TERM SHEET
Navig8 Product Tankers Inc
USD 30 million Rights Offering of 3,000,000 Units, each Unit comprising one Series A
Preference Share and 2.344 Common Shares
Not for distribution in the United States other than to a limited number of "qualified institutional buyers" ("QIBs") as defined in
Rule 144A under the US Securities Act of 1933, as amended (the "U.S. Securities Act"). Please see below and the Application
Agreement for selling and transfer restrictions.
• Navig8 Product Tankers Inc, a corporation incorporated and existing under the laws of the
Republic of the Marshall Islands.
Issuer
• Company Registration Number: 63062
• Series A Preference Shares ISIN: MHY621421152
• Common Shares ISIN: MHY621421079
• Offer Size: Rights Offering for gross proceeds to the Issuer of USD 30 million.
Offer Size and Units
• Units: 3,000,000 Units, each Unit comprising one newly issued Series A preference share, par
value USD 0.01 each and 2.344 newly issued common shares, par value USD 0.01 each.
Subscription Price
• USD 10.00 per Unit.
• Existing number of issued common shares: 39,845,945
Share Capital
Liquidation Preference
Terms of Series A
Preference Shares
• Existing number of issued preference shares: 0
• Issued shares upon completion of the Rights Offering: 46,877,945 common shares (inclusive of
7,032,000 newly issued common shares) and 3,000,000 Series A preference shares.
• Authorized shares: 500,000,000 common shares and 100,000,000 preference shares.
• Series A preference shareholders will rank ahead of common shareholders in respect of return on
capital and in liquidation.
• Each Series A preference share shall have a liquidation preference equal to USD 10.00 plus any
accrued and unpaid dividend
• Each Series A preference share shall receive a dividend equal to 10% per annum (“Dividend Rate”)
multiplied by the sum of (i) USD 10.00 and (ii) all unpaid accrued and accumulated dividends in
respect of that share.
• Each quarter, the Dividend Rate shall increase by 2% with a maximum Dividend Rate of 18%
• Dividends on Series A preference shares will accrue and be cumulative on a compound basis from
the date that the Series A preference shares are originally issued. If no dividends on Series A
preference shares are paid by the Issuer in a given quarter, such dividends shall accumulate and
compound, whether or not declared, and shall remain accumulated and compounding dividends
until paid.
• Dividends on Series A preference shares (including accumulated preference share dividends not
paid out in previous quarters) to be paid out in priority to dividends or distributions on or
redemptions of common shares.
• No fixed maturity date in respect of return of Series A preference share capital.
• Series A preference shareholders shall have the right to vote as a class on any adverse changes to
the rights of the Series A preference shares, including issuance of senior or pari passu capital
stock. However, other than the above, Series A preference shareholders shall not have any voting
rights.
• A two-thirds majority vote of Series A preference shareholders shall be required to pass any
matters requiring the approval of the Series A preference shareholders.
• The Issuer to have the right to redeem all or a percentage of the Series A preference shares in
cash at a redemption price (“Redemption Price”) equal to the sum of the liquidation preference
and accrued dividends multiplied by:
− 1.20 in year 1
− 1.10 in year 2
− 1.00 thereafter
• Upon a change of control of the Issuer, the Issuer must offer to repurchase all and not only part
of the Series A preference shares at the then applicable Redemption Price.
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• The terms of the Series A Preference Shares are set out in full in the Statement of Designation of
the Rights, Preferences and Privileges of Series A Cumulative Redeemable Perpetual Preferred
Stock of the Issuer, substantially in the form attached hereto as Annex 1, which will be filed with
the Republic of the Marshall Islands’ Registrar or Deputy Registrar of Corporations on the date of
completion of Tranche 1 and which will form part of the Issuer’s Articles of Incorporation.
