Blueprint






Exhibit 4.3


 







EXHIBIT A


 



TENAX THERAPEUTICS, INC.


 



CERTIFICATE OF DESIGNATION OF PREFERENCES,



RIGHTS AND LIMITATIONS



OF



SERIES A
CONVERTIBLE PREFERRED STOCK


 


PURSUANT
TO SECTION 151 OF THE


DELAWARE
GENERAL CORPORATION LAW


 


The
undersigned, Michael B. Jebsen and Nancy Hecox, do hereby
certify:


 


                1.
They are the President and Secretary, respectively, of Tenax
Therapeutics, Inc., a Delaware corporation (the “Corporation”).


 


                2.
The Corporation is authorized to issue 10,000,000 shares of
preferred stock, none of which have been issued.


 


                3.
The following resolutions were duly adopted by the board of
directors of the Corporation (the “Board of
Directors”):


 


        WHEREAS,
the certificate of incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, consisting
of 10,000,000 shares, $0.0001 par value per share, issuable from
time to time in one or more series;


 


        WHEREAS,
the Board of Directors is authorized to fix the dividend rights,
dividend rate, voting rights, conversion rights, rights and terms
of redemption and liquidation preferences of any wholly unissued
series of preferred stock and the number of shares constituting any
series and the designation thereof, of any of them;
and


 


        WHEREAS,
it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the
preferred stock, which shall consist of, except as otherwise set
forth in the Underwriting Agreement, up to _________ shares of the
preferred stock which the Corporation has the authority to issue,
as follows:


 


        NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or
exchange of other securities, rights or property and does hereby
fix and determine the rights, preferences, restrictions and other
matters relating to such series of preferred stock as
follows:




 

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TERMS OF PREFERRED STOCK


 


Section 1.   
Definitions. For
the purposes hereof, the following terms shall have the following
meanings:


 


“Affiliate” means with
respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person, as such
terms are used in and construed under Rule 405 of the Securities
Act.


 


“Alternate Consideration”
shall have the meaning set forth in Section 7(e).


 


“Beneficial Ownership
Limitation” shall have the meaning set forth in
Section 6(d).


 


“Board of Directors” means
the board of directors of the Corporation.


 


“Business Day” means any
day except any Saturday, any Sunday, any day which is 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.


 


“Buy-In” shall have the
meaning set forth in Section 6(c)(iv).


 


 “Commission”
means the United States Securities and Exchange
Commission.


 


“Common Stock” means the
Corporation’s common stock, par value $0.0001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.


 


“Common Stock Equivalents”
means any securities of the Corporation or its 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 exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.


 


“Conversion Amount” means
the sum of the Stated Value at issue.


 


“Conversion Date” shall
have the meaning set forth in Section 6(a).


 


“Conversion Price” shall
have the meaning set forth in Section 6(b).


 


“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock in accordance with the terms
hereof.


 


“Dilutive Issuance” shall
have the meaning set forth in Section 7(b).


 




 

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“Dilutive Issuance Notice”
shall have the meaning set forth in Section 7(b).


 


“Equity Conditions” means,
during the period in question, (a) the Corporation shall have duly
honored all conversions scheduled to occur or occurring by virtue
of one or more Notices of Conversion of the applicable Holder on or
prior to the dates so requested or required, if any, (b) the
Corporation shall have paid all liquidated damages and other
amounts owing to the applicable Holder in respect of the Preferred
Stock, (c)(i) there is an effective registration statement pursuant
to which the Corporation may issue Conversion Shares or (ii) all of
the Conversion Shares may be issued to the Holder pursuant to
Section 3(a)(9) of the Securities Act and immediately resold
without restriction, (d) the Common Stock is trading on a Trading
Market and all of the Conversion Shares are listed or quoted for
trading on such Trading Market (and the Corporation believes, in
good faith, that trading of the Common Stock on a Trading Market
will continue uninterrupted for the foreseeable future), (e) there
is a sufficient number of authorized, but unissued and otherwise
unreserved, shares of Common Stock for the issuance of all of the
shares then issuable pursuant to the Preferred Stock then
outstanding, (f) the issuance of the shares in question to the
applicable Holder (or, in the case of a redemption, the shares
issuable upon conversion in full of the redemption amount) would
not violate the limitations set forth in Section 6(d) herein, (g)
there has been no public announcement of a pending or proposed
Fundamental Transaction that has not been consummated and (h) the
applicable Holder is not in possession of any information provided
by the Corporation, any of its Subsidiaries, or any of their
officers, directors, employees, agents or Affiliates, that
constitutes, or may constitute, material non-public
information


 


 “Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.


