PROPOSAL NO. 3:
CHARTER AMENDMENT TO CONSUMMATE THE REVERSE SPLIT
On January 31, 2017, our Board of Directors approved and authorized (i) the Reverse Split of the issued and outstanding shares of Common Stock in a range of between one-for-fifteen (1:15) and one-for-fifty (1:50), with the ultimate reverse split ratio to be determined by the Board of Directors, in its sole discretion, and (ii) an amendment to either our Restated Charter or existing Certificate of Incorporation in order to consummate the Reverse Split at such time and date, if at all, as determined by the Board of Directors in its sole discretion. The Board has approved the Reverse Split Proposal and a Reverse Split within the
above range, be presented to our stockholders for their approval by written consent in lieu of a special meeting of the stockholders. The Board is now asking you to approve the Reverse Split Proposal.
A prior reverse stock split within a range of 1-for-15 to 1-for-25, giving the Board discretionary authority to determine the split ratio and to effectuate the reverse stock split was previously approved by our Board of Directors on October 8, 2015, and by our Majority Stockholders on December 1, 2015 (the Prior Reverse Split). However, our Board of Directors, in the exercise of their discretionary authority to effectuate such Prior Reverse Split and determine the exact split ratio, elected not to consummate the Prior Reverse Split within the authorized one year period after the date that the Prior Reverse Split
was approved by the requisite vote of our stockholders.
Pursuant to the Reverse Split, the 257,786,367 shares of Common Stock we have outstanding as of February 21, 2017 will be reduced to anywhere from approximately 17,185,758 shares (assuming a 1:15 Reverse Split ratio) to 5,155,727 shares (assuming a 1:50 Reverse Split ratio). As permitted under the DGCL, shares of Common Stock that would be converted into less than one share as a result of the Reverse Split will instead, at the election of the Board of Directors, be converted into either of the following: (i) the right to receive a cash payment equal to the product of such fraction multiplied by the fair market value of one
share of Common Stock, as of the effective date of the Reverse Split, or (ii) the right to receive a scrip or warrant in registered form to purchase our Common Stock which shall enable the holder thereof to receive a full share upon the surrender of such scrip or warrant aggregating a full share.
Our Board of Directors has the discretion to determine the date on which to effectuate the Reverse Split and may determine not to proceed with the Reverse Split, even if approved by our stockholders, in the event that the Company fails to meet qualification requirements for listing of our Common Stock on the Nasdaq Capital Market or FINRA will not approve the Reverse Split and will not announce it on the Daily List. We expect to consummate the Reverse Split as soon as practicable after (i) receiving the required executed Consents (FOR) the Reverse Split Proposal from the Majority Stockholders of our Common Stock as of the
Record Date and (ii) receiving requisite approval of the Reverse Split from FINRA on the Daily List, but in any event, subsequent to our filing an amendment to our Restated Charter or our existing Certificate of Incorporation (as applicable) to effectuate the Reverse Split.
The Reverse Split will only become effective upon the date and time of the filing of an amendment to our Restated Charter or our existing Certificate of Incorporation, as may be applicable. The form of the proposed amendment to effectuate the Reverse Split is included as
Exhibit B
to this Consent Solicitation Statement. The following discussion is qualified in its entirety by the full text of
Exhibit B
.
The Reverse Split shall be effectuated for Common Stock on a stock certificate by stock certificate basis, such that any fractional shares of Common Stock, resulting from the Reverse Split and held by a single record holder shall be aggregated. No fractional shares of Common Stock shall be issued upon the combination of any such shares in the Reverse Split. Issued and outstanding stock options, convertible notes and warrants will be split on the same basis and exercise prices will be adjusted accordingly. The Reverse Split shall occur whether or not the certificates representing such shares of Common Stock are surrendered to
the Company or its transfer agent.
The Reverse Split shall occur whether or not the certificates representing such shares of Common Stock are surrendered to the Company or its transfer agent.
Assuming that the Reverse Split is consummated
prior
to the filing of our Restated Charter to increase our authorized Common Stock from 500,000,000 shares to 750,000,000 shares, then the Authorized Stock Increase Proposal will not be consummated and our the number of our authorized shares of our Common Stock will remain at 500,000,000 shares and the 10,000,000 authorized shares of our Preferred Stock, and the $0.0001 par value of each share of our Common Stock and Preferred Stock will not be affected as a result of the Reverse Split. However, all of our outstanding shares of Common Stock, shares of Common Stock
issuable upon conversion of our convertible notes and shares of Common Stock issuable upon exercise of our outstanding warrants and options (as set forth below) will be adjusted to give effect to the Reverse Split.
