Page 7 of 12 – SEC Filing
| CUSIP No. 253031108 | 13D | Page 7 of 12 |
accrue on the Accrued Value of each share of Redeemable Convertible Preferred Stock until the earlier of conversion, redemption, consummation of a change of control, a liquidation event or upon
failure to mandatorily convert due to the Conversion Blockers or applicable regulatory restrictions.
Redemption Rights
On or at any time following the seventh anniversary of the closing of the Private Placement, (i) the Issuer has the right to redeem the Redeemable
Convertible Preferred Stock for a cash consideration equal to the sum of the Accrued Value, as of the date of redemption, plus an amount equal to all accrued or declared and unpaid dividends on the Redeemable Convertible Preferred Stock that have
not previously been added to the Accrued Value, and (ii) the holders of a majority of the Redeemable Convertible Preferred Stock have the right to cause the Issuer to redeem the Redeemable Convertible Preferred Stock at the same price.
Change of Control Rights
Upon consummation of a
specified change of control transaction, each holder of Redeemable Convertible Preferred Stock is entitled to receive in preference to the holders of Common Stock and any junior preferred stock, an amount equal to the greater of (i) 101% of the sum
of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Redeemable Convertible Preferred Stock that have not previously been added to the Accrued Value, or (ii) the amount that such shares would have
been entitled to receive if they had converted into common stock immediately prior to such event.
Liquidation Rights
In the event of a liquidation, dissolution or winding up of the Issuer, the holder of each share of Redeemable Convertible Preferred Stock is entitled to
receive, in preference to the holders of Common Stock and any junior preferred stock, an amount per share equal to the greater of (i) the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the
Redeemable Convertible Preferred Stock that have not previously been added to the Accrued Value, or (ii) the amount that such shares would have been entitled to receive if they had converted into common stock immediately prior to such
liquidation, dissolution or winding up.
Board Representation
Pursuant to the terms of the Purchase Agreement, the Issuer agreed to increase the size of its board of directors (the Board) to nine members and
to take all steps necessary to appoint Dr. Koppel to the resulting vacancy. Accordingly, on March 28, 2017, the Board voted to increase the size of the Board from eight to nine directors and appointed Dr. Koppel as a director of the
Issuer, effective immediately following and contingent upon, the closing of the Private Placement.
Pursuant to the terms of the Purchase Agreement, to
the extent Dr. Koppel is not reelected to the Board at any time and, so long as the Reporting Persons own at least 25% of the Redeemable Convertible Preferred Stock (or underlying Common Stock) owned by them at the closing of the Private
Placement, the Reporting Persons have the right to designate a board observer.
In their capacity as significant stockholders of the Issuer, the Reporting
Persons intend to take an active role in working with the Issuers management and the Board on operational, financial and strategic initiatives. The Reporting Persons review and intend to continue to review, on an ongoing and continuing basis,
their investment in the Issuer. Depending upon the factors discussed below and subject to applicable law, the Reporting Persons may from time to time acquire additional securities of the Issuer, convert their shares of Redeemable Convertible
Preferred Stock into shares of Common Stock or sell or otherwise dispose of some or all of their securities of the Issuer. Any transactions that the Reporting Persons may pursue may be made at any time and from time to time without prior notice and
will depend upon a variety of factors, including, without limitation, current and