• Following the closing of the Offer:
Rights in Respect of any
Future Issuances of
Securities Ranking
Senior or Pari Passu to
the Series A Preference
Shares
− if the Issuer issues any new securities of the Issuer that rank senior or pari passu to the Series
A preference shares (excluding on a first priority asset secured basis) (“Preferred Securities”)
and the Issuer does not first offer the parties that subscribed for Tranche 1 (as defined below)
the right to subscribe for their respective pro-rata share of such Preferred Securities
("Subscription Right") such pro-rata share being the percentage of the Series A preference
shares that they purchased in this rights offering, then each holder of Series A Preference
shares at such time shall have an option ("Put Right") to put the Series A preference shares
held by it to the Issuer at the then applicable Redemption Price
• For the avoidance of doubt, a Series A preference shareholder’s Subscription Right shall not
transfer in the event any of such Series A Preference Shares are transfered, and such
shareholder’s Subscription Right shall terminate in the event such shareholder no longer holds
any Series A preference shares.
Use of Proceeds
• Capital to be used for general corporate purposes including working capital and to support
delivery of all remaining newbuilding vessels
Share Registration
• Book-entry form shares to be registered with the Norwegian Central Securities Depositary (Nw.
Verdipapirsentralen or VPS).
• Subject to the following sentence, the Offer is directed towards all existing shareholders of the
Issuer with each existing shareholder being invited to participate in the Offer pro-rata to their
shareholding in the Issuer’s common stock as at the close of business on 14th November 2016
(the “Record Date”). However, the Offer will not be extended to shareholders in the United States
other than to "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the US
Securities Act of 1933, as amended (the "U.S. Securities Act").
• For the avoidance of doubt, any shareholder or, if applicable, each group of fund shareholders
that are managed by the same fund management team may apply for additional Units in excess
of its pro-rata shareholding in the Issuer as at the Record Date, up to a maximum of 500,000 Units
per shareholder or such group of fund shareholders (“Additional Units”).
• The Offer is being undertaken in two tranches – (i) subscriptions by shareholders whose
applications for Units are received by the Manager no later than 15 November 2016 at 22.00 CET
(“Tranche 1”) and (ii) subscriptions by any other shareholders whose applications for Units are
received by the Manager no later than 29 November 2016 at 22.00 CET (“Tranche 2”). Each
shareholder may, in its sole discretion, elect to participate in Tranche 1 and/or Tranche 2. Both
Tranches are on identical terms save for (i) the Subscription Right and (ii) the timeline in terms of
duration of the application period and time for allocation, payment for and issuance of Units.
Rights Offering
• Allocation of Units subscribed for in the Offer will be made by the Board of Directors in their
discretion. The guiding allocation principles will be that:
− Units shall be allocated among subscribing shareholders up to their respective pro-rata
shareholding in the Issuer’s common stock as at the Record Date; and
− in the event that not all shareholders have subscribed for their pro-rata share of the Units, any
allocations of Units in excess of a shareholder’s pro-rata share will be in proportion to the
number of Additional Units subscribed for by such shareholder relative to the total number of
Additional Units subscribed for by all shareholders in the Offer.
• As regards Tranche 1, allocations to each subscribing shareholder shall be up to the number of
Units that represents such shareholder’s pro-rata shareholding in the Issuer’s common stock as
at the Record Date. Any applications for Additional Units received by the Manager during the
Application Period for Tranche 1 shall be allocated in Tranche 2.
• As regards Tranche 2, allocations to each subscribing shareholder shall be up to the number of
Units that represents such shareholder’s pro-rata shareholding in the Issuer’s common stock as
at the Record Date. In the event that not all shareholders have subscribed for their pro-rata share
of the Units, any applications for Additional Units received by the Manager prior to the expiry of
the Application Period for Tranche 2 (including during the Application Period for Tranche 1) shall
be allocated in proportion to the number of Additional Units subscribed for by a shareholder
relative to the total number of Additional Units subscribed for by all shareholders in the Offer.
2
• No fractional Units (or fractional Series A Preference Shares or fractional Common Shares) will be
allocated. To the extent pro rata allocation is not possible, the Board of Directors will determine
the allocation by the drawing of lots.
N-OTC Registration /
Listing
Manager
Documentation
• The Issuer's common shares are registered with the ticker "EIGHT", and the Issuer’s Series A
Preference Shares will be registered with the ticker “EIGHT A”, on the Norwegian OTC system, an
information and trading support system for unlisted shares administered by the Norwegian
Securities Dealers Association.
• Pareto Securities AS acts as Manager of the Rights Offering.