Even if we do increase our authorized Common Stock to 750,000,000 shares by filing the Restated Charter with the Secretary of State of Delaware, if the Reverse Split Proposal is approved by our stockholders, the board of directors reserves the right to still implement the Reverse Split at any time within one year from the date such stockholder approval is obtained.
Purposes of the Reverse Split
Generally, a Reverse Split is expected to increase the market price per share by reducing the number of outstanding shares. See
Potential Risks of the Reverse Split
below. A Reverse Split typically does not increase the aggregate market value of all outstanding shares. Following the Reverse Split, there can be no assurance that the bid price of our Common Stock will continue at a level in proportion to the reduction in the number of outstanding shares resulting from such Reverse Split.
The Amended and Restated Charter is designed to authorize our Board of Directors to effect the Reverse Split of our currently 257,786,367 issued and outstanding shares of Common Stock within a range of not less than one-for-fifteen (1:15) and not more than one-for-fifty (1:50) within one year after the date such action is approved by the stockholders. Such Reverse Split will also reduce within a range of not less than one-for-fifteen (1:15) and not more than one-for-fifty (1:50) the 213,911,571 shares of Common Stock issuable upon conversion of our outstanding convertible notes and debentures and the exercise of our
outstanding warrants and options.
Our Common Stock is currently traded on the OTC Markets OTCQB marketplace. Such trading market is considered to be less efficient than that provided by a national stock exchange such as The Nasdaq Capital Market. In order for us to list our Common Stock on The Nasdaq Capital Market, we must fulfill certain listing requirements, including minimum bid price requirements for our Common Stock. We intend to list our Common Stock on the Nasdaq Capital Market or other national securities exchange. In order to qualify to list our shares on the Nasdaq Capital Market we will need to maintain a minimum $4.00 per share market price.
Between August 2016 and February 21, 2017, the market price of our common stock has declined from a high of $0.195 per share to as low as $0.07 per share and closed on January 31, 2017 at $0.11 per share. Following the Reverse Split, there can be no assurance that the closing bid price or closing price per share of our Common Stock will continue at a level in proportion to the reduction in the number of outstanding shares resulting from such Reverse Split, or that our Common Stock will be approved for listing on The Nasdaq Capital Market.
Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Our Board of Directors believes that the anticipated higher market price resulting from a Reverse Split may reduce, to some extent, the negative effects on the liquidity
and marketability of our Common Stock inherent in some of the policies and practices of institutional investors and brokerage firms described above. Additionally, because brokers commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher.
Our Board of Directors also believes that the Reverse Split will afford the Company additional flexibility in (i) consummating potential future financing and/or strategic transactions without the need for further
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after the Reverse Split.
Preferred Stock
On March 31, 2015, all of the 3,785,815 outstanding shares of our preferred stock, par value $0.0001 per share (Preferred Stock) converted automatically by their terms into shares of our Common Stock determined by dividing the stated value by $0.25 per share. As of June 30, 2015, the Company does not have any outstanding shares of Preferred Stock.
Options
As of December 31, 2016 we currently have outstanding options (including options granted under the 2002 Plan, 2013 Plan and Consulting Options) to purchase an aggregate of 16,650,000 shares of our Common Stock. As of December 31, 2016 we have vested options of 5,680,899 at an exercise prices ranging between $0.12 and $2.00 or a weighted average exercise price of $0.84 per share, subject to adjustments. Immediately following the Reverse Split, such options will be exercisable to purchase approximately an aggregate of between 378,727 shares and 113,618 shares of our Common Stock. The number of shares reserved for issuance under
our existing equity incentive plans would be reduced proportionally based on the ratio of the Reverse Split.
Warrants
As of December 31, 2016 we currently have outstanding warrants to purchase an aggregate 118,366,549 shares of our Common Stock at exercise prices ranging between $0.075 and $2.25 per share or a weighted average exercise price of $0.39 per share, subject to adjustment. Immediately following the Reverse Split, such warrants will be exercisable to purchase approximately an aggregate of between 7,891,103 shares and 2,367,331 shares of our Common Stock.
Fractional Shares
We will not issue any fractional shares as a result of the Reverse Split. In lieu of issuing fractional shares, we may either: (i) directly pay each stockholder who would otherwise be entitled to receive a fractional share an amount in cash equal to the closing stock price of our Common Stock, as quoted on the OTC Markets the day after the Reverse Split becomes effective, multiplied by the fractional share amount; or (ii) issue a scrip or warrant in registered form to purchase our Common Stock which shall enable the holder thereof to receive a full share upon the surrender of such scrip or warrants aggregating a full share.
