ex4-41





 







Exhibit 4.41



DESCRIPTION OF SECURITIES



REGISTERED PURSUANT TO SECTION 12 OF THE



SECURITIES EXCHANGE ACT OF 1934, AS AMENDED


 

 



Youngevity International, Inc. (the “we,”
“us,” and “our”) has three (3) classes of
securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”):
(i) Common Stock, par value $0.001 per share (the “Common
Stock”), (ii) Series B Convertible
Preferred Stock, par value $0.001 per share (the “Series B
Convertible Preferred Stock”), and (iii) Series D Cumulative
Redeemable Perpetual Preferred Stock (the “Series D Preferred
Stock”).

 



Overview

 



The following is a description of the material terms of our Common
Stock, Series B Convertible Preferred Stock and Series D Preferred
Stock and does not purport to be complete. It is subject to and qualified in its entirety by
reference to our Certificate of Incorporation, as amended (the
“Certificate of Incorporation”), the Certificate of
Designations for the Series B Convertible Preferred Stock, the
Certificate of Designations for the Series D Preferred Stock, as
amended, Bylaws (the “Bylaws”). We encourage you
to read these documents and the applicable provisions
of Delaware General
Corporation Law (the “DGCL”), for additional information.


 



Authorized Capital


 


Our
authorized capital consists of 50,000,000 shares of Common Stock,
par value $0.001 per share, and 5,000,000 shares of preferred
stock, par value $0.001 per share.

 



Description of Common Stock


 



Voting.  The holders of our Common Stock are
entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders, including the election of
directors, and do not have cumulative voting rights.


 



Dividends.  Subject to preferences that may be
applicable to any then outstanding preferred stock, the holders of
Common Stock are entitled to receive dividends, if any, as may be
declared from time to time by our Board of Directors out of legally
available funds.


 



Liquidation.  In the event of our liquidation,
dissolution or winding up, holders of our Common Stock will be
entitled to share ratably in the net assets legally available for
distribution to stockholders after the payment of all of our debts
and other liabilities, subject to the satisfaction of any
liquidation preference granted to the holders of any then
outstanding shares of preferred stock.


 



Rights and Preferences.  The holders of our Common
Stock have no preemptive, conversion or subscription rights, and
there are no redemption or sinking fund provisions applicable to
our Common Stock. The rights, preferences and privileges of the
holders of our Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of
our preferred stock that we may designate and issue in the
future.


 



Fully Paid and Nonassessable. All of our issued and
outstanding shares of Common Stock are fully paid and
nonassessable.


 


  



Potential Anti-Takeover Effects


 


Certain
provisions set forth in our Certificate of Incorporation, in our
Bylaws and in Delaware law, which are summarized below, may be
deemed to have an anti-takeover effect and may delay, deter or
prevent a tender offer or takeover attempt that a stockholder might
consider to be in its best interests, including attempts that might
result in a premium being paid over the market price for the shares
held by stockholders.


 


 




 

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Our
Certificate of Incorporation contains a provision that permits us
to issue, without any further vote or action by the stockholders,
up to five million shares of preferred stock in one or more series
and, with respect to each such series, to fix the number of shares
constituting the series and the designation of the series, the
voting powers, if any, of the shares of the series, and the
preferences and relative, participating, optional and other special
rights, if any, and any qualifications, limitations or
restrictions, of the shares of such series.


 


 In
particular our Bylaws and the DGCL, as applicable, among other
things:


 




●

Provide the Board
of Directors with the ability to alter the Bylaws without
stockholder approval; and






 




●

Provide that
vacancies on the Board of Directors may be filled by a majority of
directors in the office, although less than a quorum.






 


While
the foregoing provisions and provisions of Delaware law may have an
anti-takeover effect, these provisions are intended to enhance the
likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of
Directors and to discourage certain types of transactions that may
involve an actual or threatened change of control. In that regard,
these provisions are designed to reduce our vulnerability to an
unsolicited acquisition proposal. The provisions also are intended
to discourage certain tactics that may be used in proxy fights.
However, such provisions could have the effect of discouraging
others from making tender offers for our shares and, as a
consequence, they also may inhibit fluctuations in the market price
of our Common Stock that could result from actual or rumored
takeover attempts. Such provisions also may have the effect of
preventing changes in our management.