 


“Exempt Issuance” means
the issuance of (a) shares of Common Stock, options or other equity
awards to consultants, employees, officers or directors of the
Corporation pursuant to any stock or option plan or other equity
award plan duly adopted for such purpose by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for
such purpose, provided that any issuances to consultants shall not
exceed an aggregate of $100,000 of shares of Common Stock in any
twelve (12) month period and shall be issued as "restricted
securities" (as defined in Rule 144) and carry no registration
rights that require or permit the filing of any registration
statement in connection therewith prior to the 90 day anniversary
of the Original Issue Date, (b) securities upon the exercise or
exchange of or conversion of any securities pursuant to the
Underwriting Agreement and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of the Underwriting Agreement, provided
that such securities have not been amended since the date of the
Underwriting Agreement to increase the number of such securities or
to decrease the exercise price, exchange price or conversion price
of such securities, 
and (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of
any registration statement in connection therewith within ninety
(90) days following the Original Issue Date, and provided that any
such issuance shall only be to a Person (or to the equity holders
of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic
with the business of the Corporation and shall provide to the
Corporation additional 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.


 


“Forced Conversion Date”
shall have the meaning set forth in Section 6(e).


 


“Forced Conversion Notice”
shall have the meaning set forth in Section 6(e).


 


“Forced Conversion Notice
Date” shall have the meaning set forth in Section
6(e).


 


 




 

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“Fundamental Transaction”
shall have the meaning set forth in Section 7(e).


 


“GAAP” means United States
generally accepted accounting principles.


 


“Holder” shall have the
meaning given such term in Section 2.


 


“Liquidation” shall have
the meaning set forth in Section 5.


 


“New York Courts” shall
have the meaning set forth in Section 8(d).


 


“Notice of Conversion”
shall have the meaning set forth in Section 6(a).


 


“Original Issue Date”
means the date of the first issuance of any shares of the Preferred
Stock regardless of the number of transfers of any particular
shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred
Stock.


 


“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.


 


“Preferred Stock” shall
have the meaning set forth in Section 2.


 


“Purchase Rights” shall
have the meaning set forth in Section 7(c).


 


“Representative” means
Ladenburg Thalmann & Co. Inc.


 


 “Rule
144” means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.



 


“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.


 


“Share Delivery Date”
shall have the meaning set forth in Section 6(c)(i).


 


“Stated Value” shall have
the meaning set forth in Section 2.


 


“Successor Entity” shall
have the meaning set forth in Section 7(e).


 


“Threshold Period” shall
have the meaning set forth in Section 6(e).


 


“Trading Day” means a day
on which the principal Trading Market is open for
business.


 


“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market or the New York Stock Exchange (or any
successors to any of the foregoing).


 


 




 

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“Transfer Agent” means
Issuer Direct Corporation, with offices located at 500 Perimeter
Park Drive, Suite D, Morrisville, North Carolina 27560, and any
successor transfer agent of the Corporation.

 


“Underwriting Agreement”
means the underwriting agreement, dated as of _____ __, 2018,
between the Corporation and the Representative, as representative
of the underwriters named therein, as amended, modified or
supplemented from time to time in accordance with its
terms.

 


“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b)  if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported in the
“Pink Sheets” published by OTC Markets Group, Inc. (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) 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 Holders of a
majority in interest of the Preferred Stock then outstanding and
reasonably acceptable to the Corporation, the fees and expenses of
which shall be paid by the Corporation.


 