Issued and outstanding stock options, convertible notes and warrants will be split on the same basis and exercise prices will be adjusted accordingly.
Implementation and Exchange of Stock Certificates
Once we receive the requisite stockholder approval and subject to the Board of Directors determination and approval of our application from Nasdaq of any other national exchange for listing of our Common Stock, we will file the Restated Charter to consummate the Reverse Split, included as
Exhibit B
to this Consent Solicitation Statement, with the Delaware Secretary of State and effectuate the Reverse Split at the time specified in such Certificate of Amendment, which we refer to as the effective date.
As of the effective date of the Reverse Split, each certificate representing shares of our Common Stock before the Reverse Split would be deemed, for all corporate purposes, to evidence ownership of the reduced number of shares of our Common Stock resulting from the Reverse Split, except that holders of unexchanged shares would not be entitled to receive any dividends or other distributions payable by us after the effective date until they surrender their old stock certificates for exchange. All shares underlying options and warrants and other securities would also be automatically adjusted on the effective date.
Our transfer agent, Island Stock Transfer, is expected to act as the exchange agent for purposes of implementing the exchange of stock certificates. As soon as practicable after the effective date, stockholders and holders of securities exercisable for our Common Stock would be notified of the effectiveness of the Reverse Split. Stockholders of record would receive a letter of transmittal requesting them to surrender their
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information, as of December 31, 2016, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of our Common Stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive officers as a group.
Beneficial ownership of the Common Stock is determined in accordance with the rules of the Securities and Exchange Commission (the SEC) and includes any shares of Common Stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of December 31, 2016. Except as otherwise indicated, we believe that the persons named in this table have sole voting and investment power with respect to all shares of Common Stock held by them. Applicable percentage ownership in the following table is based on 160,684,706 shares of Common
Stock outstanding as December 31, 2016 plus, for each individual, any securities that individual has the right to acquire within 60 days of December 31, 2016.
Title of Class: Common Stock
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Title
|
|
Beneficially Owned*
|
|
Percent of Class**
|
Officers and Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Turner
|
|
|
Chief Executive Officer and Chairman of the Board
|
|
|
|
4,215,524
|
(1)
|
|
|
2.60
|
%
|
Stanley Hostler
|
|
|
Secretary and Director
|
|
|
|
10,060,887
|
(2)
|
|
|
6.12
|
%
|
David Halverson
|
|
|
President and Chief Business Officer
|
|
|
|
193,750
|
(3)
|
|
|
|
*
|
Matthew Powell
|
|
|
Vice President, Research & Development, and Chief Science Officer
|
|
|
|
205,625
|
(4)
|
|
|
|
*
|
Steve Antoline
|
|
|
Director
|
|
|
|
17,375,134
|
(5)
|
|
|
10.23
|
%
|
Leonard Harris
|
|
|
Director
|
|
|
|
4,281,624
|
(6)
|
|
|
2.65
|
%
|
Ed Roberson
|
|
|
Director
|
|
|
|
920,883
|
(7)
|
|
|
|
*
|
Scott Segal
|
|
|
Director
|
|
|
|
3,550,816
|
(8)
|
|
|
2.20
|
%
|
Josiah T. Austin
|
|
|
Director
|
|
|
|
9,822,884
|
(9)
|
|
|
5.94
|
%
|
Patrick Gallagher
|
|
|
Director
|
|
|
|
313,334
|
(10)
|
|
|
|
*
|
Maged Shenouda
|
|
|
Director
|
|
|
|
375,000
|
(11)
|
|
|
|
*
|
Officers and Directors as a Group (total of 13 persons)
|
|
|
|
|
|
|
51,315,461
|
|
|
|
28
|
%
|
5% Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
El Coronado Holdings, LLC
|
|
|
|
|
|
|
14,460,162
|
(12)
|
|
|
8.78
|
%
|
Summit Resources, Inc.
|
|
|
|
|
|
|
15,694,419
|
(13)
|
|
|
9.25
|
%
|
Andreas Wawrla
|
|
|
|
|
|
|
18,105,556
|
(14)
|
|
|
10.77
|
%
|
Laidlaw Placement Agents
|
|
|
|
|
|
|
10,708,218
|
(15)
|
|
|
6.25
|
%
|
|
*
|
Represents ownership under 1%.
|
|
(1)
|
Includes 2,730,705 shares of common stock, 1,234,819 shares of common stock to be acquired upon the exercise of warrants and 250,000 shares of common stock to be acquired upon the exercise of stock options.