 



Delaware Takeover Statute


 


In
general, Section 203 of the DGCL prohibits a Delaware corporation
that is a public company from engaging in any “business
combination” (as defined below) with any “interested
stockholder” (defined generally as an entity or person
beneficially owning 15% or more of the outstanding voting stock of
the corporation and any entity or person affiliated with such
entity or person) for a period of three years following the date
that such stockholder became an interested stockholder, unless: (1)
prior to such date, the Board of Directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder; (2)
on consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those
shares owned (x) by persons who are directors and also officers and
(y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer;
or (3) on or subsequent to such date, the business combination is
approved by the Board of Directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least two-thirds of the outstanding voting
stock that is not owned by the interested stockholder.


 


Section
203 of the DGCL defines “business combination” to
include: (1) any merger or consolidation involving the corporation
and the interested stockholder; (2) any sale, transfer, pledge or
other disposition of ten percent or more of the assets of the
corporation involving the interested stockholder; (3) subject to
certain exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder; (4) any transaction involving the
corporation that has the effect of increasing the proportionate
share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (5) the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or through the corporation.


 



Transfer Agent and Registrar for Common Stock


 


The
registrar and transfer agent for our Common Stock is Pacific Stock Transfer Company. The
principal business address for Pacific
Stock Transfer Company is 6725 Via Austi Parkway, Suite 300, Las
Vegas Nevada 89119. Their
telephone number is (800) 785-7782.


 




 

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Description of the Series B Convertible Preferred
Stock


 



General



 



Our Board of Directors has designated 1,052,631 shares of our
authorized but unissued Preferred Stock as Series B Convertible
Preferred Stock. When issued in accordance with this prospectus,
the Series B Convertible Preferred Stock will be validly issued,
fully paid and non-assessable. Our Board of Directors may authorize
the issuance and sale of additional shares of Series B Convertible
Preferred Stock from time to time.



 



Ranking



 



The Series B Convertible Preferred Stock rank, with respect to
dividend rights and rights upon voluntary or involuntary
liquidation, dissolution or winding up of our affairs:



 




●

senior
to the Series A Preferred, all classes or series of our Common
Stock and to any other class or series of our capital stock
expressly designated as ranking junior to the Series B Convertible
Preferred Stock;






 




●

on
parity any class or series of our capital stock expressly
designated as ranking on parity with the Series B Convertible
Preferred Stock, none of which exists on the date hereof;
and






 




●

junior
to any other class or series of our capital stock expressly
designated as ranking senior to the Series B Convertible Preferred
Stock, none of which exists on the date hereof.






 



The term “capital stock” does not include convertible
or exchangeable debt securities, which, prior to conversion or
exchange, rank senior in right of payment to the Series B
Convertible Preferred Stock. The Series B Convertible Preferred
Stock will also rank junior in right of payment to our other
existing and future debt obligations.



 



Dividends



 



Subject to the preferential rights of the holders of any class or
series of our capital stock ranking senior to the Series B
Convertible Preferred Stock with respect to dividend rights,
holders of shares of the Series B Convertible Preferred Stock are
entitled to receive, when, as and if authorized by our Board of
Directors and declared by us out of funds legally available for the
payment of dividends, cumulative cash dividends at the rate
of 5.0% per annum.


 



Dividends on the Series B Convertible Preferred Stock will accrue
and be cumulative from and including the date of original issue and
will be payable to holders quarterly in arrears on or about the
last day of March, June, September and December of each year
commencing June 30, 2018 or, if such day is not a business day, on
either the immediately preceding business day or next succeeding
business day at our option, except that, if such business day is in
the next succeeding year, such payment shall be made on the
immediately preceding business day, in each case with the same
force and effect as if made on such date. The term “business
day” means each day, other than a Saturday or a Sunday, which
is not a day on which banks in New York are required to close. If
the aggregate amount of dividends accrued and payable to a holder
is less than $10.00, we may, at our option, retain and not make
payment in the respect of such dividends until the aggregate number
of dividends then accrued and payable to the holder is not less
than $10.00.



 



Dividends on the Series B Convertible Preferred Stock will accrue
whether or not:



 




●

we
have earnings;






 




●

there
are funds legally available for the payment of those dividends;
or






 




●

those
dividends are authorized or declared.







 


 




 

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Holders of shares of Series B Convertible Preferred Stock are not
entitled to any dividend, whether payable in cash, property or
shares of capital stock, in excess of full cumulative dividends on
the Series B Convertible Preferred Stock as described above. Any
dividend payment made on the Series B Convertible Preferred Stock
will first be credited against the earliest accrued but unpaid
dividends due with respect to those shares which remain payable.
Accrued but unpaid dividends on the Series B Convertible Preferred
Stock will accumulate as of the dividend payment date on which they
first become payable.



 



No dividends will be authorized by our Board of Directors and
declared by us or paid or set apart for payment if such
authorization, declaration or payment is restricted or prohibited
by law.