Section 2. Designation, Amount and Par
Value. The series of preferred stock shall be designated as
its Series A Convertible Preferred Stock (the “Preferred Stock”) and the
number of shares so designated shall be up to ___ (which shall not
be subject to increase without the written consent of all of the
holders of the Preferred Stock (each, a “Holder” and collectively,
the “Holders”)). Each share of
Preferred Stock shall have a par value of $0.0001 per share and a
stated value equal to $____1, subject to increase
set forth in Section 3 below (the “Stated Value”). The
Preferred Stock will initially be issued in book-entry form and
shall initially be represented only by one or more global
certificates deposited with the Depository Trust Company
(“DTC”)
and registered in the name of Cede & Co., a nominee of DTC, or
as otherwise directed by DTC. As between the Corporation and a
beneficial owner of Preferred Stock, such beneficial owner of
Preferred Stock shall have all of the rights and remedies of a
Holder hereunder. In addition, a beneficial owner of Preferred
Stock has the right, upon written notice by such beneficial owner
to the Corporation, to request the exchange of some or all of such
beneficial owner’s interest in Preferred Stock represented by
one or more global Preferred Stock certificates deposited with Cede
& Co. (or its successor) for a physical Preferred Stock
certificate (a “Preferred Stock Certificate Request
Notice” and the date of delivery of such Preferred
Stock Certificate Request Notice by a beneficial owner, the
“Preferred Stock
Certificate Request Notice Date” and the deemed
surrender upon delivery by the beneficial owner of a number of
global shares of Preferred Stock for the same number of shares of
Preferred Stock represented by a physical stock certificate, a
“Preferred Stock
Exchange”, and such physical certificate(s), a
“Preferred Stock
Certificate”). Upon delivery of a Preferred Stock
Certificate Request Notice, the Corporation shall promptly effect
the Preferred Stock Exchange and shall promptly issue and deliver
to the beneficial owner a physical Preferred Stock Certificate for
such number of shares of Preferred Stock represented by its
interest in such global certificates in the name of the beneficial
owner. Such Preferred Stock Certificate shall be dated the Original
Issue Date and shall be executed by an authorized signatory of the
Corporation. In connection with a Preferred Stock Exchange, the
Corporation agrees to deliver the Preferred Stock Certificate to
the Holder within two (2) Business Days of the delivery of a
properly completed and executed Preferred Stock Certificate Request
Notice pursuant to the delivery instructions in the Preferred Stock
Certificate Request Notice. The Corporation covenants and agrees
that, upon the date of delivery of the properly completed and
executed Preferred Stock Certificate Request Notice, the Holder
shall be deemed to be the holder of the Preferred Stock Certificate
and further, for purposes of Regulation SHO, a Holder whose
interest in this Preferred Stock is a beneficial interest in
certificate(s) representing this Preferred Stock held in book-entry
form through DTC shall be deemed to have converted its interest in
this Preferred Stock upon instructing its broker that is a DTC
participant to convert its interest in this Preferred Stock, and,
notwithstanding anything to the contrary set forth herein, the
Preferred Stock Certificate shall be deemed for all purposes to
represent all of the terms and conditions of the Preferred Stock
evidenced by such global Preferred Stock certificates and the terms
hereof.


 


1 The Unit purchase
price.




 

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Section 3. Dividends. Except for stock
dividends or distributions for which adjustments are to be made
pursuant to Section 7, Holders shall be entitled to receive, and
the Corporation shall pay, dividends on shares of Preferred Stock
equal (on an as-if-converted-to-Common-Stock basis, disregarding
for such purpose any conversion limitations hereunder) to and in
the same form as dividends actually paid on shares of the Common
Stock when, as and if such dividends are paid on shares of the
Common Stock. No other dividends shall be paid on shares of
Preferred Stock. The Corporation shall not pay any dividends on the
Common Stock unless the Corporation simultaneously complies with
this provision.


 


Section 4. Voting Rights. Except as
otherwise provided herein or as otherwise required by law, the
Preferred Stock shall have no voting rights. However, as long as
any shares of Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote of the Holders of a
majority of the then outstanding shares of the Preferred Stock, (a)
alter or change adversely the powers, preferences or rights given
to the Preferred Stock or alter or amend this Certificate of
Designation, (b) amend its certificate of incorporation or other
charter documents in any manner that adversely affects any rights
of the Holders, (c) increase the number of authorized shares of
Preferred Stock, or (d) enter into any agreement with respect to
any of the foregoing.


 


Section 5. Liquidation. Upon any
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary (a “Liquidation”), the
Holders shall be entitled to receive out of the assets, whether
capital or surplus, of the Corporation the same amount that a
holder of Common Stock would receive if the Preferred Stock were
fully converted (disregarding for such purposes any conversion
limitations hereunder) to Common Stock which amounts shall be paid
pari passu with all holders of Common Stock. The Corporation shall
mail written notice of any such Liquidation, not less than 45 days
prior to the payment date stated therein, to each
Holder.


 


Section 6. Conversion.