|
|
(2)
|
Includes 3,554,390 shares of common stock, 1,324,204 shares of common stock to be acquired upon the exercise of warrants and 732,667 shares of common stock to be acquired upon the exercise of stock options. Also includes 2,724,992 shares of common stock held by Mr. Hostlers wife, Virginia Child and 1,465,088 shares of common stock to be acquired upon the exercise of warrants held by Mr. Hostlers wife, Virginia Child. Also includes 148,312 shares of common stock and 111,234 shares of common stock to be acquired upon the exercise of warrants jointly held by Stanley Hostler and Virginia Child.
|
|
(3)
|
Includes 193,750 shares of common stock to be acquired upon the exercise of stock options.
|
|
(4)
|
Includes 205,625 shares of common stock to be acquired upon the exercise of stock options.
|
20
|
(5)
|
Includes 1,514,048 shares of common stock owned of record by the Wilderness Land Company, LLC. Also includes 6,733,550 shares of common stock and 8,960,869 shares of common stock to be acquired upon the exercise of warrants owned of record by Summit Resources, Inc. As the trustee of the Wilderness Land Company, LLC and president of Summit Resources, Inc., Mr. Antoline has voting and dispositive control over any securities owned of record by the Wilderness Land Company and Summit Resources, Inc. Therefore, he may be deemed to beneficially own the shares of common stock and the shares of common stock to be acquired upon the exercise of warrants held of record by the Wilderness Land Company, LLC and Summit Resources, Inc. Includes 166,667 shares of common stock to be acquired upon the exercise of stock options.
|
|
(6)
|
Includes 3,235,068 shares of common stock, 629,889 shares of common stock to be acquired upon the exercise of warrants and 416,667 shares of common stock to be acquired upon the exercise of stock options.
|
|
(7)
|
Includes 537,600 shares of common stock, 57,260 shares of common stock to be acquired upon the exercise of warrants and 258,167 shares of common stock to be acquired upon the exercise of stock options. Also includes 67,856 shares of common stock owned of record by Raymond James & Associates, Inc., an IRA account of Ed Roberson.
|
|
(8)
|
Includes 2,633,844 shares of common stock, 500,305 shares of common stock to be acquired upon the exercise of warrants and 416,667 shares of common stock to be acquired upon the exercise of stock options.
|
|
(9)
|
Includes 5,049,744 shares of common stock, 216,667 shares of common stock to be acquired upon the exercise of stock options, 3,966,908 shares to be acquired upon the exercise of warrants, and 589,565 shares of common stock upon the conversion of a convertible debenture
|
|
(10)
|
Includes 246,667 shares of common stock and 66,667 shares of common stock to be acquired upon the exercise of stock options.
|
|
(11)
|
Includes 308,333 shares of common stock and 66,667 shares of common stock to be acquired upon the exercise of stock options.
|
|
(12)
|
Includes 10,493,254 shares of common stock and 3,966,908 shares of common stock to be acquired upon the exercise of warrants.
|
|
(13)
|
Includes 6,733,550 shares of common stock and 8,960,869 shares of common stock to be acquired upon the exercise of warrants. As president of Summit Resources, Inc., Mr. Antoline has voting and dispositive control over any securities owned of record by Summit Resources, Inc. Therefore, he may be deemed to beneficially own the shares of common stock and the shares of common stock to be acquired upon the exercise of warrants held of record by Summit Resources, Inc.
|
|
(14)
|
Includes 10,605,550 shares of common stock and 7,500,000 shares of common stock to be acquired upon the exercise of warrants.
|
|
(15)
|
Includes 10,708,218 shares of common stock to be acquired upon the exercise of warrants.
|
21
STOCKHOLDER PROPOSALS
Proposals of shareholders intended to be presented at our next annual meeting of shareholders, including the election of directors of the Company, must be received by us a reasonable amount of time prior to when we begin to print and send our proxy materials for such meeting. These proposals must comply with the requirements as to form and substance established by the SEC for such proposals in order to be included in the proxy statement. If the shareholder fails to give notice in reasonable time prior to when we begin to print and send our proxy materials for such meeting, then the persons named as proxies in the proxies
solicited by our Board of Directors for our next annual meeting may exercise discretionary voting power regarding any such proposal.
