the Conversion Date
at issue. Certificates representing the Series G Preferred Stock shall have the
following legend:
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THE
HOLDER AND ANY ASSIGNEE OR TRANSFEREE, BY ACCEPTANCE OF THIS STOCK CERTIFICATE,
ACKNOWLEDGE AND AGREE THAT, PURSUANT TO SECTION 5.B. OF THE CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES G PREFERRED STOCK, THE NUMBER
OF SHARES REFLECTED ON THE FACE OF THIS CERTIFICATE MAY NOT BE THE ACTUAL NUMBER
OF SHARES HELD BY THE HOLDER OR ASSIGNEE. PLEASE INQUIRE WITH THE
CORPORATION AS TO THE ACTUAL NUMBER OF SHARES EVIDENCED BY THIS
CERTIFICATE.
c. Fractional
Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Series G Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of a share of Common Stock as determined in good faith by the Board of
Directors, or round-up to the next whole number of shares, at the Corporation’s
option. Whether or not fractional shares would be issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series G Preferred Stock the holder is at the time converting into Common Stock
and the aggregate number of shares of Common Stock issuable upon such
conversion.
d. Mechanics of
Conversion.
i. Delivery of Certificate Upon
Conversion. Not later than five Trading Days after each Conversion Date
(the “Share Delivery
Date”), the Corporation shall deliver, or cause to be delivered, to the
converting Holder a certificate or certificates which, on or after the Effective
Date, shall be free of restrictive legends and trading restrictions (other than
those which may then be required by the Transaction Documents) representing the
number of shares of Common Stock being acquired upon the conversion of shares of
Series G Preferred Stock. On or after the Effective Date, the Corporation shall,
upon request of such Holder, use its reasonable efforts to deliver any
certificate or certificates required to be delivered by the Corporation under
this Section electronically through the Depository Trust Company or another
established clearing corporation performing similar functions. If in the case of
any Notice of Conversion such certificate or certificates are not delivered to
or as directed by the applicable Holder by the fifth Trading Day after the
Conversion Date, the applicable Holder shall be entitled to elect by written
notice to the Corporation at any time on or before its receipt of such
certificate or certificates, to rescind such Notice of Conversion by written
notice to the Corporation, in which event the Corporation shall promptly return
to such Holder any original Series G Preferred Stock certificate delivered to
the Corporation and such Holder shall promptly return any Common Stock
certificates representing the shares of Series G Preferred Stock tendered for
conversion to the Corporation.
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ii. Obligation Absolute;
Damages. The Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of Series G Preferred Stock in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
a 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 such Holder or any other Person
of any obligation to the Corporation; provided, however, that such
delivery shall not operate as a waiver by the Corporation of any such action
that the Corporation may have against such Holder. If the Corporation
fails to deliver to a Holder such certificate or certificates pursuant to this
Section on the fifth Trading Day after the Share Delivery Date applicable to
such conversion, the Corporation shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Stated Value of
Series G Preferred Stock being converted, $10 per Trading Day (increasing to $20
per Trading Day on the tenth Trading Day after the Share Deliver Date) for each
Trading Day after such fifth Trading Day after the Share Delivery Date until
such certificates are delivered.
e. Reservation of Shares
Issuable Upon Conversion. The Corporation covenants that it will at all
times reserve and keep available out of its authorized and unissued shares of
Common Stock for the sole purpose of issuance upon conversion of the Series G
Preferred Stock, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holders of the Series G Preferred
Stock, not less than such aggregate number of shares of the Common Stock as
shall (subject to the terms and conditions in the Securities Purchase Agreement)
be issuable upon the conversion of all outstanding shares of Series G
Preferred Stock. The Corporation covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.
6. Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Corporation, at any time while this Series G Preferred
Stock is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of
Common Stock or any other Common Stock Equivalents (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Corporation
upon conversion of, or payment of a dividend on, this Series G Preferred Stock);
(B) subdivides outstanding shares of Common Stock into a larger number of
shares; (C) combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares; or (D) issues, in the
event of a reclassification of shares of the Common Stock, any shares of capital
stock of the Corporation, then the Series G Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding any treasury shares of the Corporation) outstanding immediately
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event. Any adjustment made
pursuant to this Section 6(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
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b) Subsequent Sales.