 

a) Conversions at Option of
Holder. Each share of Preferred Stock shall be convertible,
at any time and from time to time from and after the Original Issue
Date at the option of the Holder thereof, into that number of
shares of Common Stock (subject to the limitations set forth in
Section 6(d)) determined by dividing the Stated Value of such share
of Preferred Stock by the Conversion Price. 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
Preferred Stock to be converted, the number of shares of Preferred
Stock owned prior to the conversion at issue, the number of shares
of 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 or e-mail 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. No ink-original
Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Conversion form be required. The calculations and entries set
forth in the Notice of Conversion shall control in the absence of
manifest or mathematical error. To effect conversions of shares of
Preferred Stock, a Holder shall not be required to surrender the
certificate(s) representing the shares of Preferred Stock to the
Corporation unless all of the shares of Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver
the certificate representing such shares of Preferred Stock
promptly following the Conversion Date at issue. Shares of
Preferred Stock converted into Common Stock or redeemed in
accordance with the terms hereof shall be canceled and shall not be
reissued. Notwithstanding the foregoing in this Section 6(a), a
holder whose interest in the Preferred Stock is a beneficial
interest in certificate(s) representing the Preferred Stock held in
book-entry form through DTC (or another established clearing
corporation performing similar functions), shall effect conversions
made pursuant to this Section 6(a) by delivering to DTC (or such
other clearing corporation, as applicable) the appropriate
instruction form for conversion, complying with the procedures to
effect conversions that are required by DTC (or such other clearing
corporation, as applicable), subject to a Holder’s right to
elect to receive Preferred Stock in certificated form pursuant to
Section 2, in which case this sentence shall not apply, and,
provided,
however, as between
the Corporation and a beneficial owner of Series A Preferred Stock
held in book-entry form through DTC (or another established
clearing corporation performing similar functions) shall have all
of the rights and remedies of a “Holder”
hereunder.


 




 

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b) Conversion Price. The
conversion price for the Preferred Stock shall equal $_____, subject to adjustment herein
(the “Conversion
Price”).


 




c)


Mechanics of Conversion






 

i. Delivery of Conversion Shares Upon
Conversion. Not later than the earlier of (i) two (2)
Trading Days and (ii) the number of Trading Days comprising the
Standard Settlement Period (as defined below) after each Conversion
Date (the “Share
Delivery Date”), the Corporation shall deliver, or
cause to be delivered, to the converting Holder (A) the number of
Conversion Shares being acquired upon the conversion of the
Preferred Stock, which Conversion Shares shall be free of
restrictive legends and trading restrictions, and (B) a bank check
in the amount of accrued and unpaid dividends, if any. The
Corporation shall use its best efforts to deliver the Conversion
Shares required to be delivered by the Corporation under this
Section 6 electronically through the Depository Trust Company or
another established clearing corporation performing similar
functions. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Corporation’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of Conversion.
Notwithstanding the foregoing, with respect to any Notice(s) of
Conversion delivered by 12:00 p.m. (New York City time) on the
Original Issue Date, the Corporation agrees to deliver the
Conversion Shares subject to such notice(s) by 4:00 p.m. (New York
City time) on the Original Issue Date, and the Original Issue Date
being deemed the “Share Delivery Date” with respect to
any Notice(s) of Conversion.


 

ii. 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 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 Notice of Conversion.


 

iii. Obligation
Absolute; Partial Liquidated Damages. The
Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of 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 or any violation or alleged
violation of law by such Holder or any other person, and
irrespective of any other circumstance which might otherwise limit
such obligation of the Corporation to such 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
that the Corporation may have against such Holder. In the event a
Holder shall elect to convert any or all of the Stated Value of its
Preferred Stock, the Corporation may not refuse conversion based on
any claim that such Holder or anyone associated or affiliated with
such Holder has been engaged in any violation of law, agreement or
for any other reason, unless an injunction from a court, on notice
to Holder, restraining and/or enjoining conversion of all or part
of the Preferred Stock of such Holder shall have been sought and
obtained, and the Corporation posts a surety bond for the benefit
of such Holder in the amount of 150% of the Stated Value of
Preferred Stock which is subject to the injunction, which bond
shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of such injunction, the Corporation shall
issue Conversion Shares and, if applicable, cash, upon a properly
noticed conversion. If the Corporation fails to deliver to a Holder
such Conversion Shares pursuant to Section 6(c)(i) by 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 $5,000 of Stated Value of Preferred Stock being
converted, $50 per Trading Day (increasing to $100 per Trading Day
on the third Trading Day and increasing to $200 per Trading Day on
the sixth Trading Day after such damages begin to accrue) for each
Trading Day after the Share Delivery Date until such Conversion
Shares are delivered or Holder rescinds such conversion. Nothing
herein shall limit a Holder’s right to pursue actual damages
for the Corporation’s failure to deliver Conversion Shares
within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such
rights shall not prohibit a Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable
law.