ANNUAL REPORTS
We shall provide a copy of our Form 10-K Annual Report for the fiscal year ended December 31, 2015 and our Quarterly Reports for the three fiscal quarters ended September 30, 2016, without charge, to each person to whom a Consent Solicitation Statement is delivered, upon written or oral request of such person delivered to us at Protea Biosciences Inc., c/o Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760, Attention: Ms. Anna Kotlova. Copies may also be obtained without charge through the SECs web-site at
http://www.sec.gov
. We intend to file our Form 10-K Annual Report for fiscal
year ended December 31, 2016 on or before March 31, 2017.
HOUSEHOLDING OF PROXY MATERIALS
Some banks, brokers and other nominee record holders may employ the practice of householding proxy statements and annual reports. This means that only one copy of this Consent Solicitation Statement may have been sent to multiple stockholders residing at the same household. If you would like to obtain an additional copy of this Consent Solicitation Statement, please contact us at Protea Biosciences Inc., c/o Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760, Attention: Ms. Anna Kotlova. If you want to receive separate copies of our proxy statements and annual reports in the future,
or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder.
22
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are required to comply with the reporting requirements of the Securities Exchange Act. For further information about us, you may refer to our Annual Report and our Quarterly Report, copies of which are enclosed herewith. You can review these filings at the public reference facility maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. These filings are also available electronically on the World Wide Web at
http://www.sec.gov
.
In accordance with Rule 14a-3(e)(1) under the Exchange Act, one proxy statement will be delivered to two or more stockholders who share an address, unless we have received contrary instructions from one or more of the stockholders. We will deliver promptly upon written or oral request a separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the proxy statement was delivered. Requests for additional copies of the proxy statement, and requests that in the future separate proxy statements be sent to stockholders who share an address, should be directed to Protea Biosciences Inc.,
c/o Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760, Attention: Ms. Anna Kotlova. In addition, stockholders who share a single address but receive multiple copies of the proxy statement may request that in the future they receive a single copy by contacting us at the address set forth in the prior sentence.
February 9, 2017
By Order of the Board of Directors
/s/ Stephen Turner
Stephen Turner
Chief Executive Officer
23
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PROTEA BIOSCIENCES GROUP, INC.
Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Protea Biosciences Group, Inc., a corporation organized and existing under the laws of the State of Delaware (the
Corporation
), hereby certifies as follows:
A. The name of the Corporation is Protea Biosciences Group, Inc, and the original Certificate of Incorporation of this Corporation was filed with the Secretary of State of the State of Delaware on May 24, 2015 under the name SRKP 5, Inc..
B. The board of directors of the Corporation (the Board of Directors) duly adopted a resolution, pursuant to Sections 141(f), 242 and 245 of the General Corporation Law of the State of Delaware (the
DGCL
) setting forth and adopting this Amended and Restated Certificate of Incorporation of the Corporation.
C. The stockholders of the Corporation duly approved this Amended and Restated Certificate of Incorporation by written consent in accordance with Sections 228, 242 and 245 of the DGCL.
D. This Amended and Restated Certificate of Incorporation deletes Article 4, renumbers and amends Articles 5, 6, 7, 8 and 9, and restates, integrates and further amends the provisions of the Corporations Amended and Restated Certificate of Incorporation, and has been duly approved by the written consent of the stockholders of the Corporation in accordance with Section 228 of the DGCL.
E. The text of the Amended and Restated Certificate of Incorporation of this Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE I
The name of the Corporation is Protea Biosciences Group, Inc.
ARTICLE II
The address of the Corporations registered office in the State of Delaware is 2711. Centerville Road, Suite 400, Wilmington, Delaware 19808, County of New Castle. The name of its registered agent at such address is the Corporation Service Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the DCGL, as the same exists or as may hereafter be amended from time to time.
ARTICLE IV
4.1
Authorized Capital Stock
. The total number of shares of all classes of capital stock that the Corporation is authorized to issue is Three Hundred and Sixty Million (760,000,000) shares, consisting of Seven Hundred Fifty Million (750,000,000) shares of Common Stock, par value $0.0001 per share (the
Common Stock
), and Ten Million (10,000,000) shares of Preferred Stock, par value $0.0001 per share (the
Preferred Stock
).
4.2
Increase or Decrease in Authorized Capital Stock
. The number of authorized shares of Preferred Stock or Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote generally in the election of directors, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), voting together as a single class, without
A-1
a separate vote of the holders of the class or classes the number of authorized shares of which are being increased or decreased, unless a vote by any holders of one or more series of Preferred Stock is required by the express terms of any series of Preferred Stock as provided for or fixed pursuant to the provisions of Section 4.4 of this Article IV.
4.3
Common Stock
.