 



Liquidation Preference



 



Upon any voluntary or involuntary liquidation, dissolution or
winding up of our affairs, before any distribution or payment shall
be made to holders of shares of our Common Stock or any other class
or series of capital stock ranking, as to rights upon any voluntary
or involuntary liquidation, dissolution or winding up of our
affairs, junior to the Series B Convertible Preferred Stock,
holders of shares of Series B Convertible Preferred Stock will be
entitled to be paid out of our assets legally available for
distribution to our stockholders, after payment of or provision for
our debts and other liabilities, an amount equal to the original
purchase price plus any accrued and unpaid dividends (whether or
not authorized or declared) up to but excluding the date of
payment. If, upon our voluntary or involuntary liquidation,
dissolution or winding up, our available assets are insufficient to
pay the full amount of the liquidating distributions on all
outstanding shares of Series B Convertible Preferred Stock and the
corresponding amounts payable on all shares of each other class or
series of capital stock ranking, as to rights upon liquidation,
dissolution or winding up, on parity with the Series B Convertible
Preferred Stock in the distribution of assets, then holders of
shares of Series B Convertible Preferred Stock and each such other
class or series of capital stock ranking, as to rights upon any
voluntary or involuntary liquidation, dissolution or winding up, on
parity with the Series B Convertible Preferred Stock will share
ratably in any distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be
respectively entitled.



 



Conversion Rights



 



Each share of Series B Convertible Preferred Stock is initially
convertible at any time, in whole or in part, at the option of the
holders at an initial conversion price of $4.75 per share initially
into two shares of Common Stock and automatically converts into two
shares of Common Stock on its two-year anniversary of issuance. The
conversion price set forth in the certificate of designations of
the preferred stock is also subject to pro-rated adjustment in the
case of stock splits and stock dividends and other similar
transactions.



 



No fractional shares shall be issued upon conversion of Series B
Convertible Preferred Stock into Common Stock and no payment. In
lieu of delivering fractional shares, we will pay to the holder, to
the extent permitted by law, an amount in cash equal to the current
fair market value of such fractional share as determined in good
faith by our Board.



 



No Maturity, Sinking Fund or Mandatory Redemption



 



The Series B Convertible Preferred Stock has no maturity date and
we are not required to redeem the Series B Convertible Preferred
Stock at any time. Accordingly, the Series B Convertible Preferred
Stock will remain outstanding until automatically converted to
Common Stock on the two-year anniversary of issuance, unless the
holders of the Series B Convertible Preferred Stock convert the
Series B Convertible Preferred Stock into our Common Stock. The
Series B Convertible Preferred Stock is also not subject to any
sinking fund. There are no restrictions on the repurchase or
redemption by the Company of any shares of Series B Convertible
Preferred Stock while there is an arrearage in the payment of
dividends.



 



Limited Voting Rights



 



Holders of shares of the Series B Convertible Preferred Stock
generally do not have any voting rights. However, as long as any
shares of Series B Convertible Preferred Stock are outstanding, we
may not, without the affirmative vote of the holders of a majority
of the then outstanding shares of the Series B Convertible
Preferred Stock alter or change adversely the powers, preferences
or rights given to the Series B Convertible Preferred Stock or
alter or amend its certificate of designation.



 


 




 

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Transfer Agent for the Series B
Convertible Preferred Stock



 



The transfer agent and registrar for the Series B Convertible
Preferred Stock is Pacific Stock Transfer Company. The
principal business address for Pacific
Stock Transfer Company is 6725 Via Austi Parkway, Suite 300, Las
Vegas Nevada 89119. Their
telephone number is (800) 785-7782.


 



Description of the Series D Preferred Stock


 



General


 



On December 17, 2019, we filed a Certificate
of Increase to the Certificate of Designations of our Series D
Preferred Stock with the Secretary of State of the State of
Delaware to increase the number of shares of preferred stock
designated as Series D Preferred Stock to an aggregate
of 650,000 shares.
Our Board of Directors may, without the approval of holders of the
Series D Preferred Stock or our Common Stock, subject to certain
limitations, designate additional series of authorized preferred
stock ranking junior to or on parity with the Series D Preferred
Stock or designate additional shares of the Series D Preferred
Stock and authorize the issuance of such shares. Designation of
preferred stock ranking senior to the Series D Preferred Stock will
require approval of the holders of Series D Preferred Stock, as
described below in “Voting Rights.” All of our
issued and outstanding shares of Series D Preferred Stock are fully
paid and nonassessable.


