Document:

EX-10.1

EXHIBIT 10.1

AGREEMENT

THIS AGREEMENT (this “Agreement”), is entered into as of December 31, 2012, by and
among Irving Azoff (“Azoff”), Irving Azoff and Rochelle Azoff, as Co-Trustees of the Azoff
Family Trust of 1997, dated May 27, 1997, as amended (the “Azoff Trust” and, together with
Azoff, the “Azoff Sellers”), Live Nation Entertainment, Inc. (“LNE”) and Front Line
Management Group, Inc. (“FLMG”). LNE and its affiliates (including, without limitation,
FLMG) are referred to herein as the “LNE Companies.”

Termination of Employment; Resignation as Director and Officer:

The closing of the transactions contemplated by this Agreement shall occur on December 31, 2012
(the “Closing”), and shall be effective as of 11:59 p.m. on that date. Upon the Closing,
both (i) that certain Amended and Restated Employment Agreement, dated as October 21, 2009 (the
“FLMG Employment Agreement”), by and between Azoff and FLMG, and (ii) that certain
Employment Agreement, dated as of October 21, 2009 (the “LNE Employment Agreement”), by and
between Azoff and LNE, as successor to Ticketmaster Entertainment, Inc., shall terminate (except
for such terms set forth therein which expressly survive such termination). In addition, upon the
Closing, Azoff shall voluntarily resign as a director and officer of all of the LNE Companies,
including, without limitation, FLMG.

Certain Payments to Azoff:

Upon the Closing, FLMG shall pay to Azoff (i) any and all remaining amounts of “Base
Salary” and unreimbursed business expenses due to Azoff under the FLMG Employment Agreement
through December 31, 2012; and (ii) the amount of Two Million Dollars ($2,000,000), representing
the “Annual Bonus” due to Azoff under the FLMG Employment Agreement for the fiscal year
ended December 31, 2012. In addition, LNE shall pay to Azoff the “Annual Bonus” due to
Azoff under the LNE Employment Agreement for the fiscal year ended December 31, 2012, as follows:
(x) LNE shall pay to Azoff the amount of One Million Five Hundred Thousand Dollars ($1,500,000)
upon the Closing (the “LNE Bonus Closing Payment”); and (y) LNE shall pay to Azoff the
amount by which the full amount of the Annual Bonus due to Azoff under Section 6 of the LNE
Employment Agreement exceeds the LNE Bonus Closing Payment, on the date due under Section 6 of the
LNE Employment Agreement. Such payments shall constitute payment in full under the FLMG Employment
Agreement and the LNE Employment Agreement.

Satisfaction of Note:

Upon the Closing, that certain “Note” under the LNE Employment Agreement shall mature, and LNE
shall thereupon pay to the Azoff Trust the amount of Eight Million Two Hundred Thirty-Six Thousand
and Twenty Dollars ($8,236,020), less any applicable withholding or other taxes, in full
satisfaction of any and all amounts due to the Azoff Trust thereunder.

Live Nation Restricted Shares:

Upon the Closing, the One Million Four Hundred Seventy Four Thousand Three Hundred Seventy-Two
(1,474,372) shares of “Live Nation Restricted Shares” under the LNE Employment Agreement,
which would otherwise vest on October 29, 2013, shall vest in full. Subject to compliance with
applicable law, Azoff shall thereafter have the right to dispose of any and all of the Live Nation
Restricted Shares in his discretion. Prior to the Closing, Azoff shall deliver, or cause to be
delivered, to LNE cash in amount sufficient to cover Azoff’s tax withholding obligations in
connection with the vesting of such Live Nation Restricted Shares. Upon the Closing, pursuant to
Section 11(c) of the LNE Employment Agreement, LNE shall cause 196,007 shares of LNE common stock,
with such amount determined by reference to the $8.98/share closing price of LNE common stock on
December 28, 2012, to be issued to Azoff or his designee, effective as of the date of Closing, to
an account directed by Azoff, it being understood and agreed that the issuance of such shares shall
constitute payment in full of the entire “Settlement Amount” under the LNE Employment
Agreement.

Stock Options, Stock Growth RSU’s and Restricted Shares:

Upon the Closing, each unvested “Stock Option,” “Stock Growth RSU” and
“Restricted Share” set out in Appendix A hereto shall vest in full. For the
avoidance of doubt, the parties agree that the 124,700 Restricted Shares granted to Azoff on July
15, 2011 shall vest in full as if the performance targets associated therewith had been attained.
Vested Stock Options shall be exercisable by Azoff within six (6) months of the Closing. Subject
to compliance with applicable law and the terms and conditions of the applicable plan or award
agreement pursuant to which such Stock Options, Stock Growth RSU’s and Restricted Shares were
granted, Stock Options (and the stock issued upon exercise of the Stock Options), Stock Growth
RSU’s and Restricted Shares may be disposed of by Azoff in his discretion.

