Document:

Unassociated Document

Exhibit 4.3

 

WARRANT

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

	No.	Dated: November 29, 2012

 

OVERNEAR, INC.

 

THIS PREFERRED STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [             ] and its Permitted Designees (as defined herein) (collectively, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5th) year anniversary of the Initial Exercise Date (the “Termination Date”), to subscribe for and purchase from OverNear, Inc., a Nevada corporation (the “Company”), up to 60,000 shares (the “Warrant Shares”) of Series A Convertible Preferred Stock, par value $0.001 per share, of the Company (the “Preferred Stock”).  The purchase price of one share of Preferred Stock under this Warrant shall be equal to the Exercise Price as defined in Section 2(b).

 

This Warrant is being issued pursuant to that certain Placement Agency Agreement dated August 6, 2012, as amended from time to time, by and between the Company and [          ] (the “Placement Agency Agreement”) and in connection with the Company’s private offering to accredited investors of its securities in accordance with, and subject to, the terms and conditions described in that certain Confidential Private Placement Memorandum, dated August 6, 2012, as the same may be amended and supplemented from time to time (the “Private Placement Memorandum”).

 

1.   Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Private Placement Memorandum. 

 

(a)   “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.

 

  

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

 

“Trading Market” means any of the following markets or exchanges on which the common stock, par value $0.001 per share, of the Company (the “Common Stock”) is listed or quoted for trading on the date in question: the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTC Bulletin Board, OTCQX or OTCQB (or any successors to any of the foregoing).

 

“Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 77 Spruce Street, Suite 201, Cedarhurst, NY  11516 and a facsimile number of (646) 536-3179, and any successor transfer agent of the Company.

 

“VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the average daily volume weighted average price of the Common Stock for the three Trading Days immediately preceding the date on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time), (b) if the Common Stock is not then listed or quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the average daily volume weighted average price of the Common Stock for the five Trading Days immediately preceding the date  so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants (substantially similar to this Warrant) then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

2.   Exercise.

 

(a)   Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

  

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(b)   Exercise Price.  The exercise price of the Preferred Stock under this Warrant shall be equal to $0.25 per share subject to adjustment hereunder (the “Exercise Price”). 

 

(c)   Cashless Exercise.  In addition to the method of payment set forth in Section 2(a) and in lieu of any cash payment required thereunder, the Holder shall have the right, at any time up to the Termination Date, to exercise this Warrant, in whole or in part, through a “cashless exercise” in which event the Company shall issue to the Holder a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: 

 

(A) = the VWAP of the Common Stock on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

(d)   Mechanics of Exercise.

 

(i)   Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder 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 (“DTC”) through its Deposit and Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, 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 the latest of (A) the delivery to the Company of the Notice of Exercise form, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise) (such date, the “Warrant Share Delivery Date”).   This Warrant shall be deemed to have been exercised on the first date on which the Notice of Exercise has been delivered to the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. 

 

  

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(ii)   Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

(iii)   Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

(iv)   Buy-In Rights.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker 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 the Holder of the Common Stock which is issuable upon conversion of the Warrant Shares which the Holder anticipated receiving upon such exercise and conversion (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares or credit such Holder’s balance account with DTC) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the VWAP on the date of exercise. 

 

(v)   No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company 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 Exercise Price or round up to the next whole share.

 

(vi)   Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

  

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(vii)          Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(e)   Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates (as such term is defined under Rule 144 of the Securities Act), and any other persons acting as a group together with the Holder or any of the 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 the Holder and its Affiliates shall include the number of shares of Common Stock that are issuable upon conversion of the Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion to Common Stock of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company 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 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the 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 Company, including this Warrant, by the 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 exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), 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 exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained 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 this Warrant. 

 

  

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3.   Certain Adjustments.