 



No Maturity, Sinking Fund or Mandatory Redemption


 


The
Series D Preferred Stock has no stated maturity and is not subject
to any sinking fund or mandatory redemption. Shares of the Series D
Preferred Stock will remain outstanding indefinitely unless we
decide to redeem or otherwise repurchase them. We are not required
to set aside funds to redeem the Series D Preferred
Stock.


 


 




 

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Ranking


 


The
Series D Preferred Stock ranks, with respect to rights to the
payment of dividends and the distribution of assets upon our
liquidation, dissolution or winding up:



 


	
 

	


(1)

	


senior to all classes or series of our Common Stock and to all
other equity securities issued by us including our outstanding
Series A Preferred Stock and Series B Convertible Preferred
(none of which Series B Convertible Preferred Stock are currently
outstanding) and any shares of Series
C Stock that may be issued (none of which Series C Preferred
Stock are currently outstanding) other
than equity securities referred to in clauses (2) and (3)
below;


	
 

	
 

	
 


	
 

	


(2)

	


on a parity with all equity securities issued by us with terms
specifically providing that those equity securities rank on a
parity with the Series D Preferred Stock with respect to rights to
the payment of dividends and the distribution of assets upon our
liquidation, dissolution or winding up;


	
 

	
 

	
 


	
 

	


(3)

	


junior to all equity securities issued by us with terms
specifically providing that those equity securities rank senior to
the Series D Preferred Stock with respect to rights to the payment
of dividends and the distribution of assets upon our liquidation,
dissolution or winding up (please see the section entitled
“Voting Rights” below); and


	
 

	
 

	
 


	
 

	


(4)

	


effectively junior to all of our existing and future indebtedness
(including indebtedness convertible to our Common Stock or
preferred stock) and to any indebtedness and other liabilities of
(as well as any preferred equity interests held by others in) our
subsidiaries.








 



Dividends


 


Holders
of shares of the Series D Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors, out of our
funds legally available for the payment of dividends, cumulative
cash dividends at the rate of 9.75% per annum on the $25.00 per
share liquidation preference of the Series D Preferred Stock
(equivalent to $2.4375 per annum per share). Dividends on the
Series D Preferred Stock accrue daily and shall be cumulative from,
and including, the applicable issue date and are payable monthly in
arrears on the 15th day of each month; provided that if any
dividend payment date is not a business day, as defined in the
certificate of designations, then the dividend that would otherwise
have been payable on that dividend payment date may be paid on the
next succeeding business day and no interest, additional dividends
or other sums will accrue on the amount so payable for the period
from and after that dividend payment date to that next succeeding
business day. Any dividend payable on the Series D Preferred Stock,
including dividends payable for any partial dividend period, are
computed on the basis of a 360-day year consisting of twelve 30-day
months; however, when initially issued, the shares of Series D
Preferred Stock were credited as having accrued dividends since the
first day of the calendar month in which they were issued.
Dividends will be payable to holders of record as they appear in
our stock records for the Series D Preferred Stock at the close of
business on the applicable record date, which is the last day of
the calendar month, whether or not a business day, immediately
preceding the month in which the applicable dividend payment date
falls. As a result, holders of shares of Series D Preferred Stock
will not be entitled to receive dividends on a dividend payment
date if such shares were not issued and outstanding on the
applicable dividend record date.


 


No
dividends on shares of Series D Preferred Stock shall be authorized
by our Board of Directors or paid or set apart for payment by us at
any time when the terms and provisions of any agreement of ours,
including any agreement relating to our indebtedness, prohibit the
authorization, payment or setting apart for payment thereof or
provide that the authorization, payment or setting apart for
payment thereof would constitute a breach of the agreement or a
default under the agreement, or if the authorization, payment or
setting apart for payment shall be restricted or prohibited by
law.


 


Notwithstanding
the foregoing, dividends on the Series D Preferred Stock will
accumulate whether or not we have earnings, whether or not there
are funds legally available for the payment of those dividends and
whether or not those dividends are declared by our Board of
Directors. No interest, or sum in lieu of interest, will be payable
in respect of any dividend payment or payments on the Series D
Preferred Stock that may be in arrears, and holders of the Series D
Preferred Stock will not be entitled to any dividends in excess of
full cumulative dividends described above. Any dividend payment
made on the Series D Preferred Stock shall first be credited
against the earliest accumulated but unpaid dividend due with
respect to those shares.


 




 

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Future
distributions on our Common Stock and preferred stock, including
the Series D Preferred Stock will be at the discretion of our Board
of Directors and will depend on, among other things, our results of
operations, cash flow from operations, financial condition and
capital requirements, any debt service requirements and any other
factors our Board of Directors deems relevant. Accordingly, we
cannot guarantee that we will be able to make cash distributions on
our preferred stock or what the actual distributions will be for
any future period.