(a) The holders of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders on which the holders of shares of Common Stock are entitled to vote. Except as otherwise required by law or this certificate of incorporation (this
Certificate of Incorporation
which term, as used herein, shall mean the certificate of incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock), and subject to the rights of the holders of Preferred Stock, at any annual or
special meeting of the stockholders the holders of shares of Common Stock shall have the right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms, number of shares, powers, designations, preferences, or relative participating, optional or other special rights (including, without limitation, voting rights), or to qualifications, limitations or restrictions thereon, of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one more other such series, to vote thereon pursuant to this Certificate of Incorporation (including, without limitation, by any certificate of designations relating to any series of Preferred Stock) or pursuant
to the DGCL.
(b) Subject to the rights of the holders of Preferred Stock, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board of Directors of the Corporation (the Board of Directors) from time to time out of any assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.
(c) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, and subject to the rights of the holders of Preferred Stock in respect thereof, the holders of shares of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.
(d) As determined by the Board of Directors of the Corporation, in the exercise of its sole discretion, upon effectiveness of this Certificate of Incorporation (the Split Effective Time), each [fifty (50)] shares of our Common Stock shall be combined and converted automatically, without further action, into one (1) fully paid and non-assessable share of Common Stock (the Reverse Split). No fractional shares of Common Stock will be issued in connection with the Reverse Split, and all such fractional interests will be rounded down to the nearest whole number. Each holder of record of a certificate which
immediately prior to the Split Effective Time represents outstanding shares of Common Stock (an Old Certificate) shall be entitled to receive upon surrender of such Old Certificate to the Corporations transfer agent for cancellation, a certificate (a New Certificate) representing the number of whole shares of Common Stock into and for which the shares formerly represented by such Old Certificate so surrendered are combined and converted. From and after the Split Effective Time, Old Certificates shall represent only the right to receive New Certificates as aforesaid and, to the extent the Corporation so elects, cash pursuant to the provisions hereof. The amount of capital represented by the shares of Common Stock outstanding in the aggregate immediately after the Split Effective Time shall be adjusted from the capital account of the Common Stock to the additional paid in capital account for each share of Common Stock fewer outstanding immediately following
the Reverse Split than immediately prior to the Reverse Split, such transfer to be made at the Split Effective Time. The Reverse Split will have no effect on the Authorized Capital Stock of the Corporation.
A-2
4.4.
Preferred Stock
.
The Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board of Directors). The Board of Directors is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions and to set forth in a certification of designations [filed pursuant to the DGCL] the powers, designations, preferences and relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, of
any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions that dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including, without limitation, sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issuance of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the Certificate of Incorporation or the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any
series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
ARTICLE V
5.1.
General Powers
. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
5.2.
Number of Directors; Election; Term.
(a) Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the number of directors that constitutes the entire Board of Directors shall be fixed solely by resolution of the Board of Directors.
(b) Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
5.3
Vacancies and Newly Created Directorships
. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, and [except as otherwise provided in the DGCL, vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a
vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been assigned by the Board of Directors and until his or her successor shall be duly elected and qualified.
5.4
Removal
. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, a director may be removed from office by the stockholders of the Corporation only for cause.
ARTICLE VI
6.1
Limitation of Personal Liability
. To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
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6.2
Indemnification.
The Corporation shall indemnify, to the fullest extent permitted by applicable law, any director or officer of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a
Proceeding
) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding. The Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board of Directors.
The Corporation shall have the power to indemnify, to the extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, any employee or agent of the Corporation who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses
(including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding.
Any repeal or amendment of this Article VI by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Certificate of Incorporation inconsistent with this Article VI will, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to further limit or eliminate the liability of directors) and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or amendment or adoption of such inconsistent provision with respect to acts or omissions occurring
prior to such repeal or amendment or adoption of such inconsistent provision.
ARTICLE VII
Exclusive Jurisdiction
. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or agent of the Corporation to the Corporation or the Corporations stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the
DGCL or the Corporations Certificate of Incorporation or Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of the Corporations Certificate of Incorporation or Bylaws, or (v) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VII.
ARTICLE VIII
Amendment. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation (including, without limitation, any rights, preferences or other designations of Preferred Stock), in the manner now or hereafter prescribed by this Certificate of Incorporation and the DGCL; and all rights, preferences and privileges herein conferred upon stockholders by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article VIII. Notwithstanding any other provision of this Certificate of
Incorporation, and in addition to any other vote that may be required by law or the terms of any series of Preferred Stock, the affirmative vote of the holders of at least 66 2/3% of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision as part of this Certificate of
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Incorporation inconsistent with the purpose and intent of, Article V, Article VI, Article VII or this Article VIII (including, without limitation, any such Article as renumbered as a result of any amendment, alteration, change, repeal or adoption of any other Article).