 

(a)           Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Preferred Stock or any other equity or equity equivalent securities payable in shares of Preferred Stock (which, for avoidance of doubt, shall not include any shares of Preferred Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Preferred Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Preferred Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Preferred Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Preferred Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Preferred Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

  

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(b)           Adjustment of Exercise Price upon Issuance of Additional Shares of Preferred Stock . In the event the Company shall at any time prior to the Expiration Date issue Additional Shares of Preferred Stock, as defined below, without consideration or for a consideration per share less than $0.25 (as such amount may be adjusted just prior to such issue pursuant to Section 3(a), the “Threshold Price”), then the Exercise Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Exercise Price by a fraction, (A) the numerator of which shall be (1) the number of shares of Preferred Stock outstanding immediately prior to such issue plus (2) the number of shares of Preferred Stock which the aggregate consideration received or to be received by the Company for the total number of Additional Shares of Preferred Stock so issued would purchase at the Exercise Price; and (B) the denominator of which shall be the number of shares of Preferred Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Preferred Stock so issued; provided that, (i) for the purpose of this Section 3(b), all shares of Preferred Stock issuable upon conversion or exchange of convertible securities outstanding immediately prior to such issue shall be deemed to be outstanding, and (ii) the number of shares of Preferred Stock deemed issuable upon conversion or exchange of such outstanding convertible securities shall be determined without giving effect to any adjustments to the conversion or exchange price or conversion or exchange rate of such convertible securities resulting from the issuance of Additional Shares of Preferred Stock that is the subject of this calculation. For purposes of this Warrant, “Additional Shares of Preferred Stock” shall mean all shares of Preferred Stock issued by the Company after the Effective Date (including without limitation any shares of Preferred Stock issuable upon conversion or exchange of any convertible securities or upon exercise of any option or warrant, on an as-converted basis), other than: (i) shares of Preferred Stock issued or issuable upon conversion or exchange of any convertible securities or exercise of any options or warrants outstanding on the Final Closing of the Offering; (ii) shares of Preferred Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Preferred Stock that is covered by Section 3(a) above; (iii) shares of Preferred Stock (or options with respect thereto) issued or issuable to employees or directors of, or consultants to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company; (iv) any securities issued or issuable by the Company pursuant to the Subscription Agreement and related transaction documents used in the Offering; (v) securities issued pursuant to acquisitions or strategic transactions approved by a majority of disinterested directors of the Company, provided that any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives material benefits in addition to the investment of funds and (vi) securities issued to financial institutions, institutional investors or lessors in connection with credit arrangements, equipment financings or similar transactions approved by a majority of disinterested directors of the Company. The provisions of this Section 3(b) shall not operate to increase the Exercise Price.

 

(c)           Upon each adjustment of the Exercise Price pursuant to the provisions of Section 3(b), the number of Warrant Shares issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

 

(d)           Subsequent Rights Offerings.  If the Company, at any time while the Warrant is outstanding, shall decide to issue rights, options or warrants to all holders of Preferred Stock (and not to the Holders) entitling them to subscribe for or purchase shares of Preferred Stock at a price per share less than the VWAP on the date of declaration (a “Subsequent Rights Offering”), then the Company shall provide to the Holders notice of such Subsequent Rights Offering no less than fifteen (15) days prior to the record date of such Subsequent Right Offering.

  

 

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(e)           Pro Rata Distributions.  If the Company, at any time while this Warrant is outstanding, shall decide to distribute to all holders of Preferred Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Preferred Stock (a “Pro Rata Distribution”), then the Company shall provide to the Holders notice of such Pro rata Distribution not less than fifteen (15) days prior to the record date of such Pro Rata Distribution.

(f)           Fundamental Transaction. If at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, 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 Company or another person) is completed pursuant to which holders of Preferred 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 Preferred Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Preferred Stock or any compulsory share exchange pursuant to which the Preferred Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, 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 or group of persons whereby such other person or group acquires more than 50% of the outstanding shares of Preferred Stock (not including any shares of Preferred 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 exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Preferred Stock of the successor or acquiring corporation or of the Company, 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 Preferred Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise 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 Preferred Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Preferred 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 exercise of this Warrant following such Fundamental Transaction.   The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Preferred Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Preferred Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant 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 Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

  

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(g)           Calculations. All calculations under this Section 3 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 3, the number of shares of Preferred Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Preferred Stock (excluding treasury shares, if any) issued and outstanding.

 

(h)   Notice to Holders.

 

(i)   Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

(ii)          Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Preferred Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Preferred Stock; (C) the Company shall authorize the granting to all holders of the Preferred Stock 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 Company shall be required in connection with any reclassification of the Preferred Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Preferred Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, or (F) the Company declares a record date for a Fundamental Transaction, Subsequent Rights Offering or Pro-Rata Distribution; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least fifteen (15) 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 Preferred 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 Preferred Stock of record shall be entitled to exchange their shares of the Preferred Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing 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 Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

 

  

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4.   Transfer of Warrant.