 




 

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iv. Compensation for Buy-In on Failure to
Timely Deliver Conversion Shares Upon Conversion. In
addition to any other rights available to the Holder, if the
Corporation fails for any reason to deliver to a Holder the
applicable Conversion Shares by the Share Delivery Date pursuant to
Section 6(c)(i), and if after such Share Delivery Date such Holder
is required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the
Corporation shall (A) pay in cash to such Holder (in addition to
any other remedies available to or elected by such Holder) the
amount, if any, by which (x) such Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive
from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and
(B) at the option of such Holder, either reissue (if surrendered)
the shares of Preferred Stock equal to the number of shares of
Preferred Stock submitted for conversion (in which case, such
conversion shall be deemed rescinded) or deliver to such Holder the
number of shares of Common Stock that would have been issued if the
Corporation had timely complied with its delivery requirements
under Section 6(c)(i). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of
Preferred Stock with respect to which the actual sale price of the
Conversion Shares (including any brokerage commissions) giving rise
to such purchase obligation was a total of $10,000 under clause (A)
of the immediately preceding sentence, the Corporation shall be
required to pay such Holder $1,000. The Holder shall provide the
Corporation written notice indicating the amounts payable to such
Holder in respect of the Buy-In and, upon request of the
Corporation, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Corporation’s failure to timely
deliver the Conversion Shares upon conversion of the shares of
Preferred Stock as required pursuant to the terms
hereof.


 

v. 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 Preferred Stock as herein provided, free from
preemptive rights or any other actual contingent purchase rights of
Persons other than the Holder (and the other holders of the
Preferred Stock), not less than such aggregate number of shares of
the Common Stock as shall be issuable (taking into account the
adjustments and restrictions of Section 7) upon the conversion of
the then outstanding shares of 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.


 

vi. Fractional Shares. No
fractional shares or scrip representing fractional shares shall be
issued upon the conversion of the Preferred Stock. As to any
fraction of a share which the Holder would otherwise be entitled to
purchase upon such conversion, the Corporation shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
Notwithstanding anything to the contrary contained herein, but
consistent with the provisions of this subsection with respect to
fractional Conversion Shares, nothing shall prevent any Holder from
converting fractional shares of Preferred Stock.


 

vii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on
conversion of this Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such Conversion
Shares, provided that the Corporation shall not be required to pay
any tax that may be payable in respect of any transfer involved in
the issuance and delivery of any such Conversion Shares upon
conversion in a name other than that of the Holders of such shares
of Preferred Stock and the Corporation shall not be required to
issue or deliver such Conversion Shares unless or until the Person
or Persons requesting the issuance thereof shall have paid to the
Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid. The
Corporation shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion and all fees to the
Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.


 




 