Except with respect to an Exempt Issuance, if the Corporation or any Subsidiary
thereof, as applicable, at any time while any share of Series G Preferred Stock
is outstanding issues or sells, or in accordance with this Section 6(b) is
deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Corporation) for a consideration per share (the “New Issuance Price”) less than
a price (the “Applicable
Price”) equal to the Series G Conversion Price in effect immediately
prior to such issue or sale (the foregoing a “Dilutive Issuance”), then
immediately after such Dilutive Issuance, the Series G Conversion Price then in
effect shall be reduced to the New Issuance Price. For purposes of
determining the adjusted Series G Conversion Price under this Section 6(b),
the following shall be applicable:
i. Issuance of
Options. If the Corporation in any manner grants or sells any
Options (defined below) and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange or exercise of any Convertible Securities (defined below) issuable
upon exercise of such Option is less than the Applicable Price, then all of such
shares of Common Stock underlying such Option shall be deemed to be outstanding
and to have been issued and sold by the Corporation at the time of the granting
or sale of such Option for such price per share. For purposes of this
Section 6(b), “Convertible
Securities” means any stock or other securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
shares of Common Stock, “Options” means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities, and for purposes of this Section 6(b)(i) the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or upon
conversion or exchange or exercise of any Convertible Securities issuable upon
exercise of such Option” shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Corporation with respect
to any one share of Common Stock upon granting or sale of the Option, upon
exercise of the Option and upon conversion or exchange or exercise of any
Convertible Security issuable upon exercise of such Option. No
further adjustment of the Series G Conversion Price shall be made upon the
actual issuance of such share of 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 or exercise of such Convertible
Securities.
ii. Issuance of Convertible
Securities. If the Corporation in any manner issues or sells
any Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange or exercise thereof is
less than the Applicable Price, then all shares of Common Stock issuable upon
conversion of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the
purposes of this Section 6(b)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon such conversion or exchange or
exercise” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Corporation with respect to
any one share of Common Stock upon the issuance or sale of the Convertible
Security and upon the conversion or exchange or exercise of such Convertible
Security. No further adjustment of the Series G Conversion Price
shall be made upon the actual issuance of such share of Common Stock upon
conversion or exchange or exercise 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 the Series G Conversion Price had been or are to
be made pursuant to other provisions of this Section 6(b), no further
adjustment of the Series G Conversion Price shall be made by reason of such
issue or sale.
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iii. 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, exchange or exercise of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable or
exercisable for Common Stock changes at any time, the Series G Conversion Price
in effect at the time of such change shall be adjusted to the Series G
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities 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. For purposes of this
Section 6(b)(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Subscription Date are changed in the manner described
in the immediately preceding sentence, then such Option or Convertible Security
and the Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such
change. No adjustment shall be made if such adjustment would result
in an increase of the Series G Conversion Price then in effect.
iv. Calculation of Consideration
Received. If any Option is issued in connection with the issue
or sale of other securities of the Corporation, 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 $0.01. 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 gross amount paid
by the purchaser of such Common Stock, Options, or Convertible Securities,
before any commissions, discounts, fees or expenses. If 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 Corporation 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 (including goodwill) of the
non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for non-cash consideration, the consideration received therefore
will be deemed to be the fair value of such non-cash consideration as determined
in good faith by the Board of Directors of the Corporation.
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v. Notwithstanding
the foregoing, no adjustments shall be made, paid or issued under this Section 6(b) in
respect of issuances subject to Section 6(a)
above. The Corporation shall notify the Holder in writing, no later
than the third (3rd)
Trading Day following the issuance of any Common Stock, Options or Convertible
Securities subject to this section, indicating therein the applicable issuance
price, or applicable reset price, exchange price, conversion price and other
pricing terms (such notice the “Dilutive Issuance
Notice”). For purposes of clarification, whether or not the
Corporation provides a Dilutive Issuance Notice pursuant to this Section 6(b), upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance, the Holder is entitled to receive a number of Conversion Shares based
upon the New Issuance Price regardless of whether the Holder accurately refers
to the New Issuance Price in the Notice of Exercise.