 

(a)   Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.  

 

(b)   New Warrants.  This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

  

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(c)   Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

(d)           Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer (x) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (y) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (z) that the transferee be an “accredited investor” as defined in Rule 501 promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

 

(e)           Permitted Transfers and Assignments.  Notwithstanding any provision to the contrary in this Section 4, the Holder may transfer, with or without consideration, this Warrant or any of the Warrant Shares (or a portion thereof) to the Holder’s Affiliates without obtaining the opinion from counsel that may be required by Section 4(d)(x), provided, that the Holder delivers to the Company and its counsel certification, documentation, and other assurances reasonably required by the Company’s counsel to enable the Company’s counsel to render an opinion to the Company’s Transfer Agent that such transfer does not violate applicable securities laws.

(f)           Permitted Designees.  Notwithstanding anything contained herein, the Company shall, upon written instructions from the Holder to be delivered to the Company within one hundred twenty (120) calendar days following the date of the issuance of this Warrant, transfer all or a portion of this Warrant to officers, directors, employees and other associated persons of the Holder and other registered dealers, agents and finders (collectively, “Permitted Designees”).  Such transfer shall be effective upon delivery of this Warrant and the form of assignment attached hereto, accompanied by an (i) investment letter in form and substance satisfactory to the Company and (ii) such other assurances reasonably required by the Company to ensure that such transfer does not violate applicable securities laws.

5.           INTENTIONALLY LEFT BLANK

 

  

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6.   Miscellaneous.

 

(a)   No Rights as Shareholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).  

 

(b)   Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

(c)   Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

 

(d)           Authorized Shares.  The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Preferred Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Preferred Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).  

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

  

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

(e)           Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Placement Agency Agreement.

 

(f)   Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered at such time, will have restrictions upon resale imposed by state and federal securities laws.

 

(g)   Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h)           Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Placement Agency Agreement.

 

(i)           Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Preferred Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j)   Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

(k)   Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

(l)   Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(m)   Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n)   Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page left intentionally blank]

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first set forth above.

 

	 	
OVERNEAR, INC.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Fred E. Tannous

	 
	 	 	

Chief Executive Officer

Chief Financial Officer

	 
	 	 	 	 

 

  

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NOTICE OF EXERCISE

 

TO: OVERNEAR, INC.  

(1)           The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)            Payment shall take the form of (check applicable box):

 [   ] in lawful money of the United States; or

 

             [  ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)           Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

_______________________________

_______________________________

_______________________________

(4)    Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: ___________________________________

 

Name of Authorized Signatory: ____________________________________________________

 

Title of Authorized Signatory: _____________________________________________________

Date: _________________________________________________________________________

 

  

 

  

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

_______________________________________________________________.

 

_______________________________________________________________

Dated:  ______________, _______

Holder’s Signature:  _____________________________

Holder’s Address:    _____________________________

 

 _____________________________

 

Signature Guaranteed:  ___________________________________________

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.f8k110912ex4iv_overnear.htm

 

Exhibit 4.4

 

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES A CONVERTIBLE PREFERRED STOCK

OF

OVERNEAR, INC.

(Pursuant to Section 78.1955 of the Nevada Revised Statutes)

The undersigned, being the duly elected President of OverNear, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the Nevada Revised Statutes (the “Corporation Law”),

 

DOES HEREBY CERTIFY:

 

FIRST:                 That the name of the Corporation is OverNear, Inc. and that the Corporation was originally incorporated pursuant to the Corporation Law on July 22, 2010.

 

SECOND:            The Corporation is authorized to issue two classes of shares of stock, to be designated, respectively, “Common Stock” and “Preferred Stock”.  The Preferred Stock may be issued in one or more series.  The total number of shares which the Corporation is authorized to issue is 200,000,000 shares.  150,000,000 shares with a par value of $0.001 per share shall be Common Stock, and 50,000,000 shares with a par value of $0.001 per share shall be Preferred Stock.

 

THIRD:                The Preferred Stock may be issued from time to time in one or more series.  The first series shall consist of 18,000,000 shares and is designated Series A Convertible Preferred Stock (the “Series A Preferred Stock”).  Until further designation, there shall be no other series of Preferred Stock.

