Table of Contents
Notes to Consolidated Financial Statements (Continued)
10. Capitalization (Continued)
February 18, 2014, the Company entered into an Exchange Agreement with White Rock pursuant to which White Rock exchanged 303,518 common shares held by it for 303,518
Class B-1 preferred shares, and on February 27, 2014, the Company entered into an Exchange Agreement with NRM, pursuant to which NRM exchanged 303,518 common shares held by it for
303,518 Class B-1 preferred shares. The common shares received by the Company pursuant to these Exchange Agreements were cancelled and retired and ceased to be issued and outstanding. In
connection with the White Rock and NRM Exchange Agreements, the Company reduced earnings available to common stockholders used in the calculation of basic and diluted net loss per common share for the
year ended December 31, 2014 (see Note 13) by an aggregate of $479,471, representing the difference between the fair value of the Class B-1 preferred shares issued and the fair
value of the common stock that was surrendered in the exchanges, which the Company has accounted for as a deemed preferred dividend on its common stock.
the event of any Liquidation Event (as defined in the Third Amended and Restated Certificate, see Note 20), the aggregate assets available for distribution to the stockholders
shall be distributed as follows:
- first to the holders of Class C and Class D preferred stock in an amount per share equal to their original issue price
($4.2299 per share for Class C at $21.0145 per share for Class D preferred stock);
- then, to the holders of Class B preferred stock in an amount per share equal to their original issue price ($2.471 per
share for Class B-1 and $2.572 per share for Class B-2 preferred stock); and
- then, the remaining assets shall be distributed to all holders of common stock and Class B-1, B-2, C and D preferred stock
ratably based on the number of shares held by each holder.
right to a preferential distribution held by the Class B-1, B-2, C and D preferred stockholders terminates upon the conversion of the preferred stock to common stock upon the
completion of a qualified IPO.
of common stock and Class B-1, B-2, C and D preferred stock vote together as a single class.
Class B-1, B-2, C and D preferred stockholders have certain customary protective provisions that allow them to approve the liquidation, dissolution or merger of the Company,
the payment of dividends, the amendment of the Company's certificate of incorporation, an IPO or offering of the Company's debt securities, capital expenditures above a specified threshold and changes
in the authorized shares or preferences of the Company's capital stock.
Class B-1, B-2, C and D preferred shares are subject to proportional adjustment upon stock splits and stock dividends.
Class B-1, B-2, C and D preferred shares will automatically convert, on a one-for-one basis, into common stock upon a Qualified IPO or the affirmative vote of the holders of
a majority of the issued and outstanding shares of Class B-1, B-2, C and D preferred stock.