Page 6 of 12 – SEC Filing
| CUSIP No. 253031108 | 13D | Page 6 of 12 |
Accrued Value means, with respect to each share of Redeemable Convertible Preferred Stock, the
sum of (i) the Stated Value plus (ii) on each quarterly dividend date, an additional amount equal to the dollar value of any dividends on a share of Redeemable Convertible Preferred Stock which have accrued on any dividend payment date and
have not previously been added to such Accrued Value.
Conversion Price means an initial price of $3.19 per share, subject to proportionate
adjustment for any stock split, stock dividend, combination or other similar recapitalization event.
Conversion Blocker
The conversion of shares of Redeemable Convertible Preferred Stock into shares of Common Stock, whether by means of a Voluntary Conversion or a Mandatory
Conversion, is subject to (i) a mandatory 19.99% blocker provision (the Mandatory Blocker) that will prohibit beneficial ownership of more than 19.99% of the Issuers voting power to comply with NASDAQ Listing Rules and
(ii) if so elected by an investor, a voluntary blocker provision (a Voluntary Blocker and, together with the Mandatory Blocker, the Conversion Blockers) that will prohibit beneficial ownership of a percentage of the
shares of Common Stock outstanding immediately after giving effect to such conversion that is specified by the holder in a written notice to the Issuer, such percentage not to exceed 19.99%.
Following the date of a Mandatory Conversion, any shares of Redeemable Convertible Preferred Stock that are not converted as a result of the Conversion
Blockers or applicable regulatory restrictions will continue to be entitled to all of the rights of the holders of Redeemable Convertible Preferred Stock except that they will no longer be entitled to cumulative dividends, priority distribution of
assets upon consummation of a change of control or a liquidation event and certain special voting provisions.
As of the date hereof, the Reporting
Persons have not elected to be subject to a Voluntary Blocker.
Voting Rights
Holders of Redeemable Convertible Preferred Stock are entitled to vote together with shares of Common Stock (based on one vote per each share of Common Stock
into which the shares of Redeemable Convertible Preferred Stock are convertible on the applicable record date, subject to the Conversion Blockers) on any matter on which the holders of Common Stock are entitled to vote.
In addition, for so long as any shares of Redeemable Convertible Preferred Stock remain outstanding, without the approval of holders of a majority of the
Redeemable Convertible Preferred Stock, the Issuer may not, among other things, (i) amend, modify or fail to give effect to any right of holders of Redeemable Convertible Preferred Stock, (ii) change the authorized number of Redeemable
Convertible Preferred Stock or issue additional Redeemable Convertible Preferred Stock or create a new class or series of equity securities or securities convertible into equity securities with equal or superior rights, preferences or privileges to
those of the Redeemable Convertible Preferred Stock in terms of liquidation preference, dividend rights or certain governance rights, (iii) issue shares of Common Stock or securities convertible into Common Stock while the Issuer has
insufficient shares to effect the conversion of Redeemable Convertible Preferred Stock into Common Stock, (iv) declare or pay dividends or redeem or repurchase any capital stock (other than certain repurchases from employees, directors,
advisors or consultants upon termination of service) or (v) incur certain indebtedness in excess of $10 million.
Dividend Rights
Each holder of Redeemable Convertible Preferred Stock is entitled to receive cumulative dividends on the Accrued Value of each share of Redeemable Convertible
Preferred Stock at an initial rate of 12% per annum, compounded quarterly and subject to two rate reductions of 4% each upon the occurrence of certain agreed upon milestone events. Dividends on the Redeemable Convertible Preferred Stock are payable
in kind and will