Other Stock of LNE:

Subject to compliance with applicable law, Azoff shall thereafter have the right to dispose of any
and all other shares of stock of LNE owned by Azoff or the Azoff Trust in his discretion and
without regard to any blackout windows that may be in effect.

Artists and Personnel:

Effective as of January 1, 2013, Azoff shall have the right to (i) represent and manage certain
artists (including individual band members) (the “Retained Artists”), and (ii) employ or
engage certain employees (the “Retained Personnel”). The Retained Artists, and their
historical and projected commission earnings, are set forth in Appendix B hereto. The
Retained Personnel are set forth in Appendix C hereto.

Retained Artists:

Azoff shall indemnify the LNE Companies with respect to any claims by the Retained Artists relating
to the period prior to January 1, 2013. FLMG makes no representation that the Retained Artists
shall agree to continue to be represented and managed by Azoff from and after January 1, 2013. Any
cash or other assets previously paid to, or received by, FLMG (or any other LNE Company) relating
to the representation of such Retained Artist shall remain the sole and exclusive property of FLMG,
and Azoff shall arrange with the Retained Artists to pay to FLMG (i) all commissions relating to
concerts performed or other activities undertaken through December 31, 2012 and (ii) such
commissions and/or artist receipts relating to future concerts other activities as may be necessary
to satisfy in full all uncollected receivables, unrecouped advances or loans (including interest)
owed or owing by such Retained Artists as of the close of business on December 31, 2012;
provided, that Azoff shall assign to LNE any payments received by Azoff from the Retained
Artists until all such uncollected receivables, advances or loans (including interest) are recouped
in full.

Retained Personnel:

(i) FLMG shall terminate the employment of the Retained Personnel, effective as of December 31,
2012; (ii) FLMG shall pay the Retained Personnel (A) their respective salaries through December 31,
2012, (B) any and all bonuses that have already been approved by LNE and not otherwise paid, and
(C) any recorded accrued vacation pay through December 31, 2012, in each case, (x) within thirty
(30) days of the Closing, (y) subject to the execution and delivery of a general release in favor
of the LNE Companies and (z) subject to the full repayment of any outstanding advances or loans
(including interest) made to the Retained Personnel prior to the effective date of such
termination; and (iii) FLMG shall assign to Azoff or one of his affiliates (as designated by
Azoff), in accordance with their respective terms, any and all written employment agreements
between FLMG and the Retained Personnel, subject to the parties obtaining any required consents in
connection with any such assignment. Azoff shall indemnify the LNE Companies against any claims by
any of the Retained Personnel relating to their employment, including, without limitation, any
claims for severance, but excluding any obligations of FLMG (a) pursuant to clause (ii) of the
immediately preceding sentence and (b) pursuant to clause (1) of the immediately following
paragraph. FLMG makes no representation that the Retained Personnel shall agree to be employed or
engaged by Azoff after the Closing or for any specified period of time thereafter.

Notwithstanding the foregoing:

(1) FLMG shall pay severance to the employees labeled “Severance Employees” in Appendix C
in accordance with FLMG policy, in each case, upon the execution and delivery of a general release
in favor of the LNE Companies; provided, that to the extent such employees receive any
compensation from Azoff or any of his affiliates during calendar year 2013, FLMG shall have the
right to “claw-back” from Azoff any severance amounts actually paid to such employees on a
dollar-for-dollar basis.

(2) Upon the Closing, (w) that certain Employment Agreement, dated as of January 25, 2011 (the
“Hodgson Employment Agreement”), by and between Colin Hodgson (“Hodgson”) and FLMG,
shall be terminated by Hodgson with “Good Reason;” (x) FLMG shall pay to Hodgson (A) any
and all remaining amounts of “Base Salary” and unreimbursed business expenses due to
Hodgson under the Hodgson Employment Agreement through December 31, 2012; (B) the amount of One
Million Dollars ($1,000,000), representing the “Bonus” due to Hodgson under the Hodgson
Employment Agreement for the fiscal year ended December 31, 2012, payable within thirty (30) days
of the Closing in accordance with the Hodgson Employment Agreement; and (C) the amount of Two
Million Dollars ($2,000,000), representing the amounts due to Hodgson pursuant to Section
7(c)(ii)(B) of the Hodgson Employment Agreement and payable within thirty (30) days of Closing in
accordance with the Hodgson Employment Agreement, subject to compliance with Internal Revenue Code
Section 409(A); (y) any and all unvested grants to Hodgson of equity in FLMG or its affiliates
(other than any equity interests that vest upon the achievement of a targeted LNE common stock
price or other performance targets which have not been attained prior to the Closing) shall vest in
full, as provided in Section 7(c)(ii)(C) of the Hodgson Employment Agreement; and (z) Hodgson shall
voluntarily resign as a director and officer of all of the LNE Companies, including, without
limitation, FLMG; provided, that to the extent Hodgson receives any compensation from Azoff
or any of his affiliates during calendar year 2013, FLMG shall have the right to “claw-back” from
Azoff any severance amounts actually paid to Hodgson (including, without limitation, the amount set
forth in subclause (x)(C) above) on a dollar-for-dollar basis. Such payments shall constitute
payment in full under the Hodgson Employment Agreement. Notwithstanding anything to the contrary
set forth in the Hodgson Employment Agreement, Hodgson shall be free to accept any employment or
engagement whatsoever by Azoff or any of his affiliates.