• This Term Sheet (as revised if applicable), the Application Agreement, including its Exhibit I, and
the Investor Presentation dated 15 November 2016.
Tranche 1
• Receipt of applications for Units, including Additional Units, for gross proceeds of not less than
USD 30 million by the expiry of the Tranche 1 application period.
• Receipt by the Manager of funds equal to the aggregate subscription price for Units (but excluding
Additional Units) subscribed for pursuant to applications received by the expiry of the Tranche 1
application period (the “Tranche 1 Amount”), to be held in escrow by the Manager until release
to the Company (as contemplated by the terms of the Application Agreement). For the avoidance
of doubt, the Tranche 1 amount shall represent allocation of and payment for only those Units
which have been allocated in Tranche 1 and shall not include any allocations of Additional Units.
Conditions to
Completion
• Execution of all required corporate resolutions by the Issuer to issue the Units and to consummate
the Rights Offering.
• The conditions to completion of Tranche 1 are expected to be fulfilled at the latest by 21
November 2016.
Tranche 2
• Receipt of applications for, and allocation of, Units for gross proceeds of not less than USD 30
million (including the allocation of Units in Tranche 1), and receipt by the Manager of USD 30
million less the Tranche 1 Amount, to be held in escrow by the Manager until release of Tranche
2 (as contemplated by the terms of the Application Agreement).
• Execution of all required corporate resolutions by the Issuer to issue the Units and to consummate
the Rights Offering.
• The conditions to completion of Tranche 2 are expected to be fulfilled at the latest by 29
November 2016.
Escrow Arrangement
• Payments for allocated Units under each of Tranche 1 and Tranche 2 to be made to an account
designated by the Manager and be held in escrow by the Manager until, and be released to the
Issuer following receipt by the Manager of documentation, satisfactory to the Manager,
evidencing fulfilment of the conditions to completion of Tranche 1 or Tranche 2, respectively,
including a confirmation in writing by the Issuer (signed by the Issuer’s Secretary) to the Manager
confirming that the conditions to completion of Tranche 1 or Tranche 2, respectively, have been
fulfilled. For the avoidance of doubt, allocation of and payment for any Additional Units will be
made under Tranche 2.
• If the conditions to completion of Tranche 1 are not fulfilled by 21 November 2016, the
subscription amounts for Units allocated under Tranche 1 paid by investors into escrow will be
returned.
• If the conditions to completion of Tranche 2 are not fulfilled by 7 December 2016, the subscription
amounts for Units allocated under Tranche 2 paid by investors into escrow will be returned.
Selling Restrictions
Allocation Criteria:
Application Period
• Selling restrictions as per the Application Agreement.
• See Rights Offering section.
• Commencement:
− 15 November 2016 at 08.00 CET.
• Expiry of Tranche 1:
− 15 November 2016 at 22.00 CET.
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• Expiry of Tranche 2:
− 29 November 2016 at 22.00 CET.
Tranche 1
• Expected fulfilment of
closing conditions under
Tranche 1:
− On or about 21 November 2016.
• Notification of conditional
allocation under Tranche 1:
− On or about 22 November 2016.
− Payment due date to Company from escrow account: on or
about 22 November 2016.
• Payment, delivery of Units
and registration under
Tranche 1:
− Delivery of Units to the Manager: Expected on or about 22
November 2016, assuming prompt fulfillment of the conditions
to completion of Tranche 1, with OTC-registration in Norway in
the name of the subscribing shareholders on the first business
day thereafter.
Tranche 2
Settlement
• Expected fulfilment of
closing conditions under
Tranche 2:
− On or about 29 November 2016.
• Notification of conditional
allocation under Tranche 2
(including allocation of any
Additional Units):
− On or about 30 November 2016.
• Payment, delivery of Units
and registration under
Tranche 2:
− Payment due date to Company from escrow account: on or
about 30 November 2016.
− Delivery of Units to the Manager: Expected on or about 30
November 2016, assuming prompt fulfillment of the conditions
to completion of Tranche 2, with OTC-registration in Norway in
the name of the subscribing shareholders on the first business
day thereafter.
THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND UNTIL THESE SECURITIES
HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, THESE SECURITIES MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT TO (A) A QIB PURSUANT TO RULE 144A OF THE U.S. SECURITIES ACT, (B) A PERSON WHO IS
NOT A U.S. PERSON IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE U.S. SECURITIES ACT OR (C)
PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AS PERMITTED UNDER THE U.S. SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS. NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER U.S. FEDERAL, STATE OR
FOREIGN SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS TERM SHEET IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
For complete terms and conditions that will apply, see the Application Agreement
*****
15 November 2016
Navig8 Product Tankers Inc
Pareto Securities AS
4
ANNEX 1
STATEMENT OF DESIGNATION OF THE RIGHTS, PREFERENCES AND
PRIVILEGES
OF
SERIES A CUMULATIVE REDEEMABLE PERPETUAL PREFERRED STOCK
OF
NAVIG8 PRODUCT TANKERS INC
The undersigned, Daniel Chu, do hereby certify:
1.
That he is the duly elected and acting Secretary of Navig8 Product Tankers Inc, a
Marshall Islands corporation (the “Corporation”).
2.
That pursuant to the authority conferred by the Corporation’s Fourth Amended and
Restated Articles of Incorporation (the “Articles of Incorporation”), the Corporation’s Board of
Directors (the “Board of Directors”) on 14 November, 2016 adopted the following resolutions
designating and prescribing the relative rights, preferences and limitations of the Series A
Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”):
RESOLVED, pursuant to the authority vested in the Board of Directors by the Articles of
Incorporation, the Board of Directors does hereby establish a series of preferred stock of the
Corporation, par value $0.01 per share, and that the designation and number of shares of such series,
and the voting and other powers, preferences and relative, participating, optional or special rights
and qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
The distinctive serial designation of such series of preferred stock is “Series A Cumulative
Redeemable Perpetual Preferred Stock”. Each share of Series A Preferred Stock shall be identical
in all respects to every other share of Series A Preferred Stock. The shares of Series A Preferred
Stock represent perpetual equity interests in the Corporation and shall not give rise to a claim for
payment of a principal amount at a particular date.
The Series A Preferred Stock shall have a par value of $0.01 per share and the number of
shares constituting such series shall initially be 3,000,000, which number the Board of Directors
may from time to time increase or decrease (but not below the number of shares of Series A
Preferred Stock then outstanding). Shares of Series A Preferred Stock that are purchased or
otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued
preferred shares undesignated as to series.
1.
Dividends.
“Original Issue Price” shall mean $10.00 per share of Series A Preferred Stock, subject to
appropriate adjustment in the event of any stock dividend, stock split, combination or other similar
recapitalization with respect to the Series A Preferred Stock.
“Original Issue Date” shall mean the first date on which a share of Series A Preferred
Stock is issued to any holder, which, for the avoidance of doubt, was [22] November, 2016.
5
“Dividend Period” shall mean a period of time commencing on and including a Dividend
Payment Date (other than the initial Dividend Period, which shall commence on and include the
Original Issue Date) and ending on and including the day next preceding the next Dividend Payment
Date.
“Dividend Rate” shall mean the rate of 10.0% per annum, with such rate increasing on each
three-month anniversary of the Original Issue Date by 2.0% per annum, provided that the applicable
Dividend Rate shall not exceed 18.0% per annum.
From and after the Original Issue Date, dividends on each outstanding share of Series A
Preferred Stock shall be cumulative and shall accrue (whether or not earned or declared, whether or
not there are funds legally available for the payment thereof, whether the Corporation has any
earnings or net profits, and whether or not restricted by the terms of any of the Corporation’s
indebtedness outstanding at any time) on a daily basis in arrears at the applicable Dividend Rate on
the sum of the Original Issue Price plus all unpaid accrued and accumulated dividends thereon. All
accrued dividends on any share of Series A Preferred Stock shall be paid in cash only when, as and
if declared by the Board of Directors out of funds legally available therefor or upon a liquidation or
redemption in accordance with the provisions of Section 2 or Section 6, and the Corporation shall
be under no obligation to declare such accrued dividends; provided, that to the extent not paid on
each three-month anniversary of the Original Issue Date (each such date, a "Dividend Payment
Date"), all accrued dividends on any share shall accumulate and compound on the applicable
Dividend Payment Date whether or not declared by the Board and shall remain accumulated,
compounding dividends until paid pursuant hereto. Dividends shall accumulate in each Dividend
Period from and including the preceding Dividend Payment Date (other than the initial Dividend
Period, which shall commence on and include the Original Issue Date), to but excluding the next
Dividend Payment Date for such Dividend Period. All accrued and accumulated dividends on the
shares of Series A Preferred Stock shall be prior and in preference to any dividend on any Junior
Securities (as defined below) and shall be fully declared and paid before any dividends are declared
and paid, or any other distributions or redemptions are made, on any Junior Securities, other than to
declare or pay any dividend or distribution payable on Junior Securities in shares of such Junior
Security. Any dividend payable on the Series A Preferred Stock shall be computed on the basis of
a 360-day year consisting of twelve 30-day months.