 

FOURTH:            The Board of Directors of the Corporation (the “Board”) have duly adopted resolutions proposing to designate this Certificate of Designation of Preferences, Rights and Limitations of the Corporation’s Series A Preferred Stock (the “Certificate”), declaring said Certificate and designation to be advisable and in the best interests of the Corporation and its stockholders.

 

RESOLVED, The preferences, rights, limitations and other matters relating to the Series A Preferred Stock are as follows:

 

1.           Dividends.  The holders of Series A Preferred Stock shall be entitled to receive, if, when and as declared by the Board, out of any funds legally available therefore (or, alternatively, out of the Corporation’s authorized but unissued Common Stock, valued at its per share fair market value as determined in good faith by the Board of Directors) dividends at an annual rate of 8% of the Original Purchase Price (as defined below) of the Series A Preferred Stock for each outstanding share of Series A Preferred Stock (as adjusted for combinations, consolidations, subdivisions or stock splits with respect to such shares) held by each such holder.   Such dividends shall rank (i) senior to the Common Stock or any new class or series of stock of the Corporation that by its terms ranks junior to the Series A Preferred Stock, or that does not provide for any terms for seniority (collectively, “Series A Junior Dividend Securities”) (ii) on a parity with any new class or series of stock of the Corporation that by its terms ranks on a parity with the Series A Preferred Stock as to payment of dividends (“Series A Parity Dividend Securities”) and (iii) junior to any new class of stock of the Corporation that by its terms ranks senior to the Series A Preferred Stock with respect to dividends.

 

  

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In the event dividends are paid to the holders of Series A Preferred Stock that are less than the full amounts to which such holders are entitled pursuant to this Section 1, such holders shall share pro rata in the total amount of dividends paid according to the respective amounts due each such holder if such dividends were paid in full.  The right to such dividends on the Series A Preferred Stock shall not be cumulative, and no right shall accrue to holders of Series A Preferred Stock by reason of the fact that dividends are not declared or paid in any prior year.

 

No dividend shall be paid or declared on any Series A Junior Dividend Securities or Series A Parity Dividend Securities (other than dividends payable in Common Stock for which an adjustment is made pursuant to Section 4(f) hereof), unless a dividend, payable in the same consideration and manner, is simultaneously paid or declared, as the case may be, on each share of Series A Preferred Stock in an amount determined as set forth above.  For purposes hereof, the term “dividends” shall include any pro rata distribution by the Corporation, out of funds of the Corporation legally available therefore, of cash, property, securities (including, but not limited to, rights, warrants or options) or other property or assets to the holders of capital stock of the Corporation, whether or not paid out of capital, surplus or earnings.

 

Prior to declaring any dividend or making any distribution on or with respect to shares of any Series A Junior Dividend Securities or Series A Parity Dividend Securities, the Corporation shall take all prior corporate action necessary to authorize the issuance of any securities that are issuable as a dividend or distribution in respect of the Series A Preferred Stock.

 

For purposes hereof, the Original Purchase Price of the Series A Preferred Stock shall mean $0.25.

 

	
2.

	
Liquidation Preference.

 

(a)           In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive the amount of $0.50 per share (as adjusted for any stock splits or combinations of the Series A Preferred Stock, stock dividends paid in and on Series A Preferred Stock, or recapitalizations or any similar transactions that have the effect of increasing or decreasing the number of shares represented by each outstanding share of Series A Preferred Stock) then held by them, with fractional cents being rounded to nearest whole cent (with one-half cent being rounded upward), both prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock or to any new class or series of stock of the Corporation that by its terms ranks junior to the Series A Preferred Stock, or that does not provide any terms for seniority, as to distribution of assets upon liquidation, dissolution or winding up (collectively, “Series A Junior Liquidation Securities”) plus all declared but unpaid dividends on each such share (“Liquidation Payment”).  If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full preferential amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.

 

  

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(b)          After payment has been made to (i) the holders of the Series A Preferred Stock of the full amounts to which they shall be entitled as aforesaid and (ii) the holders of any equity securities of the Corporation that by its terms ranks on a parity with the Series A Preferred Stock as to distribution of assets upon liquidation, dissolution or winding up, (collectively, “Series A Parity Liquidation Securities”), the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed pro rata among the holders of Series A Junior Liquidation Securities, the Series A Preferred Stock and the Series A Parity Liquidation Securities (if any) in proportion to their respective holdings of the issued and outstanding shares of the Corporation, on an as-converted basis, calculated as of the date immediately prior to the date fixed for determination of stockholders entitled to receive such distribution.