Overhead Costs:

Azoff or one of his affiliates (i) shall enter into a sub-lease agreement with FLMG for the space
in the current Glendon offices described as the area on the 20th floor from the large conference
room through to the end of the Azoff wing; and (ii) shall have an option, exercisable within the
first six (6) months after the Closing (but upon not less than ninety (90) days prior written
notice), to sub-lease all of the remaining space on the 20th floor (collectively, the
“Sub-leased Premises”). The term of any such sub-lease(s) shall be effective for the
duration of FLMG’s current lease agreement for the Sub-leased Premises; and Azoff shall have the
right to further sub-lease the Sub-leased Premises; provided, however, that LNE
shall have the first right to take back any space prior to Azoff sub-leasing such space. Any
sub-lease(s) and sub-sub-lease(s) contemplated by this section shall be subject to obtaining the
prior approval of the applicable landlord in accordance with the terms and conditions of the lease
agreement.

The rent shall be equal to the cost per square foot to FLMG under the terms of the current lease
agreement (which rate shall include the pro rata share, on a per square foot basis, of the gross
amount spent on leasehold improvements, less the landlord tenant improvement allowance), plus
applicable parking and utilities. Azoff shall have the use, for the duration of the sub-lease(s)
and without charge, of all (i) furniture and office equipment located within such sub-leased space
(but not within any communal office space or other office space with shared access for other
Sub-leased Premises occupants) and (ii) IT equipment, servers, and telephone systems associated
with such sub-leased space and dedicated to the Retained Personnel, it being understood that all of
the items referenced in clauses (i) and (ii) above shall be made available on an “AS IS, WHERE IS”
basis without any obligation on the part of any LNE Company to maintain, repair, preserve or
otherwise insure the functionality, utility or safety of such furniture, equipment or systems.
Azoff shall retain ownership of certain domain names, trademarks and trade names that are personal
to him, including, without limitation, the “azoffmusic” name, each of which are set forth on
Appendix D hereto. Other FLMG employees currently using this email address shall be
transitioned off as soon as is practical, and any shared infrastructure utilized by the Retained
Personnel and other FLMG employees will likewise be separated as soon as is practical following the
Closing.

Restrictive and Other Covenants:

Except as expressly set forth below, the restrictive covenants set forth in Article VII of that
certain Stock Purchase Agreement, dated as of February 4, 2011 (the “Stock Purchase
Agreement”), by and among LNE, Azoff, the Azoff Trust and the other parties thereto, shall
remain in full force and effect following the Closing in accordance with its terms. The Azoff
Sellers hereby reaffirm the terms and conditions set forth in Article VII of the Stock Purchase
Agreement, including confirmation, for the avoidance of doubt, that the parties intended, as of the
date of the Stock Purchase Agreement, for (x) the term “tour sponsorship” and
“ticket-selling” (as such terms are used in the definition of “Music Business”
under the Stock Purchase Agreement) to include sponsorship and other related arrangements with
credit card companies and VIP ticketing and other related services, respectively, and (y) the term
“Artist” (as such term is used in the Stock Purchase Agreement) to include DJ’s and other
persons involved in electronic dance music.

(i) LNE and FLMG hereby waive, effective as of the Closing, the restrictive covenants set forth in
Article VII of the Stock Purchase Agreement solely with respect to Azoff’s participation or
engagement in the following activities:

	 	(a)	 	the representation and/or management of the Retained Artists (as contemplated
under “Artists and Personnel” above); it being explicitly understood and agreed that,
other than as expressly set forth in this subsection (a) and subsections (b), (c) and
(d) of this clause (i) below, the Azoff Sellers shall continue to be restricted from
representing and/or managing any Artists in accordance with the terms and conditions of
the Stock Purchase Agreement, whether or not such Artists are currently or subsequently
represented or managed by any of the LNE Companies (including, without limitation,
FLMG); and

	 	(b)	 	the representation and/or management of an unlimited number of Emerging Artists
(as defined below); and

	 	(c)	 	the representation and/or management of not more than five (5) new Permitted
Artists (as defined below) for each of calendar year 2013 and 2014; and from and after
January 1, 2015, the representation and/or management of an unlimited number of
Permitted Artists; and