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d) Beneficial
Ownership Limitation. The Corporation shall not effect
any conversion of the Preferred Stock, and a Holder shall not have
the right to convert any portion of the Preferred Stock, to the
extent that, after giving effect to the conversion set forth on the
applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any Persons acting as a group
together with such Holder or any of such Holder’s Affiliates
(such Persons, “Attribution Parties”))
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below).  For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon
conversion of the Preferred Stock with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the
remaining, unconverted Stated Value of Preferred Stock beneficially
owned by such Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Corporation
subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, the
Preferred Stock) beneficially owned by such Holder or any of its
Affiliates or Attribution Parties.  Except as set forth in the
preceding sentence, for purposes of this Section 6(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the
Corporation is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation
contained in this Section 6(d) applies, the determination of
whether the Preferred Stock is convertible (in relation to other
securities owned by such Holder together with any Affiliates and
Attribution Parties) and of how many shares of Preferred Stock are
convertible shall be in the sole discretion of such Holder, and the
submission of a Notice of Conversion shall be deemed to be such
Holder’s determination of whether the shares of Preferred
Stock may be converted (in relation to other securities owned by
such Holder together with any Affiliates and Attribution Parties)
and how many shares of the Preferred Stock are convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure
compliance with this restriction, each Holder will be deemed to
represent to the Corporation each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Corporation shall
have no obligation to verify or confirm the accuracy of such
determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated
thereunder. For purposes of
this Section 6(d), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the
following: (i) the Corporation’s most recent periodic or
annual report filed with the Commission, as the case may be, (ii) a
more recent public announcement by the Corporation or (iii) a more
recent written notice by the Corporation or the Transfer Agent
setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request (which may be
via email) of a Holder, the Corporation shall within one Trading
Day confirm orally and in writing to such Holder the number of
shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of
the Corporation, including the Preferred Stock, by such Holder or
its Affiliates or Attribution Parties since the date as of which
such number of outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% (or, upon
election by a Holder prior to the issuance of any shares of
Preferred Stock, 9.99%) of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon conversion of Preferred Stock
held by the applicable Holder. A Holder, upon notice to the
Corporation, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 6(d) applicable to its
Preferred Stock provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon conversion of this Preferred Stock
held by the Holder and the provisions of this Section 6(d) shall
continue to apply. Any such increase in the Beneficial Ownership
Limitation will not be effective until the 61st day after such
notice is delivered to the Corporation and shall only apply to such
Holder and no other Holder. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 6(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of Preferred Stock.


 

e) Forced Conversion.
Notwithstanding anything herein to the contrary, if after the
Original Issue Date, the VWAP during any 30 consecutive Trading Day
period, which thirty (30) consecutive Trading Day period shall have
commenced only after the Original Issue Date (the
“Threshold
Period”), exceeds $______2 (subject to
adjustment for forward and reverse stock splits, recapitalizations,
stock dividends and the like after the Original Issue Date) and
(ii) the average daily dollar trading volume for such Threshold
Period exceeds $175,000 per Trading Day, the Corporation may,
within one (1) Trading Day after the end of any such Threshold
Period, deliver a written notice to all Holders (a
“Forced Conversion
Notice” and the date such notice is delivered to all
Holders, the “Forced
Conversion Notice Date”) to cause each Holder to
convert all or part of such Holder’s Preferred Stock (as
specified in such Forced Conversion Notice) pursuant to Section 6,
it being agreed that the “Conversion Date” for purposes
of Section 6 shall be deemed to occur on the third Trading Day
following the Forced Conversion Notice Date (such third Trading
Day, the “Forced
Conversion Date”). The Corporation may not deliver a
Forced Conversion Notice, and any Forced Conversion Notice
delivered by the Corporation shall not be effective, unless all of
the Equity Conditions have been met on each Trading Day during the
applicable Threshold Period through and including the later of the
Forced Conversion Date and the Trading Day after the date that the
Conversion Shares issuable pursuant to such conversion are actually
delivered to the Holders pursuant to the Forced Conversion Notice.
Any Forced Conversion Notices shall be applied ratably to all of
the Holders based on the then outstanding shares of Preferred
Stock. For purposes of clarification, a Forced Conversion shall be
subject to all of the provisions of Section 6, including, without
limitation, the provisions requiring payment of liquidated damages
and limitations on conversions.


 


Section 7. Certain
Adjustments.


 

a) Stock Dividends and Stock
Splits. If the Corporation, at any time while this Preferred
Stock is outstanding: (i) 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 Preferred Stock), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split)
outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues, in the event of a reclassification of shares of the
Common Stock, any shares of capital stock of the Corporation, then
the 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 7(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.


 


2 300% of Conversion
Price.




 

9








 






 