 


Except
as provided in the next paragraph, unless full cumulative dividends
on all shares of Series D Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is
set apart for payment for all past dividend periods, no dividends
(other than in shares of Common Stock or in shares of any series of
preferred stock that we may issue ranking junior to the Series D
Preferred Stock as to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up) shall be
declared or paid or set aside for payment upon shares of our Common
Stock or preferred stock that we may issue ranking junior to, or on
a parity with, the Series D Preferred Stock as to the payment of
dividends or the distribution of assets upon liquidation,
dissolution or winding up. Nor shall any other distribution be
declared or made upon shares of our Common Stock or preferred stock
that we may issue ranking junior to, or on a parity with, the
Series D Preferred Stock as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up.
Also, any shares of our Common Stock or preferred stock that we may
issue ranking junior to or on a parity with the Series D Preferred
Stock as to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up, shall not be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys paid to or made available for a sinking fund for the
redemption of any such shares) by us (except by conversion into or
exchange for our other capital stock that we may issue ranking
junior to the Series D Preferred Stock as to the payment of
dividends and the distribution of assets upon liquidation,
dissolution or winding up); provided, however, that the foregoing
shall not prevent the purchase or acquisition by us of shares of
Series D Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of
Series D Preferred Stock.


 


When
dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series D Preferred Stock and
the shares of any other series of preferred stock that we may issue
ranking on a parity as to the payment of dividends with the Series
D Preferred Stock, all dividends declared upon the Series D
Preferred Stock and any other series of preferred stock that we may
issue ranking on a parity as to the payment of dividends with the
Series D Preferred Stock shall be declared pro rata so that the
amount of dividends declared per share of Series D Preferred Stock
and such other series of preferred stock that we may issue shall in
all cases bear to each other the same ratio that accrued dividends
per share on the Series D Preferred Stock and such other series of
preferred stock that we may issue (which shall not include any
accrual in respect of unpaid dividends for prior dividend periods
if such preferred stock does not have a cumulative dividend) bear
to each other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on
the Series D Preferred Stock that may be in arrears.


 



Liquidation Preference


 


In the
event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of shares of Series D Preferred Stock will
be entitled to be paid out of the assets we have legally available
for distribution to our shareholders, subject to the preferential
rights of the holders of any class or series of our capital stock
we may issue ranking senior to the Series D Preferred Stock with
respect to the distribution of assets upon liquidation, dissolution
or winding up, a liquidation preference of $25.00 per share, plus
an amount equal to any accumulated and unpaid dividends to, but not
including, the date of payment, before any distribution of assets
is made to holders of our Common Stock or any other class or series
of our capital stock we may issue that ranks junior to the Series D
Preferred Stock as to liquidation rights.


 


In the
event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, our available assets are insufficient to
pay the amount of the liquidating distributions on all outstanding
shares of Series D Preferred Stock and the corresponding amounts
payable on all shares of other classes or series of our capital
stock that we may issue ranking on a parity with the Series D
Preferred Stock in the distribution of assets, then the holders of
the Series D Preferred Stock and all other such classes or series
of capital stock shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which
they would otherwise be respectively entitled.


 




 

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We will
use commercially reasonable efforts to provide written notice
of any such liquidation, dissolution or winding up no fewer than 10
days prior to the payment date. After payment of the full amount of
the liquidating distributions to which they are entitled, the
holders of Series D Preferred Stock will have no right or claim to
any of our remaining assets. The consolidation or merger of us with
or into any other corporation, trust or entity or of any other
entity with or into us, or the sale, lease, transfer or conveyance
of all or substantially all of our property or business, shall not
be deemed a liquidation, dissolution or winding up of us (although
such events may give rise to the special optional redemption to the
extent described below).


 



Redemption


 


The
Series D Preferred Stock is not redeemable by us prior to September
23, 2022, except as described below under “Special Optional
Redemption.”


 



Optional Redemption. On and after September 23, 2022, we
may, at our option, upon not less than 30 nor more than 60
days’ written notice, redeem the Series D Preferred Stock, in
whole or in part, at any time or from time to time, for cash at a
redemption price of $25.00 per share, plus any accumulated and
unpaid dividends thereon to, but not including, the date fixed for
redemption. If we elect to redeem any shares of Series D Preferred
Stock as described in this “Optional Redemption”
section, we may use any available cash to pay the redemption price,
and we will not be required to pay the redemption price only out of
the proceeds from the issuance of other equity securities or any
other specific source.