	 	(d)	 	from and after January 1, 2015, the representation and/or management of an
unlimited number of Restricted Artists (as defined below), it being expressly
acknowledged and agreed that the Azoff Sellers shall remain restricted under the Stock
Purchase Agreement from representing and/or managing any Restricted Artist prior to
January 1, 2015; provided, that, if (x) the Eagles terminate their relationship
with Azoff prior to January 1, 2015 (with no further right to receive any sunset
payment(s), advance(s) or other payment(s) of any nature therefrom (a “Sunset
Payment”)), and/or (y) Christina Aguilera terminates her relationship with Azoff
prior to January 1, 2015 with no Sunset Payment, Azoff shall be permitted to sign one
(1) Restricted Artist to replace the Eagles and/or Christina Aguilera at such time;
provided, further, that in the event Azoff or any of his affiliates are
entitled to any Sunset Payments in connection with any such termination under
subclause (x) or (y) above, Azoff shall remain restricted from signing any such
replacement Restricted Artist(s) for a proportionate amount of time remaining in the
period from the date of such termination until January 1, 2015 that is equal to the
ratio of (i) the aggregate amount of such Sunset Payments advanced to or to be received
by Azoff or any of his affiliates to (ii) the amount of expected earnings scheduled by
Azoff for such terminating Artist (as set forth in Appendix B) (e.g., if the
Eagles terminate their relationship with Azoff on January 1, 2014, the Sunset Payment is
$4 million and the expected earnings scheduled by Azoff for such Artist is $6 million,
then Azoff shall remain restricted from signing such replacement Restricted Artist until
September 1, 2014 (or 2/3 of the remaining time until January 1, 2015); and

	 	(e)	 	the employment and/or engagement of the Retained Personnel (as contemplated under
“Artists and Personnel” above); and

	 	(f)	 	the business of music recording and publishing; and

	 	(g)	 	any and all businesses relating to the development, production, financing,
distribution and exploitation of audio and visual media, including, without limitation,
television (including, without limitation, a television project currently entitled
“Marshall”), motion pictures, non-concert live stage productions, book publishing, video
games and other businesses, in each case, to the extent that they do not constitute
engaging in the Music Business; it being acknowledged and agreed that the following
activities shall not constitute engaging in the Music Business for purposes hereof: (1)
music contest or music lifestyle television programs (e.g., American Idol), (2)
television scripted content that is music based, (3) awards programs appearing on
television, and (4) motion pictures that are not based on the involvement of any Artist
(other than any Azoff Artist (as defined below)) (e.g., Azoff could produce the musical
“Chicago” but not the life story of Katy Perry); it being further acknowledged and
agreed that live concerts produced for television and motion pictures would be
considered engaging in the Music Business for purposes hereof; and

	 	(h)	 	marketing, advertising and similar services, in substantively the same form as
such services are currently provided by, for example, advertising agencies, marketing
fulfillment companies, and such firms as the Wasserman Media Group and IMG, solely to
the extent such activities (1) would not otherwise constitute the representation or
management of Artists, and (2) are not performed on behalf of any person that derives
more than twenty percent (20%) of its gross revenues from businesses which compete with
any LNE Company in the Music Business.

For the avoidance of doubt, the limited waivers granted in subsections (a) through (d) of clause
(i) above with respect to the Retained Artists, Emerging Artists, Permitted Artists and Restricted
Artists (as the case may be) are granted solely with respect to the management and/or
representation of such Artist and nothing set forth herein shall be interpreted or construed as
permitting any Azoff Seller to engage in any other aspect of the Music Business, including, without
limitation, VIP ticketing or merchandising, with any such Artist or otherwise participate in any
revenue streams derived therefrom, except (x) for the collection of commissions and similar fees
from such Artists customarily paid to managers or representatives in connection with such
activities and (y) as expressly permitted by subsections of (f) through (h) of clause (i) above.

(ii) The Azoff Sellers hereby agree:

	 	(a)	 	to, from and after the Closing, perform and use commercially reasonable efforts
to ensure that the Azoff Artists perform their respective commitments, as applicable,
under the prevailing LNE/FLMG sponsorship agreement with American Express or other
credit card sponsor, as though Azoff were still employed by LNE and FLMG and such Azoff
Artists were managed and represented by FLMG, it being agreed and acknowledged that any
and all payments from American Express or other credit card sponsor shall be paid to
LNE, not Azoff; and

	 	(b)	 	(x) to offer VIP Nation a right of last refusal to act as the exclusive provider
of VIP ticketing and other related services for any Emerging Artist or Permitted Artist
from the Closing until October 29, 2016 (such period, the “Specified Period”) on
prevailing market terms and (y) to offer VIP Nation a right of first negotiation (but
not last refusal) to act as the exclusive provider of VIP ticketing and other related
services for any Azoff Artist (other than any Emerging Artist or Permitted Artist)
during the Specified Period on prevailing market terms; and