2.
Liquidation, Dissolution or Winding Up.
2.1
Preferential Payments to Holders of Series A Preferred Stock. In the
event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, or
a sale of all or substantially all of the assets or properties of the Corporation individually or in a
series of transactions (a “Liquidation Event”), the holders of shares of Series A Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders after satisfaction of all liabilities, if any, to creditors of the
Corporation and subject to the rights of holders of any shares of Senior Securities or Parity Securities
then outstanding in respect of distributions upon a Liquidation Event, and before any payment shall
be made to the holders of Junior Securities by reason of their ownership thereof, an amount per share
equal to the Original Issue Price, plus any accrued but unpaid dividends thereon, whether or not
declared, together with any other dividends declared but unpaid thereon. A consolidation or merger
of the Corporation with or into any other entity, individually or in a series of related transactions,
shall not be deemed a Liquidation Event. If upon any such Liquidation Event, the assets of the
Corporation available for distribution to its stockholders shall be insufficient to pay the holders of
shares of Series A Preferred Stock the full amount to which they shall be entitled under this
Subsection 2.1, the holders of shares of Series A Preferred Stock shall share ratably in any
distribution of the assets available for distribution in proportion to the respective amounts which
6
would otherwise be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
2.2
Distribution of Remaining Assets. In the event of any Liquidation
Event, after the payment of all preferential amounts required to be paid to the holders of shares of
Series A Preferred Stock and any Parity Securities, the remaining assets of the Corporation available
for distribution to its stockholders shall be distributed among the holders of Common Stock and any
other Junior Securities then outstanding according to their respective rights and preferences.
3.
Voting.
3.1
General. The holders of outstanding shares of Series A Preferred
Stock shall not have any voting rights with respect to any matter presented to the stockholders of the
Corporation for their action or consideration at any meeting of stockholders of the Corporation (or
by written consent of stockholders in lieu of meeting) save in respect of the matters set out in
Subsection 3.3.
3.2
[Deleted]
3.3
Series A Preferred Stock Protective Provisions. At any time when
shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or
indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in
addition to any other vote required by law or the Articles of Incorporation) the written consent or
affirmative vote of the holders of at least two-thirds of the then outstanding shares of Series A
Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class, and any such act or transaction entered into without such consent or vote shall
be null and void ab initio, and of no force or effect.
3.3.1 amend, alter or repeal any provision of the Articles of
Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers,
preferences or rights of the Series A Preferred Stock;
3.3.2 create, or authorize the creation of, or issue or obligate itself to
issue shares of, any Parity Securities or Senior Securities (as defined below), or increase the
authorized number of shares of Series A Preferred Stock or increase the authorized number of shares
of any Parity Securities or Senior Securities;
3.3.3 (i) reclassify, alter or amend any Parity Security if such
reclassification, alteration or amendment would render such other security a Senior Security or (ii)
reclassify, alter or amend any Junior Security if such reclassification, alteration or amendment
would render such other security a Senior Security or Parity Security.
4.
Optional Conversion.
The holders of the Series A Preferred Stock shall have no conversion rights.
5.
Mandatory Conversion.
The Series A Preferred Stock shall not be subject to any mandatory conversion
rights.
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6.
Optional Redemption by the Company.