c) Pro Rata
Distributions. If the Corporation, at any time while this Series G
Preferred Stock is outstanding, distributes to all holders of Common Stock (and
not to Holders) evidences of its indebtedness or assets (including cash and cash
dividends) (other than stock dividends, which shall be subject to Section 6(a)) then,
in each such case, the Series G Conversion Price shall be adjusted by
multiplying such Series G Conversion Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of the Common Stock as determined by the Board of
Directors of the Corporation in good faith. In either case the adjustments shall
be described in a statement delivered to the Holders describing the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
d) Fundamental
Transaction. If, at any time while this Series G Preferred Stock is
outstanding, (i) the Corporation effects any merger or consolidation of the
Corporation with or into another Person, (ii) the Corporation effects any sale
of all or substantially all of its assets in one transaction or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the
Corporation or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Corporation effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common Stock
is effectively converted into or exchanged for other securities, cash or
property (in any such case, a “Fundamental Transaction”),
then, upon any subsequent conversion of this Series G Preferred Stock, the
Holders shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For
purposes of any such conversion, the determination of the Series G Conversion
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Corporation shall
apportion the Series G Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holders shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Series G Preferred Stock
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Corporation or surviving entity
in such Fundamental Transaction shall file a new Certificate of Designation with
the same terms and conditions and issue to the Holders new preferred stock
consistent with the foregoing provisions and evidencing the Holders’ right to
convert such preferred stock into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this Section 6(d) and
insuring that this Series G Preferred Stock (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.
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e) Other
Events. If any event occurs of the type contemplated by the
provisions of this Section 6 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), then the
Corporation’s Board of Directors in good faith will make an appropriate
adjustment in the Series G Conversion Price so as to be equitable under the
circumstances and otherwise protect the rights of the Holders; provided that no
such adjustment will increase the Series G Conversion Price as otherwise
determined pursuant to this Section 6.
f) Calculations. All
calculations under this Section 6 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 6, the number
of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury
shares of the Corporation) issued and outstanding.
g) Notice to the
Holders.
i. Adjustment to Conversion
Price. Whenever the Series G Conversion Price is adjusted pursuant to any
provision of this Section 6, the
Corporation shall promptly mail to each Holder a notice setting forth the Series
G Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
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ii. Notice to Allow Conversion
by Holder. If (A) the Corporation shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Corporation shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Corporation shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any
stockholders of the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Corporation is a party, any sale or transfer of all or substantially all of the
assets of the Corporation, of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then, in each case,
the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Series G Preferred Stock, and shall cause to
be delivered to each Holder at its last address as it shall appear upon the
stock books of the Corporation, at least 10 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the
failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to convert the Series G Preferred Stock
(or any part hereof) during the 10-day period commencing on the date of such
notice through the effective date of the event triggering such
notice.
7. Mandatory Redemption at
Maturity. If any share of Series G Preferred Stock remains
outstanding on Mandatory Redemption Date, then on the Mandatory Redemption Date,
the Corporation shall redeem each such share of Series G Preferred Stock for an
amount in cash equal to its Stated Value plus all accrued and unpaid dividends
or distributions thereon, unless the Holder, in its sole discretion, elects to
convert each such share at the Series G Conversion Price as of the Mandatory
Redemption Date.
8. Definitions. As
used herein, the following terms shall have the following meanings:
a. “Affiliate” means any Person
that, directly or indirectly through one (1) or more intermediaries, controls or
is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 144 under the Securities Act. With
respect to a Holder, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Holder will be deemed
to be an Affiliate of such Holder.
b. “Business Day” means any day
except Saturday, Sunday, any day which shall be a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to
close.
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c. “Common Stock” means the
Corporation’s common stock, par value $.00001 per share.
d. “Common Stock Equivalents”
means any securities of the Corporation or the Subsidiaries which would entitle
the holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
e. “Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion of the shares
of Series G Preferred Stock in accordance with the terms hereof.
f. “Effective Date” means the date
that the registration statement registering the Conversion Shares for resale is
declared effective by the SEC
g. “Exempt Issuance” means
issuance by the Corporation of: (a) shares of Common Stock or options to
purchase Common Stock issued to employees, officers, directors or consultants of
the Corporation pursuant to any stock or option plan duly adopted by unanimous
vote of the members of the Board of Directors of the Corporation or a committee
of all the independent directors established for such purpose, (b) securities
issued upon the exercise or exchange of or conversion of any Securities issued
hereunder and/or other securities (including the securities set forth on Schedule 3.1(g) of
the Securites Purchase Agreement) exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities or to decrease the
exercise, exchange or conversion price of any such securities, (c) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the directors, provided that any such issuance shall only be to a Person
which is, itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Corporation, as determined by a majority of
the directors, and in which the Corporation receives benefits in addition to the
investment of funds, but shall not include a transaction in which the
Corporation is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities, (d)
Management Options and (e) securities to shareholders of a target company in
connection with a Spin-off Transaction.
h. “Holder” means a holder of
Series G Preferred Stock.
i. “Junior Security” means the
Common Stock, the Series C Preferred Stock, the Series D Preferred Stock, Series
E Preferred Stock, Series F Preferred Stock, Series H Preferred Stock, all other
Common Stock Equivalents of the Corporation existing on the date hereof, and any
class or series of capital stock of the Corporation hereafter created that does
not, by its terms, rank senior to or pari passu with the Series G Preferred
Stock as to distribution of assets upon Liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, or payment of dividends on
shares of equity securities.