	 	(c)	 	(x) to offer LNE’s merchandising companies a right of last refusal on any
bona-fide third party offers or proposals to act as the exclusive or non-exclusive
merchandise partners and service providers for any Emerging Artist or Permitted Artist
during the Specified Period on prevailing market terms and (y) to offer LNE’s
merchandising companies a right of first negotiation (but not last refusal) to act as
the exclusive or non-exclusive merchandise partners and service providers for any Azoff
Artist (other than any Emerging Artist or Permitted Artist) during the Specified Period
on prevailing market terms; it being acknowledged by the LNE Companies that in no event
can the Azoff Sellers guarantee that an Azoff Artist will agree to any one or more
merchandising agreements with LNE’s merchandising companies; and

	 	(d)	 	(x) to offer the LNE Companies a right of last refusal to promote not less than
75% of the Eagles’ concert dates for calendar year(s) 2013/14 and (y) to use
commercially reasonable efforts to offer the LNE Companies a right of last refusal to
promote any tours for any Azoff Artist which are commenced during the Specified Period;
it being acknowledged by the LNE Companies that, although Azoff will use commercially
reasonable efforts to keep the LNE Companies currently apprised of such Azoff Artists’
touring possibilities, in no event can the Azoff Sellers guarantee that the Eagles or
any other Azoff Artist will agree to any one or more such arrangements with the LNE
Companies; and

	 	(e)	 	during the Specified Period, not to directly or indirectly (i) solicit, advise,
sign, hire, or interfere or otherwise do, or attempt to do, business with, any manager
or employee of the LNE Companies, (ii) induce or attempt to induce any person (x) under
a written or oral agreement to violate the terms of their contracts or employment
arrangements with any LNE Company, or (y) to leave the employ of any LNE Company, or
(iii) engage in any activity similar to the foregoing, in each case, without LNE’s prior
written consent; and

	 	(f)	 	during the Specified Period, not to acquire, directly or indirectly, or enter
into an agreement to acquire, the on-going business, assets or enterprise of any manager
engaged in the representation or management of Artists engaged in the Music Business,
including, without limitation, by hiring, engaging or employing or agreeing to hire,
engage or employ any manager of Artists.

	 	 	For purposes of this Agreement, the following terms shall have the meanings set forth below:

“Azoff Artist” means any Artist, including any band or other group of Artists, that at
any time is represented or managed by Azoff or any of his affiliates, including the Retained
Artists, any Artist represented or managed by Azoff pursuant to section (i)(b), section (i)(c)
or section (i)(d) above.  For the avoidance of doubt, the term “Azoff Artist” shall not include
any LNE Artist.

“LNE Artist” means any Artist, including any band or other group of Artists (other than
the Retained Artists), that is, at any time, or was, within the preceding twenty-four (24)
months, represented or managed by any LNE Company (including, without limitation, FLMG).

“Emerging Artist” means any Artist, including any band or other group of Artists, who
(x) is not an LNE Artist and (y) has no prior material revenues from all Music Business sources
(it being understood and agreed that any determination as to whether any such revenues are
material shall be made by LNE in its reasonable discretion).

“Permitted Artist” means any Artist, including any band or other group of Artists, (x)
who is not an LNE Artist and (y) whose gross revenues from all Music Business sources during the
immediately preceding twelve-month period were less than or equal to Five Million Dollars
($5,000,000).

“Restricted Artist” means any Artist, including any band or other group of Artists, (x)
who is not an LNE Artist and (y) whose gross revenues from all Music Business sources during the
immediately preceding twelve-month period were greater than Five Million Dollars ($5,000,000).

Releases:

Upon the Closing, Azoff, Hodgson, the LNE Companies and FLMG shall execute and deliver mutual
general releases and mutual non-disparagement covenants.

Confidentiality; No Publicity:

This Agreement and the matters described herein are strictly confidential, and may not be divulged,
disseminated or disclosed, in whole or in part, by any party to any person or entity other than to
a party’s legal and financial advisors or to the extent required by applicable law, judicial
process or regulation. Each party agrees that there shall be no public announcements or other
publicity with respect to this Agreement or the transactions contemplated hereby without the
express prior written consent of the other; provided, that although no such consent shall
be required for any announcement or disclosure required by applicable law, judicial process or
regulation, the parties will reasonably consult with one another in advance regarding the content
of such required announcement or disclosure.

Further Assurances:

From time to time, at the reasonable request of any other party hereto and without further
consideration, each party hereto shall execute and deliver such additional documents and take any
and all such further action as may be necessary or appropriate to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this Agreement.

Binding Effect; No Third Party Beneficiaries:

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may be assigned by the Azoff Sellers
to their affiliates; provided, that no such assignment shall relieve the Azoff Sellers from
their respective obligations hereunder. No person other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of this Agreement.