6.1
General. Shares of Series A Preferred Stock may be redeemed by the
Corporation at a price per share (the “Redemption Price”) equal to:
(i) the sum of:
(A) the Original Issue Price per share,
PLUS
(B) all accrued dividends in respect of each such share, whether
declared or not, which have not been paid,
(ii) with such sum being MULTIPLIED by either:
(A) 1.20 if the Redemption Date is prior to the first one-year
anniversary of the Original Issue Date; or
(B) 1.10 if the Redemption Date is on or after the first one-year
anniversary of the Original Issue Date but prior to the second one-year
anniversary of the Original Issue Date; or
(C) 1.00 if the Redemption Date is on or after the second one-year
anniversary of the Original Issue Date;
such Redemption Price to be payable within thirty (30) days after notice by the Corporation at any
time has been submitted to the holders of the then-outstanding shares of Series A Preferred Stock,
of the Corporation’s intention to redeem a percentage of or all shares of Series A Preferred Stock
(the “Redemption Notice”). Upon receipt of a Redemption Notice, the Corporation shall apply all
of its assets to any such redemption, and to no other corporate purpose, except to the extent
prohibited by Marshall Islands law governing distributions to stockholders. The date of the payment
of the Redemption Price shall be referred to as a “Redemption Date.” On each Redemption Date,
except as set forth in Section 6.5 below, the Corporation shall redeem, on a pro rata basis in
accordance with the number of shares of Series A Preferred Stock owned by each holder, that
number of outstanding shares of Series A Preferred Stock held by such holder determined by (i)
dividing (A) the total number of shares of Series A Preferred Stock outstanding owned by such
holder immediately prior to such Redemption Date by (B) the total number of shares of Series A
Preferred Stock outstanding immediately prior to such Redemption Date and (ii) multiplying the
result of (i) with the aggregate number of outstanding shares of Series A Preferred Stock that the
Corporation intends to redeem. If on any Redemption Date Marshall Islands law governing
distributions to stockholders prevents the Corporation from redeeming all shares of Series A
Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of
shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon
as it may lawfully do so under such law.
6.2
Redemption Notice. The Corporation shall send the written
Redemption Notice to each holder of record of Series A Preferred Stock not less than thirty (30)
days prior to each Redemption Date. Each Redemption Notice shall state:
(a)
the number of shares of Series A Preferred Stock held
by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption
Notice;
8
(b)
the Redemption Date and the Redemption Price; and,
for holders of shares in certificated form, that the holder is to surrender to the Corporation, in the
manner and at the place designated, his, her or its certificate or certificates representing the shares
of Series A Preferred Stock to be redeemed.
6.3
Surrender of Certificates; Payment. On or before the applicable
Redemption Date, each holder of shares of Series A Preferred Stock to be redeemed on such
Redemption Date shall, if a holder of shares in certificated form, surrender the certificate or
certificates representing such shares (or, if such registered holder alleges that such certificate has
been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the
Corporation to indemnify the Corporation against any claim that may be made against the
Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation,
in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption
Price for such shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof. In the event less than all of the shares of Series A
Preferred Stock represented by a certificate are redeemed, a new certificate, instrument, or book
entry representing the unredeemed shares of Series A Preferred Stock shall promptly be issued to
such holder.
6.4
Rights Subsequent to Redemption. If the Redemption Notice shall
have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon
redemption of the shares of Series A Preferred Stock to be redeemed on such Redemption Date is
paid or tendered for payment or deposited with an independent payment agent so as to be available
therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares
of Series A Preferred Stock so called for redemption shall not have been surrendered, dividends with
respect to such shares of Series A Preferred Stock shall cease to accrue after such Redemption Date
and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except
only the right of the holders to receive the Redemption Price without interest upon surrender of any
such certificate or certificates therefor.
6.5
Redemption at Holders’ Discretion. At the Company’s election, a
Redemption Notice provided to all holders of the Series A Preferred Stock pursuant to Section 6.2
which states that the Corporation intends to redeem up to all outstanding shares of Series A Preferred
Stock may also state that the number of shares of Series A Preferred Stock held by the holder that
the Corporation shall redeem on the Redemption Date will be determined by notice of such holder
received by the Corporation prior to the Redemption Date, and the number of shares of such holder
redeemed on the Redemption Date pursuant to Section 6.1 will be the number of shares specified by
such holder in such notice.