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j. “Management Options” means
options to purchase (a) up to an aggregate of 12.5% of the shares of Common
Stock of the Corporation as of the date hereof on a fully diluted basis issued
to executives, consultants, employees and agents of the Corporation (including
options issued to Robert DeCecco, Richard Diamond, Christopher Phillips and
Stuart Rouse to acquire shares of Common Stock of the Corporation pursuant to
their employment or consulting agreements, as the case may be, referenced in
Section 2.4(b)(v) of the Securities Purchase Agreement) and (b) shares of common
stock of Designer Liquidator, Inc. and/or OmniResponse, Inc. issued to Robert
DeCecco, Richard Diamond, Christopher Phillips and Stuart Rouse, as the case may
be, granted pursuant to their employment or consulting agreements, as the case
may be, referenced in Section 2.4(b)(v) of the Securities Purchase Agreement and
provided that such options, by their terms: (a) vest two (2) years from the date
of issue; and (b) become exercisable only after payment by the Corporation of
the Special Preferred Distribution in full to holders of Series G Preferred
Stock or as otherwise contemplated by the terms of the Certificate of
Designation.
k. “Original Issue Date” the date
the Corporation initially issues the shares of Series G Preferred Stock,
regardless of the number of times transfer of such share is made on the stock
records maintained by or for the Corporation and regardless of the number of
certificates which may be issued to evidence such share.
l. “Pari Passu Security” means
any class or series of capital stock of the Corporation hereafter created that,
by its terms, ranks on parity with the Series G Preferred Stock as to
distribution of assets upon Liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and payment of dividends on
shares of equity securities.
m. “Person” shall mean any
individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
n. “SEC” means the United States
Securities and Exchange Commission.
o. “Rule 144” means Rule 144
promulgated by the SEC under the Securities Act.
p. “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
q. “Securities Purchase Agreement”
means the Securities Purchase Agreement dated on or about June 30, 2010, by and
between the Corporation, and each of the purchasers of Series G Preferred Stock
of the Corporation a party thereto.
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r. “Senior Security” means any class or series of
capital stock of the Corporation hereafter created that, by its terms, ranks
senior to the Series G Preferred Stock as to distribution of assets upon
Liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, or payment of dividends on shares of equity
securities.
s. “Series A Preferred Stock”
means the Series A Convertible Preferred Stock of the Corporation and such
designations, preferences and limitations as set forth in the Certificate of
Designation, Preferences and Rights of Series A Convertible Preferred Stock
filed with the State of Nevada on November 22, 2006.
t. “Series B Preferred Stock”
means the Series B Convertible Preferred Stock of the Corporation and such
designations, preferences and limitations as set forth in the Certificate of
Designation, Preferences and Rights of Series B Convertible Preferred Stock
filed with the State of Nevada on May 25, 2007.
u. “Series C Preferred Stock”
means the Series C Convertible Preferred Stock of the Corporation and such
designations, preferences and limitations as set forth in the Certificate of
Designation, Preferences and Rights of Series C Convertible Preferred Stock
filed with the State of Nevada on October 17, 2007 and amended on July 22,
2009.
v. “Series D Preferred Stock”
means the Series D Convertible Preferred Stock of the Corporation and such
designations, preferences and limitations as set forth in the Certificate of
Designation, Preferences and Rights of Series D Convertible Preferred Stock
filed with the State of Nevada on April 30, 2008 and amended on July 22,
2009.
w. “Series E Preferred Stock”
means the Series E Preferred Stock of the Corporation and such designations,
preferences and limitations as set forth in the Certificate of Designation,
Preferences and Rights of Series E Preferred Stock filed with the State of
Nevada on August 27, 2009.
x. “Series F Preferred Stock”
means the Series F Preferred Stock of the Corporation and such designations,
preferences and limitations as set forth in the Certificate of Designation,
Preferences and Rights of Series F Preferred Stock filed with the State of
Nevada on February 12, 2009 and amended on July 22, 2009.
y. “Series H Preferred Stock”
means the Series H Preferred Stock of the Corporation and such designations,
preferences and limitations as set forth in the Certificate of Designation,
Preferences and Rights of Series H Preferred Stock, which as of the date of this
Certificate of Designations has not been filed with the State of
Nevada.
z.