Governing Law; Consent to Exclusive Jurisdiction:

This Agreement shall be governed by and construed in accordance with the laws of the State of New
York, without regard to the principles of conflicts of law thereof that would apply the laws of
another jurisdiction.

The parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court
sitting in New York, New York over any suit, action or proceeding arising out of or relating to
this Agreement. To the fullest extent they may effectively do so under applicable law, the parties
hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any
claim that they are not subject to the jurisdiction of any such court, any objection that they may
now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

Specific Performance:

The parties agree that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties hereby agree that each party hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the United States or any state having
jurisdiction, in addition to any other remedy to which such party may be entitled at law or in
equity.

Severability:

If any one or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid,
illegal or unenforceable shall substantially impair the benefits of the remaining provisions
hereof.

Entire Agreement:

This Agreement is intended by the parties to be a complete statement of the agreements and
understandings of the parties hereto, and shall supersede all prior agreements and understandings
between the parties hereto, with respect to the matters set forth herein; provided, that,
as set forth in “Restrictive and Other Covenants” above, the Stock Purchase Agreement shall remain
in full force and effect following the Closing in accordance with its terms.

Counterparts:

This Agreement may be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an executed counterpart of
a signature page to this Agreement by facsimile transmission or by e-mail of a .pdf attachment
shall be effective as delivery of a manually executed counterpart of this Agreement.

[Remainder of this page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
above.

/s/ Irving Azoff

IRVING AZOFF

	 	 	 
	THE AZOFF FAMILY TRUST OF 1997, DATED MAY 27, 1997, AS AMENDED

	By: /s/Irving Azoff

	 	

	 

	Name:

Title:

	 	Irving Azoff

Co-Trustee

	 	 	 
	 	 	By: /s/ Rochelle Azoff
	 	 	Name: Rochelle Azoff
	 	 	Title: Co-Trustee
	IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
	above.

	 	 	 
	LIVE NATION ENTERTAINMENT INC.

	By: /s/ Michael G. Rowles

	 

	Name:

Title:

	 	Michael G. Rowles

Executive Vice President, General Counsel and Secretary

	 	 	 
	 	 

                     FRONT LINE MANAGEMENT GROUP, INC.   }
                     By: /s/ Michael G. Rowles           }

                     Name:               Michael G. Rowles
                     Title:              Vice President
FRONT LINE MANAGEMENT GROUP, INC.

	 	 	By: /s/ Michael G. Rowles
	 	 	Name: Michael G. Rowles
	 	 	Title: Vice PresidentUnassociated Document

EXHIBIT 4.1

 

 

DARA BIOSCIENCES, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES B-3 CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

The undersigned, David J. Drutz and David Tousley, do hereby certify that:

 

They are the Chief Executive Officer and acting Chief Financial Officer, respectively, of DARA BioSciences, Inc., a Delaware corporation (the “Corporation”).

 

The Corporation is authorized to issue one million shares of preferred stock.

 

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 one million shares, $0.01 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 up to one million 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 any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

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

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

 

“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.

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

“Common Stock” means the Corporation’s common stock, par value $0.01 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 the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“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 the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

 

  

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“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 either (A) the Company may issue Conversion Shares or (B) the Holders are permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents (and shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders or (iii) 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 shares issuable pursuant to the Transaction Documents 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 Transaction Documents, (f) there is no existing Triggering Event and no existing event which, with the passage of time or the giving of notice, would constitute a Triggering Event, (g) the issuance of the shares in question to the applicable Holder would not violate the limitations set forth in Section 6(d) or 6(e) herein, (h) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or may constitute, material non-public information, and (j) for each Trading Day in a period of 20 consecutive Trading Days prior to the applicable date in question, the daily trading volume for the Common Stock on the principal Trading Market exceeds $250,000.

 

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

“Exempt Issuance” shall have the meaning set forth in the Purchase Agreement.

“Existing Preferred Stock” means the outstanding shares of Series A Convertible Preferred Stock and Series B-2 Convertible Preferred Stock of the Corporation.

“Forced Conversion Amount” means the sum of (a) 100% of the aggregate Stated Value then outstanding and (b) all liquidated damages and other amounts due in respect of the Preferred Stock.

“Forced Conversion Date” shall have the meaning set forth in Section 8(d).

“Forced Conversion Notice” shall have the meaning set forth in Section 8(d).

 

  

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 “Forced Conversion Notice Date” shall have the meaning set forth in Section 8(d).

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

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

“Junior Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.

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

“Notice of Conversion” shall have the meaning set forth in Section 8(a).

“Optional Redemption” shall have the meaning set forth in Section 8(a).