 



Special Optional Redemption


 


Upon
the occurrence of a Change of Control (as defined below), we may,
at our option, upon not less than 30 nor more than 60 days’
written notice, redeem the Series D Preferred Stock, in whole or in
part, within 120 days after the first date on which such Change of
Control occurred, for cash at a redemption price of $25.00 per
share, plus any accumulated and unpaid dividends thereon to, but
not including, the redemption date. If we elect to redeem any
shares of Series D Preferred Stock as described in this
“Special Optional redemption” section, we may use any
available cash to pay the redemption price, and we will not be
required to pay the redemption price only out of the proceeds from
the issuance of other equity securities or any other specific
source.


 


A
“Change of Control” is deemed to occur when the
following have occurred and are continuing:


 




●

the acquisition by
any person, including any syndicate or group deemed to be a
“person” under Section 13(d)(3) of the Exchange Act
(other than Stephan Wallach and Michelle Wallach, our chief
executive officer and our chief operating officer, respectively,
and our principal shareholders, any member of their immediate
family, and any “person” or “group” under
Section 13(d)(3) of the Exchange Act, that is controlled by Mr.
Wallach or Mrs. Wallach or any member of their immediate family,
any beneficiary of the estate of Mr. Wallach or Mrs. Wallach, or
any trust, partnership, corporate or other entity controlled by any
of the foregoing), of beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or
series of purchases, mergers or other acquisition transactions of
our stock entitling that person to exercise more than 50% of the
total voting power of all our stock entitled to vote generally in
the election of our directors (except that such person will be
deemed to have beneficial ownership of all securities that such
person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a
subsequent condition); and






 




●

following the
closing of any transaction referred to above, neither we nor the
acquiring or surviving entity has a class of common securities (or
American Depositary Receipts representing such securities) listed
on the NYSE, the NYSE American or Nasdaq, or listed or quoted on an
exchange or quotation system that is a successor to the NYSE, the
NYSE American or Nasdaq.






 


 




 

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Redemption Procedures. In the event we elect to redeem
Series D Preferred Stock, the notice of redemption will be mailed
by us postage prepaid to each holder of record of Series D
Preferred Stock called for redemption at such holder’s
address as it appear on our stock transfer records, not less than
30 nor more than 60 days prior to the redemption date, and will
state the following:


 




●

the redemption
date;






 




●

the number of
shares of Series D Preferred Stock to be redeemed;






 




●

the redemption
price;






 




●

the place or places
where certificates (if any) for the Series D Preferred Stock are to
be surrendered for payment of the redemption price;






 




●

that dividends on
the shares to be redeemed will cease to accumulate on the
redemption date;






 




●

whether such
redemption is being made pursuant to the provisions described above
under “Optional Redemption” or “Special Optional
Redemption”; and






 




●

if applicable, that
such redemption is being made in connection with a Change of
Control and, in that case, a brief description of the transaction
or transactions constituting such Change of Control.






 


If less
than all of the Series D Preferred Stock held by any holder are to
be redeemed, the notice mailed to such holder shall also specify
the number of shares of Series D Preferred Stock held by such
holder to be redeemed. No failure to give such notice or any defect
thereto or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any shares of Series D Preferred
Stock except as to the holder to whom notice was defective or not
given.


 


Holders
of Series D Preferred Stock to be redeemed shall surrender the
Series D Preferred Stock at the place designated in the notice of
redemption and shall be entitled to the redemption price and any
accumulated and unpaid dividends payable upon the redemption
following the surrender. If notice of redemption of any shares of
Series D Preferred Stock has been given and if we have irrevocably
set aside the funds necessary for redemption in trust for the
benefit of the holders of the shares of Series D Preferred Stock so
called for redemption, then from and after the redemption date
(unless default shall be made by us in providing for the payment of
the redemption price plus accumulated and unpaid dividends, if
any), dividends will cease to accumulate on those shares of Series
D Preferred Stock, those shares of Series D Preferred Stock shall
no longer be deemed outstanding and all rights of the holders of
those shares will terminate, except the right to receive the
redemption price plus accumulated and unpaid dividends, if any,
payable upon redemption. If any redemption date is not a business
day, then the redemption price and accumulated and unpaid
dividends, if any, payable upon redemption may be paid on the next
business day and no interest, additional dividends or other sums
will accumulate on the amount payable for the period from and after
that redemption date to that next business day. If less than all of
the outstanding Series D Preferred Stock is to be redeemed, the
Series D Preferred Stock to be redeemed shall be selected pro rata
(as nearly as may be practicable without creating fractional
shares) or by any other equitable method we determine.