“Series G Warrant” means
the Series G Common Stock Purchase Warrant issued pursuant to the Securities
Purchase Agreement.
aa. “Spin-off Transaction” means a
transaction whereby certain Subsidiaries, assets, brands and/or lines of
business of the Corporation or a Subsidiary may be spun-off and merged with and
into a public shell company.
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bb. “Subsidiary” shall mean any
corporation, association, partnership, limited liability company or other
business entity of which more than fifty percent (50%) of the total voting power
is, at the time, owned or controlled, directly or indirectly, by the Corporation
or one or more of the other Subsidiaries of the Corporation or a combination
thereof.
cc. “Trading Day” means a day on
which the securities exchange, association, or quotation system on which shares
of Common Stock are listed or quoted for trading shall be open for business or,
if the shares of Common Stock shall not be listed on such exchange, association,
or quoted on a quotation system for such day, a day with respect to which trades
in the United States domestic over-the-counter market shall be
reported.
dd. “Trading Market” means the
following exchanges on which the Common Stock is listed for trading on the date
in question: the New York Stock Exchange, the Nasdaq Capital Market or the
Nasdaq Global Market, the American Stock Exchange, the OTCBB, or Pink
Sheets.
ee. “Transaction Documents” shall
have the meaning ascribed to such term in the Securities Purchase
Agreement.
ff. “VWAP” of a share of Common
Stock as of a particular date (the “Determination Date”) shall
mean the price determined by the first of the following clauses that applies:
(a) if shares of Common Stock are traded on a national securities exchange (an
“Exchange”), the
weighted average of the closing sale price of a share of the Common Stock of the
Corporation on the last five (5) Trading Days prior to the Determination Date
reported on such Exchange as reported in The Wall Street Journal (weighted with
respect to the trading volume with respect to each such day); (b) if shares of
Common Stock are not traded on an Exchange but trade in the over-the-counter
market and such shares are quoted on the National Association of Securities
Dealers Automated Quotations System (“NASDAQ”), the weighted average
of the closing sale price of a share of the Common Stock of the
Corporation on the last five (5) Trading Days prior to the Determination Date
reported on NASDAQ as reported in The Wall Street Journal (weighted with respect
to the trading volume with respect to each such day); (c) if such shares are an
issue for which last sale prices are not reported on NASDAQ, the average of the
closing sale price, in each case on the last five (5) Trading Days (or if the
relevant price or quotation did not exist on any of such days, the relevant
price or quotation on the next preceding Business Day on which there was such a
price or quotation) prior to the Determination Date as reported by the Over the
Counter Bulletin Board (the “OTCBB”), or any other
successor organization; (d) if no closing sales price is reported for the Common
Stock by the OTCBB or any other successor organization for such day, the average
of the closing sale price, in each case on the last five (5) Trading Days (or if
the relevant price or quotation did not exist on any of such days, the relevant
price or quotation on the next preceding Business Day on which there was such a
price or quotation) prior to the Determination Date as reported
by the "pink sheets" by the Pink Sheets, LLC, or any successor
organization, (e) if no closing sales price is reported for the Common Stock by
the OTCBB or any other successor organization for such day, then the average of
the high and low bid and asked price of any of the market makers for the Common
Stock as reported on the OTCBB or in the "pink sheets" by the Pink
Sheets, LLC on the last five (5) Trading Days; or (e) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holder and reasonably acceptable to the
Corporation.
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IN WITNESS WHEREOF, this Certificate of
Designations has been executed by a duly authorized officer of the Corporation
on this 30th day of June, 2010.
|
OMNIRELIANT
HOLDINGS, INC.
|
||
|
By:
|
||
|
Robert
DeCecco
|
||
|
Chief
Executive Officer
|
||
(Signature
Page to Series G Preferred Certificate of Designations)
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ANNEX
A
NOTICE OF
CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES
OF SERIES
G PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series G
Convertible Preferred Stock indicated below into shares of common stock, $.00001
par value per share (the “Common Stock”), of
OmniReliant Holdings, Inc., a Nevada corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as may be
required by the Corporation in accordance with the Purchase Agreement. No fee
will be charged to the Holders for any conversion, except for any such transfer
taxes.
Conversion
calculations:
|
Date to Effect Conversion:
|
|
Number of shares of Preferred Stock owned prior to Conversion:
|
|
Number of shares of Preferred Stock to be Converted:
|
|
Stated Value of shares of Preferred Stock to be Converted:
|
|
Applicable Conversion Price:
|
|
Number of shares of Preferred Stock subsequent to Conversion:
|
|
[HOLDER]
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
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