 

(c)          For purposes of this Subsection 2, a liquidation, dissolution or winding up of the Corporation shall be deemed to be occasioned by, or to include (unless the holders of at least a majority of the Series A Preferred Stock then outstanding shall determine otherwise), (i) the acquisition of the Corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation) that results in the transfer of more than 50% of the outstanding voting power of the Corporation; or (ii) a sale, lease or other disposition of all or substantially all the assets of the Corporation (including, for purposes of this section, intellectual property rights which, in the aggregate, constitute substantially all of the Corporation’s material assets).

 

(d)           In any of such events described in Subsection 2(c) above, if the consideration received is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors.

 

Any securities shall be valued as follows:

 

(A)           Securities not subject to investment letters or other similar restrictions on free marketability covered by (B) below:

(1)           If traded on a national securities exchange or through the Nasdaq Stock Market, the value shall be deemed to be the average of the closing prices of the securities on such quotation system over the thirty (30) day period ending three (3) days prior to the closing;

 

 

  

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(2)           If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing; and

(3)           If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board.

 

(B)           The method of valuation of securities subject to investment letters or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A)(1), (2) or (3) to reflect the approximate fair market value thereof, as determined by the Board in good faith.

(e)           Liquidation Notice.  Prior to any liquidation pursuant to this Section 2, the Corporation shall mail, postage prepaid, written notice thereof (the “Liquidation Notice”) 10 days prior to any liquidation, to each holder of record of the Series A Preferred Stock whose shares are to be redeemed, at such holder’s post office address last shown on the records of the Corporation. Each such Redemption Notice shall state:

 

(i)           The date on which liquidation is to occur (the “Liquidation Date”), which date shall be no less than ten (10) days after the Corporation’s mailing of the Liquidation Notice, and the Liquidation Price;

 

(ii)           The number of shares of Series A Preferred Stock held by the holder that the Corporation shall liquidate on the Liquidation Date specified in the Liquidation Notice; and

 

(iv)           That the holder is to surrender to the Corporation, in the manner and at the place designated, his or its certificate or certificates representing the shares of Series A Preferred Stock to be redeemed.

 

	
3.

	
Voting Rights.

 

(a)            Each share of Series A Preferred Stock issued and outstanding shall be entitled to the number of votes equal to the number of shares of Common Stock into which such share of Series A Preferred Stock could be converted in accordance with the terms of this Certificate at the record date for determination of the stockholders entitled to vote or consent on such matters, such votes or consents to be counted together with all other shares of stock of the Corporation having general voting power and not separately as a class (except as otherwise expressly provided herein or as required by law). Holders of Series A Preferred Stock shall be entitled to notice of any stockholders’ meeting or consent in accordance with the By-laws of the Corporation.  Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to a nearest whole number (with one-half being rounded upward).

 

  

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(b)            In addition to any other rights provided by law, for so long as any Series A Preferred Stock remain outstanding, the consent of the holders of at least 66% of the outstanding Series A Preferred Stock, voting as a separate class, shall be required for any action to  (i) effect a sale of all or substantially all of the Corporation’s assets or enter into any transaction which results in the holders of the Corporation’s capital stock prior to the transaction owning less than 50% of the voting power of the Corporation’s capital stock after the transaction, (ii) effect a reclassification or recapitalization of the outstanding capital stock of the Corporation, (iii) redeem shares of Preferred Stock or Common Stock (excluding shares of Common Stock repurchased from employees, officers, directors, consultants or other persons performing services for the Corporation pursuant to agreements under which the Corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment), (iv) effect a liquidation, dissolution, recapitalization or reorganization of the Corporation or enter into any license that has the same economic effect as a liquidation of the Corporation, (v) creation (by reclassification or otherwise) or issuance of any new class or series of  capital stock with rights, preferences or privileges that are pari passu or senior to the Series A Preferred Stock, or (vi) amend or repeal any provision of, or add any provision to, the Corporation’s Articles of Incorporation or Bylaws to alter or change the rights, preferences or privileges of the Series A Preferred or increase or decrease the number of authorized shares of Series A Preferred.

 

	
4.

	
Conversion.  The holders of the Series A Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

(a)            Right to Convert.  The Series A Preferred Stock shall only be convertible, and shall convert, as provided in Subsections 4(b) and (c) hereof.