7.
Mandatory Redemption. The Series A Preferred Stock shall be redeemed by
the Corporation in whole and not in part upon a Change of Control as set forth in this Section 7.
7.1
“Change of Control” shall mean the acquisition of the Corporation
by any person or group of related persons by means of any transaction or series of related
transactions (including, without limitation, any reorganization, consolidation or merger with or into
any other entity, or the direct or indirect sale of a majority of the consolidated assets of the
Corporation and its subsidiaries to any person or persons): (a) in which the shareholders of the
Corporation immediately before the first such transaction do not, immediately after any other such
transaction, retain stock or other equity interests representing at least fifty percent (50%) of the
voting power of the surviving entity of such transaction, or (b) after which any such person or
persons hold more than fifty percent (50%) of the outstanding shares of the acquired entity.
9
7.2
On the date a contract (regardless of whether it is conditional) is signed by
the Corporation agreeing to a Change of Control, the Corporation shall submit to the holders of the
then-outstanding shares of Series A Preferred Stock, a Redemption Notice setting out the
Corporation’s intention to redeem all shares of Series A Preferred Stock. The process of redemption
of all shares of Series A Preferred Stock shall then follow the procedure set out in Section 6.
8.
Rank. The Series A Preferred Stock shall be deemed to rank:
8.1
senior to all classes of the common stock, par value $0.01 per share, of the
Corporation (the “Common Stock”) and to any other class or series of capital stock established
after the Original Issue Date, the terms of which class or series do not expressly provide that it is
made senior to or on parity with the Series A Preferred Stock with respect to the distribution of
assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or
rights of redemption (collectively referred to with the Corporation’s Common Stock as “Junior
Securities”); and
8.2
on a parity with any other class or series of capital stock established after the
Original Issue Date by the Board of Directors, the terms of which class or series are not expressly
subordinated or senior to the Series A Preferred Stock with respect to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of
redemption (collectively referred to as “Parity Securities”); and
8.3
junior to all of the Corporation’s indebtedness and other liabilities with
respect to assets available to satisfy claims against the Corporation and to each class or series of
capital stock established after the Original Issue Date by the Board of Directors, the terms of which
class or series expressly provide that it ranks senior to the Series A Preferred Stock with respect to
the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the
payment of dividends or rights of redemption (collectively referred to as “Senior Securities”).
The Corporation may issue Junior Securities from time to time in one or more series
without the vote or consent of the holders of the Series A Preferred Stock. The Board of Directors
has the authority to determine the preferences, powers, qualifications, limitations, restrictions and
special or relative rights or privileges, if any, of any such series before the issuance of any shares of
that series. The Board of Directors shall also determine the number of shares constituting each series
of securities. The ability of the Corporation to issue Parity Securities and Senior Securities is limited
as described under Section 3.
9.
Redeemed or Otherwise Acquired Shares. Any shares of Series A Preferred
Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be
automatically and immediately cancelled and retired and shall not be reissued, sold or transferred.
Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted
to the holders of Series A Preferred Stock following redemption.
10.
Waiver. Any of the rights, powers, preferences and other terms of the Series
A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred
Stock by the affirmative written consent or vote of the holders of at least two thirds of the shares of
Series A Preferred Stock then outstanding.
11.
Notices. Any notice required or permitted by the provisions of this Statement
of Designation to be given to a holder of shares of Series A Preferred Stock shall be mailed, postage
prepaid, to the post office address last shown on the records of the Corporation, or given by
electronic communication as may be permitted in this Statement of Designation, in the Articles of
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Incorporation and Bylaws or by applicable law, and shall be deemed sent upon such mailing or
electronic transmission.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, does
hereby affirm that this Statement of Designation is the act and deed of the Corporation and
that the facts herein stated are true, and accordingly has hereunto set his or her hand on
November [22], 2016.
Name: Daniel Chu
Title:
Secretary
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IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, does hereby
affirm that this Statement of Designation is the act and deed of the Corporation and that the facts
herein stated are true, and accordingly has hereunto set his or her hand on November [22], 2016.
Name: Daniel Chu
Title:
Secretary
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