ARTICLE IX
The effective date and time of this Amended and Restated Certificate of Incorporation shall be , 2017.
IN WITNESS WHEREOF, Protea Biosciences Group, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by a duly authorized officer of the Corporation on this day of , 2017.
PROTEA BIOSCIENCES GROUP, INC.
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By:
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Stephen Turner
President, Authorized Person
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Exhibit B
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
PROTEA BIOSCIENCES GROUP, INC.
(a Delaware corporation)
The undersigned, Stephen Turner, hereby certifies that:
1. He is the Chief Executive Officer of Protea Biosciences Group, Inc. (the Corporation), a Delaware corporation, and is duly authorized by the Board of Directors of the Corporation to execute this instrument.
2. The present name of the Corporation is Protea Biosciences Group, Inc. The Corporation filed its Certificate of Incorporation with the Secretary of State of the State of Delaware on May 24, 2005, as amended on September 2, 2011, June 24, 2013, October 30, 2014, March 12, 2015 and July 2, 2015, and October 24, 2016.
3. This Certificate of Amendment of the Certificate of Incorporation was duly approved by the Corporations Board of Directors and duly adopted by written consent of the stockholders of the Corporation in accordance with the applicable provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware.
4. ARTICLE FIFTH of the Certificate of Incorporation of the Corporation is hereby amended to read in its entirety as follows:
The total number of shares of capital stock which the Corporation shall have authority to issue is: [five hundred and ten thousand (510,000,000)][seven hundred and sixty million (760,000,000)]. These shares shall be divided into two classes with [five hundred thousand (500,000,000)] [seven hundred and fifty million (750,000,000)] shares designated as common stock at $.0001 par value (the Common Stock) and ten million (10,000,000) shares designated as preferred stock at $.0001 par value (the Preferred Stock).
The Preferred Stock of the Corporation shall be issued by the Board of Directors of the Corporation in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Corporation may determine, from time to time.
Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.
5. The holders of a majority of the shares of Common Stock issued and outstanding as at the date of this amended to the Certificate of Incorporation and the Board of Directors of the Corporation have authorized a [one-for ] reverse split of the issued and outstanding shares of Common Stock of the Corporation (the Reverse Stock Split) to be effective as of , 2017. As a result of such Reverse Stock Split, (a) the currently issued and outstanding shares of Common Stock of the Corporation shall be decreased to
shares of Common Stock, and each one full share of currently outstanding Common Stock shall become share of Common Stock; and (b) each one full share Common Stock issuable upon conversion of any convertible securities or upon exercise of any warrant or option to purchase Common Stock shall be reduced to share of Common Stock. The Reverse Stock Split does not affect the authorized capital stock of the Corporation as set forth in ARTICLE FIFTH of the Certificate of Incorporation.
6. No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.
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IN WITNESS WHEREOF
, the Corporation has caused this Certificate of Amendment of the Certificate of Incorporation to be executed this day of , 2017.
/s/ Stephen Turner
Stephen Turner
Chief Executive Officer
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ANNEX A
WRITTEN CONSENT OF STOCKHOLDERS OF
PROTEA BIOSCIENCES GROUP, INC.
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, being a stockholder of record of Protea Biosciences Group, Inc. (the
Company
) as of February 21, 2017 hereby takes the following action, in accordance with our Bylaws, as amended to date, and pursuant to Section 228 of the Delaware General Corporation Law, with respect to all shares of Common Stock, par value $0.0001 per share, of the Company (
Common Stock
) held by the undersigned, in connection with the solicitation by the Board of Directors of the Company of written consent, pursuant to Section 228 of Title 8 of the Delaware Code, to the three (3) Proposals set forth
below, as the same are described in the Companys Consent Solicitation Statement on Schedule 14A, dated February 9, 2017, without a meeting.
(Place an X in the appropriate boxes)
The Board of Directors recommends that Stockholders CONSENT to the following Proposals
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Proposal 1.
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The ratification of the appointment of Schneider Downs & Co., Inc., as our independent registered public auditors and accountants for our fiscal year ending December 31, 2016;
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Proposal 2.