 

(b)           Voluntary Conversion.  Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for the Series A Preferred Stock without payment of any additional consideration. Each share of Series A Preferred Stock shall be convertible into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Purchase Price of the Series A Preferred Stock by the Series A Preferred Conversion Price (as defined below), subject to adjustments in effect at the time of conversion as provided below (the “Conversion Ratio”). The conversion price for the Series A Preferred Stock shall initially be the Original Purchase Price of the Series A Preferred Stock with respect to each share of Series A Preferred Stock (the “Series A Preferred Conversion Price”).  As of the date of the adoption of this Certificate, the Original Purchase Price of Series A Preferred Stock is $0.25 per share, therefore, the Series A Preferred Conversion Price for the Series A Preferred Stock is $0.25.  Accordingly, as of the date hereof, each share of Series A Preferred Stock shall convert into one share of Common Stock, with the foregoing being subject to further adjustment as set forth below.

 

 

  

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(c)            Automatic Conversion. Each share of Series A Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Ratio upon the closing of any financing by the Corporation of at least $5 million in gross proceeds in which shares of capital stock of the Corporation are sold at a price per share of at least $0.50, subject to adjustment for any stock split or combinations of Common Stock, stock dividends paid in or on Common Stock, or recapitalizations or any similar transactions that have the effect of increasing or decreasing the number of shares represented by each outstanding share of Common Stock (a “Qualified Financing”).  In the event of the automatic conversion of the Series A Preferred Stock upon a Qualified Financing, the person(s) entitled to receive the Common Stock issuable upon such conversion of Series A Preferred Stock shall be deemed to have converted such Series A Preferred Stock immediately prior to the closing of the Qualified Financing and such conversion shall be conditioned upon such occurrence.

 

(d)            Mechanics of Conversion.  Before any holder of Series A Preferred Stock shall be entitled to convert the same into shares of Common Stock, such holder shall surrender the certificate or certificates thereof, duly endorsed, at the office of the Corporation or of any transfer agent for such stock, and, in the event of voluntarily conversion pursuant to Subsection 4(b), shall give written notice to the Corporation at such office that he elects to convert the same and shall state therein the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued.  The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series A Preferred Stock, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid.  Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.  If the conversion is in connection with an underwritten offering of securities pursuant to the Act, the conversion may, at the option of any holder tendering Series A Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the persons entitled to receive the Common Stock upon the conversion of the Series A Preferred Stock shall not be deemed to have converted such Series A Preferred Stock until immediately prior to the closing of such sale of securities.

 

(e)            Adjustments to Conversion Price for Certain Diluting Issues.

 

(i)            Special Definitions.  For purposes of this Subsection 4(e)(i), the following definitions apply:

 

(A)           “Options” shall mean rights, options, or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (defined below).

 

  

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(B)            “Original Issue Date” shall mean the date on which a share of Series A Preferred Stock was first issued.

 

(C)           “Convertible Securities” shall mean any evidences of indebtedness, shares (other than Common Stock and Series A Preferred Stock) or other securities convertible into or exchangeable for Common Stock.

 

(D)           “Additional Shares of Common Stock” shall mean any shares of the capital stock of the Corporation, whether now authorized or not, and rights, options or warrants to purchase such shares, and securities of any type whatsoever that are, or may become, convertible into such shares; providedthat the term “Additional Shares of Common Stock” does not include shares of Common Stock issued: (1) upon conversion of Series A Preferred Stock; (2) pursuant to the exercise, exchange or conversion of Options or Convertible Securities or other common stock purchase rights issued (or to be issued) to employees, officers or directors of, or consultants, counsel or advisors to, or any strategic ally of or investor in, the Corporation pursuant to any stock purchase or stock option plan or other arrangement approved by the Board of Directors; (3) pursuant to the exercise of options, warrants or any convertible debt outstanding as of the date of the final closing date of the sale of Series A Preferred Stock (“Final Closing Date”); (4) in connection with the acquisition of all or part of another entity by stock acquisition, merger, consolidation or other reorganization, or by the purchase of all or part of the assets of such other entity (including securities issued to persons formerly employed by such other entity and subsequently hired by the Corporation or an affiliate of the Corporation and to any brokers or finders in connection therewith) where the Corporation or its stockholders own more than fifty percent (50%) of the voting power of the acquired, surviving, combined or successor company; (5) to financial institutions, strategic or institutional investors or bona fide commercial partners, or lessors in connection with credit arrangements, equipment financings or similar transactions approved by the Board of Directors, but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (6) as a dividend or other distribution on the Series A Preferred Stock; (7) upon the exercise of any warrants issued to any placement agent or its designees in connection with the placement of the Series A Preferred Stock; and (8) any right, option or warrant to acquire any securities convertible into the securities excluded from the definition of Additional Shares of Common Stock pursuant to subsections (1) through (8) above.

