Page 9 of 25 – SEC Filing
(X) (a) any person or group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), other than certain Permitted Holders (and/or any direct transferee of shares of Preferred Stock from any Permitted Holder) (as defined in the Certificate of Designation), (i) shall have acquired beneficial ownership of more than fifty percent (50%) or more on a fully diluted basis of the voting and/or economic interest in the capital stock of the Issuer (or surviving entity in a merger or consolidation, if applicable)) or (ii) shall have obtained the power (whether or not exercised) to elect a majority of the members of the Board (or similar governing body); or (b) the occurrence of any change of control or similar event under any agreements relating to any indebtedness of the Issuer or its subsidiaries; or
(Y) except in the case of a Deemed Liquidation Event (as defined in the Certificate of Designation and described below) in which holders of Preferred Stock receive, concurrently with the consummation of such Deemed Liquidation Event, a cash payment pursuant to Sections 2.1 and 2.4 of the Certificate of Designation in full, in an amount equal to the Fundamental Change Price as defined in the Certificate of Designation that would otherwise be payable, the Issuer or any of its subsidiaries enters into any transaction of merger or consolidation (except that a person may be merged with or into the Issuer or another wholly-owned subsidiary thereof so long as the Issuer or another wholly-owned subsidiary is the continuing or surviving person), or conveys, sells, leases, subleases (as lessor or sublessor), exchanges, transfers or otherwise disposes of, in one transaction or a series of transactions, all or substantially all of the consolidated business, assets or property of the Issuer and its subsidiaries.
The Fundamental Change Price for each share of Preferred Stock, as of any date, shall be calculated as the sum of (i) the amount payable in respect of such share under Section 2.1 of the Certificate of Designation in the event of a Liquidation Event as of such date, plus (ii) any and all accrued and unpaid dividends upon the Preferred Stock, whether or not declared, as of the date of the Fundamental Change, plus (iii) the Participation Amount as defined in the Certificate of Designation.
Merger or Liquidation
Subject to the Fundamental Change provision described above, under the terms of the Certificate of Designation, upon merger or consolidation resulting in a change of control, sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Issuer or any subsidiary of the Issuer, of substantially all of the assets of the Issuer and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of the Issuers Subsidiary, Napo Pharmaceuticals, Inc. (or any successor in interest), or one or more other subsidiaries of the Issuer if substantially all of the assets of the Issuer and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries (collectively, a Deemed Liquidation), liquidation, dissolution or winding up of the Issuer as determined under the Certificate (collectively, a Liquidation Event), each share of Preferred Stock will be entitled to a preference of $1.665 per share (or the equivalent of $0.185 per share on an as-converted to Voting Common Stock basis) plus a participation right described below. Thereafter, the holders of Common Stock then outstanding shall be entitled to receive an amount per share of Common Stock (in stock or cash as determined under the Certificate of Designation) equal to $0.185 (as adjusted for stock splits, reverse splits, stock dividends, reclassifications, recapitalizations and/or other similar events). Thereafter, all of the remaining assets of the Issuer and/or proceeds from a Deemed Liquidation or Liquidation Event, as applicable, will in general be divided pro rata among the holders of the shares of Preferred Stock and the shares of Common Stock, on an as converted basis (all as more fully specified and calculated under the Certificate of Designation).
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