b) Subsequent Equity Sales. Until
such time as 85% of the aggregate number of shares of Preferred
Stock issued to all Holders on the Original Issue Date have been
converted to Common Stock, if the Corporation or any Subsidiary, as
applicable sells or grants any option to purchase or sells or
grants any right to reprice, or otherwise disposes of or issues (or
announces any sale, grant or any option to purchase or other
disposition), any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock at an
effective price per share that is lower than the then Conversion
Price (such lower price, the “Base Conversion Price”
and such issuances, collectively, a “Dilutive Issuance”) (if
the holder of the Common Stock or Common Stock Equivalents so
issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be
entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance
shall be deemed to have occurred for less than the Conversion Price
on such date of the Dilutive Issuance), then the Conversion Price
shall be reduced to equal the Base Conversion Price. Such
adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no adjustment will
be made under this Section 7(b) in respect of an Exempt
Issuance. If the Corporation enters into a Variable Rate
Transaction, despite the prohibition set forth in the Underwriting
Agreement, the Corporation shall be deemed to have issued Common
Stock or Common Stock Equivalents at the lowest possible conversion
price at which such securities may be converted or exercised. The
Corporation shall notify the Holders in writing, no later than the
Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section 7(b), 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 7(b), upon the occurrence of any Dilutive Issuance,
the Holders are entitled to receive a number of Conversion Shares
based upon the Base Conversion Price on or after the date of such
Dilutive Issuance, regardless of whether a Holder accurately refers
to the Base Conversion Price in the Notice of Conversion.
Notwithstanding the foregoing, no further adjustments to the
Conversion Price shall be made pursuant to this Section 7(b) in the
event that (i) the VWAP during any 30 consecutive Trading Days (the
“Measurement
Period” which 30 consecutive Trading Day period shall
not have commenced until after the Original Issue Date) exceeds
$_____3
(subject to adjustment for forward and reverse stock splits,
recapitalizations, stock dividends and the like after the Original
Issue Date), and (ii) the dollar trading volume for each Trading
Day during such Measurement Period exceeds $175,000 per Trading
Day.


 




c) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 7(a) above, if at any time the Corporation
grants, issues or sells any Common Stock Equivalents or rights to
purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of such
Holder’s Preferred Stock (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights (provided, however, to
the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial
ownership of such shares of Common Stock as a result of such
Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).


 

d) Pro Rata Distributions. During
such time as this Preferred Stock is outstanding, if the
Corporation declares or makes any dividend or other distribution of
its assets (or rights to acquire its assets) to holders of shares
of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any
time after the issuance of this Preferred Stock, then, in each such
case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Preferred
Stock (without regard to any limitations on conversion hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).

 


 3 300% of the
Conversion Price.




 

10








 






 

e) Fundamental Transaction. If, at
any time while this Preferred Stock is outstanding, (i) the
Corporation, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Corporation
with or into another Person, (ii) the Corporation, directly or
indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any,
direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Corporation or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Corporation, directly or
indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization 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, or (v) the Corporation, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such
other Person acquires more than 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the
other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or
share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Preferred Stock, the Holder 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 (without regard to any limitation in Section 6(d) on
the conversion of this Preferred Stock), the number of shares of
Common Stock of the successor or acquiring corporation or of the
Corporation, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Preferred
Stock is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of this Preferred Stock). For purposes of any such
conversion, the determination of the 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 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 Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
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 Corporation shall cause any
successor entity in a Fundamental Transaction in which the
Corporation is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Corporation under
this Certificate of Designation in accordance with the provisions
of this Section 7(e) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for this Preferred Stock a security of the
Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Preferred Stock which is
convertible for a corresponding number of shares of capital stock
of such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon conversion of
this Preferred Stock (without regard to any limitations on the
conversion of this Preferred Stock) prior to such Fundamental
Transaction, and with a conversion price which applies the
conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Preferred Stock immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Certificate of Designation referring to the
“Corporation” shall refer instead to the Successor
Entity), and may exercise every right and power of the Corporation
and shall assume all of the obligations of the Corporation under
this Certificate of Designation with the same effect as if such
Successor Entity had been named as the Corporation
herein.


 




 

11








 






 

f) Calculations. All calculations
under this Section 7 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 7, 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 Conversion Price is adjusted pursuant to any provision
of this Section 7, the Corporation shall promptly deliver to each
Holder by facsimile or email a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.


 

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, or 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 Preferred Stock, and shall cause to be
delivered by facsimile or email to
each Holder at its last facsimile number or email address as it
shall appear upon the stock
books of the Corporation, at least twenty (20) 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. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Corporation or any of the Subsidiaries, the
Corporation shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder
shall remain entitled to convert the Conversion Amount of this
Preferred Stock (or any part hereof) during the 20-day period
commencing on the date of such notice through the effective date of
the event triggering such notice except as may otherwise be
expressly set forth herein.