 

(ii)           No Adjustment of Conversion Price.  Notwithstanding anything to the contrary, no adjustment of the Series A Preferred Conversion Price shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share (determined pursuant to Subsection 4(e)(iv) hereof) for an Additional Share of Common Stock issued or deemed to be issued by the Corporation is at least $0.01 less than the Series A Preferred Conversion Price in effect on the date of and immediately prior to such issue; provided that any adjustment in an amount less than $0.01 per share shall be carried forward and taken into account in any subsequent adjustment.

 

  

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(iii)           Deemed Issue of Additional Shares of Common Stock.  In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options (except for Options issued pursuant to Subsection 4(e)(i)(D) herein) or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

 

(A)           no further adjustment in the Series A Preferred Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

 

(B)           if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Series A Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; and

 

(C)           no readjustment pursuant to clause (B) above shall have the effect of increasing the Series A Preferred Conversion Price to an amount which exceeds the lower of (1) the Series A Preferred Conversion Price on the original adjustment date, or (2) the Series A Preferred Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date.

 

(iv)           Adjustment of Series A Preferred Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation, at any time after the Original Issue Date shall issue Additional Shares of Common Stock, without consideration or for a consideration per share at least $0.01 per share less than the Series A Preferred Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, the Series A Preferred Conversion Price shall be reduced, concurrently with such issue, to a price equal to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; providedthat if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $0.01 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued.  For the purposes of adjusting the Series A Preferred Conversion Price, the issue of Additional Shares of Common Stock issued at the same price at two or more closings held within thirty (30) days of each other shall be aggregated and shall be treated as one issue of Additional Shares of Common Stock occurring on the earliest date on which such securities were issued.

 

 

  

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(v)           Determination of Consideration.  For purposes of this Subsection 4(e), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

 

(A)           insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;

 

(B)           insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board; and

 

(C)           in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation (“Related Securities”) for consideration which covers both, be the proportion of such consideration so received, computed as provided in Subsections 4(e)(v)(A) and 4(e)(v)(B) above, as determined in good faith by the Board of Directors, based on the actual consideration paid for the Additional Shares of Common Stock less the fair market value of the Related Securities.

 

(D)           The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4(e)(iii), relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (y) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

 

(f)           (i)           Adjustments for Combinations or Subdivisions of Common Stock.  In the event that at any time after the date the Series A Preferred Stock is first issued, the outstanding shares of Common Stock shall be subdivided (by forward stock split, stock dividend or other like occurrence) into a greater number of shares of Common Stock, and no equivalent subdivision or increase is made with respect to the Series A Preferred Stock, the Series A Preferred Conversion Price then in effect shall, concurrently with the effectiveness of such subdivision or other increase, be proportionately decreased.  In the event that the outstanding shares of Common Stock shall be combined or consolidated into a lesser number of shares of Common Stock (by reverse split or otherwise), and no equivalent combination or consolidation is made with respect to the Series A Preferred Stock, the Series A Preferred Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

 

 

  

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(ii) Adjustments for Stock Dividends and Other Distributions.  If the Corporation at any time pays a dividend, with respect to its Common Stock only, payable in shares of Common Stock or rights to purchase shares of Common Stock, without any comparable payment or distribution to the holders of Series A Preferred Stock, then the Series A Preferred Conversion Price shall be proportionally reduced as at the date the Corporation fixes as a record date for the purpose of receiving such dividend (or if no such record date is fixed, as at the date of such payment) to that price determined by multiplying the applicable Conversion Price in effect immediately prior to such record date (or if no record date is fixed then immediately prior to such payment) by a fraction (x) the numerator of which shall be the total number of shares of Common Stock outstanding and those issuable with respect to other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (“Common Stock Equivalents”), prior to the payment of such dividend, and (y) the denominator of which shall be the total number of shares of Common Stock outstanding and those issuable with respect to such shares of Common Stock Equivalents immediately after the payment of such dividend (plus, in the event that the Corporation paid cash for fractional shares, the number of additional shares which would have been outstanding had the Corporation issued fractional shares in connection with such dividend).  In the event the Corporation at any time or from time to time makes, or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution (excluding any repurchases of securities by the Corporation not made on a pro rata basis from all holders of any class of the Corporation's securities) payable in property or in securities of the Corporation other than shares of Common Stock, and other than as otherwise adjusted in this Section 4 or as provided in Section 1, then and in each such event the holders of Preferred Stock shall receive at the time of such distribution, the amount of property or the number of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock on the date of such event.