 


In
connection with any redemption of Series D Preferred Stock, we
shall pay, in cash, any accumulated and unpaid dividends to, but
not including, the redemption date, unless a redemption date falls
after a dividend record date and prior to the corresponding
dividend payment date, in which case each holder of Series D
Preferred Stock at the close of business on such dividend record
date shall be entitled to the dividend payable on such shares on
the corresponding dividend payment date notwithstanding the
redemption of such shares before such dividend payment date. Except
as provided in this paragraph, we will make no payment or allowance
for unpaid dividends, whether or not in arrears, on shares of the
Series D Preferred Stock to be redeemed.


 


Unless
full cumulative dividends on all shares of Series D Preferred Stock
have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof has been or
contemporaneously is set apart for payment for all past dividend
periods, no shares of Series D Preferred Stock shall be redeemed
unless all outstanding shares of Series D Preferred Stock are
simultaneously redeemed and we shall not purchase or otherwise
acquire directly or indirectly any shares of Series D Preferred
Stock (except by exchanging it for our capital stock ranking junior
to the Series D Preferred Stock as to the payment of dividends and
distribution of assets upon liquidation, dissolution or winding
up); provided, however, that the foregoing shall not prevent the
purchase or acquisition by us of shares of Series D Preferred Stock
pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Series D Preferred
Stock.


 


 




 

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Subject
to applicable law, we may purchase shares of Series D Preferred
Stock in the open market, by tender or by private agreement. Any
shares of Series D Preferred Stock that we acquire may be retired
and reclassified as authorized but unissued shares of preferred
stock, without designation as to class or series, and may
thereafter be reissued as any class or series of preferred
stock.


 



Voting Rights


 


Holders
of the Series D Preferred Stock do not have any voting rights,
except as set forth below or as otherwise required by
law.


 


On each
matter on which holders of Series D Preferred Stock are entitled to
vote, each share of Series D Preferred Stock will be entitled to
one vote. In instances described below where holders of Series D
Preferred Stock vote with holders of any other class or series of
our preferred stock as a single class on any matter, the Series D
Preferred Stock and the shares of each such other class or series
will have one vote for each $25.00 of liquidation preference
(excluding accumulated dividends) represented by their respective
shares.


 


So long
as any shares of Series D Preferred Stock remain outstanding, we
will not, without the affirmative vote or consent of the holders of
at least two-thirds of the shares of the Series D Preferred Stock
outstanding at the time, given in person or by proxy, either in
writing or at a meeting (voting together as a class with all other
series of parity preferred stock that we may issue upon which like
voting rights have been conferred and are exercisable), (a)
authorize or create, or increase the authorized or issued amount
of, any class or series of capital stock ranking senior to the
Series D Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding
up or reclassify any of our authorized capital stock into such
shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such
shares; or (b) unless redeeming all Series D Preferred Stock in
connection with such action, amend, alter, repeal or replace our
certificate of incorporation or the certificate of designations
designating the Series D Preferred Stock, including by way of a
merger, consolidation or otherwise in which we may or may not be
the surviving entity, so as to materially and adversely affect and
deprive holders of Series D Preferred Stock of any right,
preference, privilege or voting power of the Series D Preferred
Stock (each, an “Event”). An increase in the amount of
the authorized preferred stock, including the Series D Preferred
Stock, or the creation or issuance of any other series of preferred
stock that we may issue, or any increase in the amount of
authorized shares of such series, in each case ranking on a parity
with or junior to the Series D Preferred Stock with respect to
payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed an
Event and will not require us to obtain two-thirds of the votes
entitled to be cast by the holders of the Series D Preferred Stock
and all such other similarly affected series, outstanding at the
time (voting together as a class), so long as such increase in the
number of shares of Series D Preferred Stock or issuance of such
new series of preferred stock does not (i) provide for, in the
aggregate, taken together with any previously issued shares of
Series D Preferred Stock), the payment of annual dividends on (in
the case of additional shares of Series D Preferred Stock), or on
parity with (in the case of any other series of preferred stock),
the Series D Preferred Stock in excess of $2,437,500 and (ii) any
such new series of preferred stock that may be created is on parity
or junior with the Series D Preferred Stock with respect to the
distribution of assets upon our liquidation, dissolution or winding
up.