 




 

12








 






 


 Section
8.  
Miscellaneous


 

a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holders
hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile or
e-mail, or sent by a nationally recognized overnight courier
service, addressed to the Corporation, at ONE Copley Parkway, Suite
490, Morrisville, North Carolina 27560, Attention: Michael B. Jebsen, facsimile
number: (919) 855-2133, e-mail address: m.jebsen@tenaxthera.com, or
such other facsimile number, e-mail address or address as the
Corporation may specify for such purposes by notice to the Holders
delivered in accordance with this Section 8. Any and all notices or
other communications or deliveries to be provided by the
Corporation hereunder shall be in writing and delivered personally,
by facsimile, e-mail, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number,
e-mail address or address of such Holder appearing on the books of
the Corporation. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of
(i) the time of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or e-mail at the
e-mail address set forth in this Section 8 prior to 5:30 p.m. (New
York City time) on any date, (ii) the next Trading Day after the
time of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or e-mail at the e-mail
address set forth in this Section on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is
required to be given.


 

b) Absolute Obligation. Except as
expressly provided herein, no provision of this Certificate of
Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay liquidated
damages, and accrued dividends, as applicable, on the shares of
Preferred Stock at the time, place, and rate, and in the coin or
currency, herein prescribed.


 

c) Lost or Mutilated Preferred Stock
Certificate. If a Holder’s Preferred Stock certificate
shall be mutilated, lost, stolen or destroyed, the Corporation
shall execute and deliver, in exchange and substitution for and
upon cancellation of a mutilated certificate, or in lieu of or in
substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Preferred Stock so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such
loss, theft or destruction of such certificate, and of the
ownership hereof reasonably satisfactory to the
Corporation.


 

d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflict of laws thereof. All legal proceedings concerning the
interpretation, enforcement and defense of the transactions
contemplated by this Certificate of Designation (whether brought
against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in
the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). The
Corporation and each Holder hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any action, suit or
proceeding, any claim that it is not personally subject to the
jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. The Corporation
and each Holder hereby irrevocably waives personal service of
process and consents to process being served in any such action,
suit or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
applicable law. The Corporation and each Holder hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Certificate of Designation or
the transactions contemplated hereby. If the Corporation or any
Holder shall commence an action, suit or proceeding to enforce any
provisions of this Certificate of Designation, then the prevailing
party in such action, suit or proceeding shall be reimbursed by the
other party for its attorneys’ fees and other costs and
expenses incurred in the investigation, preparation and prosecution
of such action, suit or proceeding.


 

e) Waiver. Any waiver by the
Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Corporation or a
Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of
the right thereafter to insist upon strict adherence to that term
or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a Holder must be in
writing.


 

f) Severability. If any provision
of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.


 




 

13








 






 

g) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.


 

h) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit
or affect any of the provisions hereof.


 

i) Status of Converted or Redeemed
Preferred Stock. If any shares of Preferred Stock shall be
converted, redeemed or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of
preferred stock and shall no longer be designated as Series A
Convertible Preferred Stock.


 


 


*********************




 

14








 






RESOLVED,
FURTHER, that the Chairman, the president or any vice-president,
and the secretary or any assistant secretary, of the Corporation be
and they hereby are authorized and directed to prepare and file
this Certificate of Designation of Preferences, Rights and
Limitations in accordance with the foregoing resolution and the
provisions of Delaware law.


 


        IN
WITNESS WHEREOF, the undersigned have executed this Certificate
this ___ day of _____, 20__.


 


	

     __________________________________________


     Name:
Michael B. Jebsen


     Title:
President and Chief Financial Officer


 

	

     __________________________________________


     Name:
Nancy Hecox


     Title:
Secretary


 







 


 




 

15








 






 



ANNEX A


 


NOTICE
OF CONVERSION


 


(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
PREFERRED STOCK)


 


The
undersigned hereby elects to convert the number of shares of Series
A Convertible Preferred Stock indicated below into shares of common
stock, par value $0.0001 per share (the “Common Stock”), of Tenax
Therapeutics, Inc., a Delaware 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. 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:
____________________


 


	

Number
of shares of Common Stock to be Issued:
___________________________


 


	

Applicable
Conversion
Price:____________________________________________


 


	

Number
of shares of Preferred Stock subsequent to Conversion:
________________


 


	

Address
for Delivery: ______________________


or


DWAC
Instructions:


Broker
no: _________


Account
no: ___________






 


	

 


HOLDER


 


By:___________________________________


     Name:


     Title:

	
 







 


 




 

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