“Optional Redemption Amount” means the sum of (a) 120% of the then outstanding Stated Value of the Preferred Stock, (b) accrued but unpaid dividends and (c) all liquidated damages and other amounts due in respect of the Preferred Stock.

“Optional Redemption Date” shall have the meaning set forth in Section 8(a).

“Optional Redemption Notice” shall have the meaning set forth in Section 8(a).

“Optional Redemption Notice Date” shall have the meaning set forth in Section 8(a).

“Optional Redemption Period” shall have the meaning set forth in Section 8(a).

“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 Agreement” means the Securities Purchase Agreement, dated as of  December 28, 2012, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

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

“Series B-4 Preferred Stock” means the Series B-4 Convertible Preferred Stock issued pursuant to the Purchase Agreement.

 

  

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“Shareholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Corporation with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.

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

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

“Trading Day” means a day on which the principal Trading Market is open for trading, or if the Common Stock is not listed or quoted on any Trading Market, “Trading Day” means a “Business Day”.

 

“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 MKT, 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).

“Transfer Agent” means American Stock Transfer & Trust Company LLC, the current transfer agent of the Company, with a mailing address of 6201 15th Avenue, 2nd Floor, Brooklyn, New York 11219 and a facsimile number of (718) 921-8323, and any successor transfer agent of the Company.

 

Section 2.                      Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series B-3 Convertible Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 2,550 (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 $0.01 per share and a stated value equal to $1,000 (the “Stated Value”).

 

Section 3.                      Dividends.

a) Dividends. 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) to and in the same form as dividends (other than dividends in the form of Common Stock) actually paid on shares of the Common Stock when, as and if such dividends (other than dividends in the form of Common Stock) are paid on shares of the Common Stock, provided, however, any such payment shall be permitted only following the payment of any dividends required to be paid on the Corporation’s outstanding Series A Convertible Preferred Stock and Series B-2 Convertible Preferred Stock in accordance with the terms thereof as in effect on the Original Issue Date.  Other than as set forth in the previous sentence, no other dividends shall be paid on shares of Preferred Stock; and the Corporation shall pay no dividends (other than dividends in the form of Common Stock) on shares of the Common Stock unless it simultaneously complies with the previous sentence.

 

  

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b) Other Securities. So long as any Preferred Stock shall remain outstanding, the Corporation shall not redeem, purchase or otherwise acquire directly or indirectly more than a de minimis amount of any Junior Securities other than as to repurchases of Common Stock or Common Stock Equivalents from departing officers or directors, and provided that, while any of the Preferred Stock remains outstanding, such repurchases shall not exceed an aggregate of $100,000 in any fiscal year from all officers and directors.

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 50.1% or more 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) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Preferred Stock, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) 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 an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share of Preferred Stock after any distribution or payment to the holders of the Existing Preferred Stock and before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.  A Fundamental Transaction shall be deemed a Liquidation.

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 such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. To effect conversions of shares of 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.

 

  

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b) Conversion Price.  The conversion price for the Preferred Stock shall equal $0.76, subject to adjustment herein (the “Conversion Price”).

c)  Mechanics of Conversion

 

i. Delivery of Certificate Upon Conversion. Certificates for Conversion Shares shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit or Withdrawal Agent at Custodian system (“DWAC”) if the Company is then a participant in such system and there is an effective registration statement permitting the issuance of the Conversion Shares to or resale of the Conversion Shares by Holder, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after such Conversion Date.

 

ii. 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.

iii. Fractional Shares of Common Stock. 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 receive 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.

 

  

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iv. Obligation Absolute; Partial Liquidated Damages.  Subject to limitations set forth in Section 6(d) and 6(e) herein, 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 any one 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) on the second Trading Day after the Share Delivery Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $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 such second 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 or declare a Triggering Event pursuant to Section 10 hereof 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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v. 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.

vi. Transfer Taxes.  The issuance of certificates for shares of the Common Stock on conversion of 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 certificates, 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 certificate 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 certificates 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.

 

  

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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) 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 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 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 beneficially owned by such Holder or any of its Affiliates.  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.  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 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 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 of a Holder, the Corporation shall within two Trading Days 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 since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% 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 not less than sixty-one (61) days’ prior 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 Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply.  Any such increase or decrease will not be effective until the sixty-first (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) Issuance Limitations.  Notwithstanding anything herein to the contrary, if the Corporation has not obtained Shareholder Approval, then the Corporation may not issue, upon conversion of the Preferred Stock, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date in connection with any conversion of Preferred Stock issued pursuant to the Purchase Agreement and in connection with the conversion of any shares of Series B-4 Preferred Stock issued pursuant to the Purchase Agreement, would exceed 3,739,400 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the “Issuable Maximum”).  Each Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the original Stated Value of such Holder’s Preferred Stock by (y) the aggregate Stated Value of all Preferred Stock and any shares of Series B-4 Preferred Stock issued pursuant to the Purchase Agreement issued on the Original Issue Date to all Holders.  In addition, each Holder may allocate its pro-rata portion of the Issuable Maximum among Series B-4 Preferred Stock and Preferred Stock held by it in its sole discretion.  Such portion shall be adjusted upward ratably in the event a Holder no longer holds any Preferred Stock and the amount of shares issued to such Holder pursuant to such Holder’s Preferred Stock was less than such Holder’s pro-rata share of the Issuable Maximum.