 

(iii)           Adjustments for Reclassification, Exchange and Substitution.  If any capital reorganization or reclassification of the capital stock of the Corporation (other than as a result of a stock dividend, subdivision or combination of shares or any other event described in Sections 4(f)(1) or 4(f)(ii) (a “Corporate Change”) shall be effected in such a way that holders of Common Stock shall be entitled to receive capital stock, other securities or property with respect to or in exchange for Common Stock, then, as a condition of such Corporate Change, lawful and adequate provisions shall be made whereby each holder of a share or shares of Series A Preferred Stock shall, upon conversion, receive such kind and shares of capital stock, other securities or property as may be issued or payable with respect to or in exchange for the number of shares of such Common Stock into which the Series A Preferred Stock held at the time of such Corporate Change shall have been convertible.  In the event of any Corporate Change, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock, to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of capital stock, other securities or property thereafter receivable upon conversion of the Series A Preferred Stock.  The Corporation shall not effect any Corporate Change unless, prior to the consummation of such Corporate Change, the successor or combined corporation (if other than the Corporation) or the acquiring corporation, by written instrument, undertakes the obligations of the Corporation described in the first sentence of this Section 4(f)(iii) and assumes the obligation to deliver to each holder of Series A Preferred Stock such shares of capital stock, other securities or property that the holder is entitled to receive in accordance with this Section 4(f)(iii).

 

  

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(g)           No Impairment.  The Corporation will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A Preferred Stock against impairment.

 

(h)           Issue Taxes.  The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series A Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

 

(i)           Reservation of Stock Issuable Upon Conversion.  The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate.

 

(j)           Fractional Shares.  No fractional share shall be issued upon the conversion of any share or shares of Series A Preferred Stock.  All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series A Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share.  If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction a sum in cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the Board of Directors.

 

(k)           Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the Series A Preferred Conversion Price pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Corporation shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Series A Preferred Conversion Price, at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the Series A Preferred Stock.

 

  

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(l)           Notices of Record Date.  Subject to Section 3(b) above, in the event that the Corporation shall propose at any time:

 

(a)           to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus;

 

(b)           to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights;

 

(c)           to effect any reclassification or capitalization of its Common Stock outstanding involving a change in the Common Stock; or

 

(d)           to merge or consolidate with or into any other Corporation, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up,

 

Then, in connection with each such event, the Corporation shall send to the holders of Series A Preferred Stock:

 

 (1)           in the case of the matters referred to in (a) and (b) above, at least twenty (20) days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in (a) and (b) above; and

 

 

 (2)           in the case of the matters referred to in (c) and (d) above, at least thirty (30) days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event).

 

Each such written notice shall be delivered personally or given by first class mail, postage prepaid, addressed to the holders of the Series A Preferred Stock at the address for each such holder as shown on the books of the Corporation.

  

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5.           Redemption.  The Series A Preferred Stock shall not be redeemable by the Corporation.

 

6.           Amendment.                      Subject to Section 3(b)(vi), any term relating to the Series A Preferred Stock may be amended and the observance of any term relating to the Series A Preferred Stock may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the vote or written consent of holders of at least a majority of the shares of the Series A Preferred Stock then outstanding.  Any amendment or waiver so effected shall be binding upon the Corporation and any holder of shares of Series A Preferred Stock.

 

 

  

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IN WITNESS WHEREOF, this Certificate of Designation of Preferences, Rights and Limitations is executed on behalf of the Corporation by its President this 9th day of November 2012.

 

OVERNEAR, INC.

 

By:      _________________________

Name: Bill Glaser

Title:  President

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