 


Notwithstanding
the foregoing, if an Event set forth in the preceding paragraph
materially and adversely affects the right, preference, privilege
or voting power of the Series D Preferred Stock but not all series
of parity preferred stock that we may issue upon which voting
rights have been conferred and are exercisable, the affirmative
vote or consent of the holders of at least two-thirds of the shares
of Series D Preferred Stock and all other similarly affected series
outstanding at the time (voting together as a class) given in
person or proxy, either in writing or at a meeting, shall be
required in lieu of the vote or consent that would otherwise be
required by the preceding paragraph.


 


The
foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of Series D
Preferred Stock shall have been redeemed or called for redemption
upon proper notice and sufficient funds shall have been deposited
in trust to effect such redemption.


 


Except
as expressly stated in the certificate of designations or as may be
required by applicable law, the Series D Preferred Stock do not
have any relative, participating, optional or other special voting
rights or powers and the consent of the holders thereof shall not
be required for the taking of any corporate action.


 


 




 

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Information Rights


 


During
any period in which we are not subject to Section 13 or 15(d) of
the Exchange Act and any shares of Series D Preferred Stock are
outstanding, we will use our best efforts to (i) make available on
our website copies of the Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q that we would have been required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we
were subject thereto (other than any exhibits that would have been
required) and (ii) promptly, upon request, supply copies of such
reports to any holders or prospective holder of Series D Preferred
Stock. We will use our best effort to mail (or otherwise provide)
the information to the holders of the Series D Preferred Stock
within 15 days after the respective dates by which a periodic
report on Form 10-K or Form 10-Q, as the case may be, in respect of
such information would have been required to be filed with the SEC,
if we were subject to Section 13 or 15(d) of the Exchange Act, in
each case, based on the dates on which we would be required to file
such periodic reports if we were a “non-accelerated
filer” within the meaning of the Exchange Act.


 



No Conversion Rights



 


The
Series D Preferred Stock is not convertible into our Common Stock
or any other security.


 



No Preemptive Rights


 


Holders
of Series D Preferred Stock do not have any preemptive rights to
purchase or subscribe for our Common Stock or any other security by
virtue of their ownership thereof.



 



Change of Control



 


Provisions
in our Certificate of Incorporation, including the Certificate of
Designations establishing the terms of the Series D Preferred
Stock, as amended, and Bylaws may make it difficult and expensive
for a third party to pursue a tender offer, change in control or
takeover attempt, which is opposed by management and the Board of
Directors.


 



Book-Entry Procedures


 


DTC
acts as securities depository for our outstanding Series D
Preferred Stock. With respect to the outstanding Series D Preferred
Stock, we issued fully registered global securities certificates in
the name of DTC’s nominee, Cede & Co. These
certificates represent the total aggregate number of issued and
outstanding shares of Series D Preferred Stock. We deposited these
certificates with DTC or a custodian appointed by DTC. We will not
issue certificates to holders of the shares of Series D Preferred
Stock, unless DTC’s services are discontinued as described
below.


 


In
those instances where a vote is required, neither DTC nor Cede
& Co. itself will consent or vote with respect to the shares of
Series D Preferred Stock. Under its usual procedures, DTC would
mail an omnibus proxy to us as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.’s consenting
or voting rights to those direct participants whose accounts the
shares of Series D Preferred Stock are credited to on the record
date, which are identified in a listing attached to the omnibus
proxy.


 


Dividends
on the Series D Preferred Stock are made directly to DTC’s
nominee (or its successor, if applicable). DTC’s practice is
to credit participants’ accounts on the relevant payment date
in accordance with their respective holdings shown on DTC’s
records unless DTC has reason to believe that it will not receive
payment on that payment date.


 


If DTC
notifies us that it is unwilling to continue as securities
depositary, or it is unable to continue or ceases to be a clearing
agency registered under the Exchange Act and a successor depositary
is not appointed by us within 90 days after receiving such notice
or becoming aware that DTC is no longer so registered, we will
issue the Series D Preferred Stock in definitive form, at our
expense, upon registration of transfer of, or in exchange for, such
global security.


 




 

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Global Clearance and Settlement Procedures


 


When
initially issued, settlement for the Series D Preferred Stock was
made in immediately available funds. Secondary market trading among
DTC’s participants occurs in the ordinary way in accordance
with DTC’s rules and is settled in immediately available
funds using DTC’s Same-Day Funds Settlement
System.


 



Transfer Agent and Disbursing Agent
for the Series D Preferred Stock


 


The
registrar, transfer agent and dividend and redemption price
disbursing agent in respect of the Series D Preferred Stock is
Pacific Stock Transfer Company.
The principal business address for Pacific Stock Transfer Company is 6725 Via Austi
Parkway, Suite 300, Las Vegas Nevada 89119. Their telephone number is (800)
785-7782.


 


 




 

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