 

  

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Section 7.                      Certain Adjustments.

a) Stock Dividends and Stock Splits.  If the Corporation, at any time while 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, 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.

 

b) Subsequent Equity Sales.  Until such time that for 30 consecutive Trading Days after the Closing Date (a “Qualifying Period”), which 30 consecutive Trading Day period shall have commenced only after April 30, 2013, (i) the VWAP for each of any 25 Trading Days during the Qualifying Period exceeds 250% of the then effective Conversion Price and (ii) the volume for each Trading Day during the Qualifying Period exceeds $250,000 per Trading Day, 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.  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.

 

  

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c) Fundamental Transaction.  If, at any time while 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, (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 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, 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 Preferred Stock is convertible immediately prior to such Fundamental Transaction.  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 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 and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(c) 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 of this Preferred Stock, 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 and the Other Transaction Documents 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 and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

  

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d) 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.

 

e) 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 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 to each Holder at its last 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.

 

  

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                      Section 8.

a) Optional Redemption at Election of Corporation.  Subject to the provisions of this Section 8(a), at any time after the date hereof, the Corporation may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the then outstanding Preferred Stock for cash in an amount equal to the Optional Redemption Amount on the thirtieth (30th) Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date” and such redemption, the “Optional Redemption”).  The Optional Redemption Amount is payable in full on the Optional Redemption Date.

b) Redemption Procedure.  The payment of cash pursuant to an Optional Redemption shall be payable on the Optional Redemption Date.  Notwithstanding anything to the contrary in this Section 8, the Corporation’s determination to redeem shares of Preferred Stock under Section 8(a) shall be applied ratably among the Holders of the Preferred Stock. Any Holder may elect to convert its Preferred Stock pursuant to Section 6 prior to the Optional Redemption Date by the delivery of a Notice of Conversion to the Corporation.

c) Surrender of Certificates.  On or before the Optional Redemption Date, each of the Holders, unless such Holder has exercised his, her or its right to convert such Preferred Stock as provided in Section 6, shall surrender the certificate or certificates representing such Preferred Stock (or, if such Holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Optional Redemption Notice, and thereupon the Optional Redemption Amount for such Preferred Stock shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof.  In the event less than all of the shares of Preferred Stock represented by a certificate are redeemed, a new certificate representing the unredeemed shares of Preferred Stock shall promptly be issued to such Holder.

 

  

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d) Forced Conversion.  Notwithstanding anything herein to the contrary, if (i) the VWAP for each of any 25 Trading Days during any 30 consecutive Trading Day period (“Forced Conversion Threshold Period”), exceeds 250% of the then effective Conversion Price  and (ii) the volume for each Trading Day during any Forced Conversion Threshold Period exceeds $250,000 per Trading Day, the Corporation may, within 1 Trading Day after the end of any such Forced Conversion 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) plus all accrued but unpaid dividends thereon and all liquidated damages and other amounts due in respect of the Preferred Stock 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 Forced Conversion 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 each Holder’s initial purchases of Preferred Stock hereunder, provided that any voluntary conversions by a Holder shall be applied against such Holder’s pro rata allocation, thereby decreasing the aggregate amount forcibly converted hereunder if less than all shares of the Preferred Stock are forcibly converted.  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 9.                      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 sent by a nationally recognized overnight courier service, addressed to the Corporation, at 8601 Six Forks Road, Suite 160, Raleigh, North Carolina, Attention: Investor Relations, facsimile number (919) 861-0239, or such other facsimile number or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 9.  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, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number 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 date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number 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 (2nd) 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.

 

  

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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, accrued dividends and accrued interest, 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.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (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”).  Each party hereto 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 (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action 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.

 

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.

 

  

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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.

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 B-3 Convertible Preferred Stock.

 

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

 

  

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RESOLVED, FURTHER, that the chief executive officer, 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 31st day of December, 2012.

 

	
/s/ David J. Drutz 

	 	 	
/s/ David Tousley

	 
	
Name: David J. Drutz

	 	 	
Name:  David Tousley

	 
	
Title:  Chief Executive Officer

	 	 	
Title:  Acting Chief Financial Officer

	 

 

  

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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 B-3 Convertible Preferred Stock indicated below into shares of common stock, par value $0.01 per share (the “Common Stock”), of DARA BioSciences, 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 and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement pursuant to which the Preferred Stock was issued. 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: 

	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 

 

 

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