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An amendment to our Certificate of Incorporation, as amended (the Restated Charter) to increase authorized capitalization (the Authorized Common Stock Increase) from 500,000,000 shares of common stock, par value $0.0001 per share (the Common Stock), and 10,000,000 shares of preferred stock, par value $0.0001 per share, to 750,000,000 shares of Common Stock, and 10,000,000 shares of preferred stock, par value $0.0001 per share;
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Proposal 3.
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Approval of a Reverse Split of Common Stock, within a range of between one-for-fifteen (1:15) and one-for-fifty (1:50), with the exact Reverse Split ratio to be determined by the Board of Directors, in its sole discretion, and the related approval of the Restated Charter to effectuate the Reverse Split, to be effective at such time and date, if at all, as determined by the Board in its sole discretion
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Proposal 1. Ratification of Appointment of Schneider Downs & Co., Inc., as our auditors for the 2016 Fiscal Year.
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o
CONSENT (FOR)
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o
CONSENT WITHHELD (AGAINST)
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o
ABSTAIN
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Proposal 2. Approval of the Restated Charter to effectuate the Authorized Common Stock Increase:
RESOLVED, that Article 5 of the Certificate of Incorporation of the Corporation, as previously amended, be further amended to add the following paragraph to the end thereof:
The total number of shares of capital stock which the Corporation shall have authority to issue is: seven hundred and sixty million (760,000,000). These shares shall be divided into two classes with seven hundred and fifty million (750,000,000) shares designated as common stock at $.0001 par value (the Common Stock) and ten million (10,000,000) shares designated as preferred stock at $.0001 par value (the Preferred Stock).
The Preferred Stock of the Corporation shall be issued by the Board of Directors of the Corporation in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Corporation may determine, from time to time.
Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.
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No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.
RESOLVED, that the Certificate of Amendment (the Restated Charter) to the Certificate of Incorporation of the Corporation attached as
Exhibit A
to the Corporations Consent Solicitation Statement dated February 9, 2017 (the Consent Solicitation Statement) be, and it hereby is, authorized, approved and adopted in all respects.
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o
CONSENT (FOR)
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o
CONSENT WITHHELD (AGAINST)
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o
ABSTAIN
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Proposal 3. Approval of the Restated Charter to effectuate the Reverse Stock Split of our Common Stock:
RESOLVED, that Article 5 of the Certificate of Incorporation of the Corporation, as previously amended, be further amended to add the following paragraph to the end thereof:
Reverse Stock Split
. As determined by the Board of Directors of the Company, in the exercise of its sole discretion, a split ratio between a range of fifteen (25) to fifty (50) shares of the issued and outstanding shares of Common Stock as of the time the certificate containing this amendment becomes effective (the Split Effective Time), shall be combined and converted (the Reverse Split) automatically, without further action, into one (1) fully paid and non-assessable share of Common Stock. In lieu of any fractional shares to which a holder would otherwise be entitled, the
Corporation, at its discretion, shall either: (a) pay cash equal to the product of such fraction multiplied by the fair market value of one share of Common Stock, as of the Split Effective Time or (b) issue a scrip or warrant in registered form to purchase our Common Stock which shall enable the holder thereof to receive a full share upon the surrender of such scrip or warrant aggregating a full share; Each holder of record of a certificate which immediately prior to the Split Effective Time represents outstanding shares of Common Stock (an Old Certificate) shall be entitled to receive upon surrender of such Old Certificate to the Corporations transfer agent for cancellation, a certificate (a New Certificate) representing the number of whole shares of Common Stock into and for which the shares formerly represented by such Old Certificate so surrendered are combined and converted. From and after the Split Effective Time, Old Certificates shall represent
only the right to receive New Certificates as aforesaid and, to the extent the Corporation so elects, cash pursuant to the provisions hereof. The amount of capital represented by the shares of Common Stock outstanding in the aggregate immediately after the Split Effective Time shall be adjusted from the capital account of the Common Stock to the additional paid in capital account for each share of Common Stock fewer outstanding immediately following the Reverse Split than immediately prior to the Reverse Split, such transfer to be made at the Split Effective Time.
;and be it further
RESOLVED, that the Certificate of Amendment (the Restated Charter) of the Certificate of Incorporation of the Corporation attached as Exhibit A to the Corporations Consent Solicitation Statement dated February 9, 2017 (the Consent Solicitation Statement) be, and it hereby is, authorized, approved and adopted in all respects.
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o
CONSENT (FOR)
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CONSENT WITHHELD (AGAINST)
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ABSTAIN
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INSTRUCTIONS
: TO CONSENT, WITHHOLD CONSENT OR ABSTAIN FROM CONSENTING TO THE APPROVAL OF EACH PROPOSAL, CHECK THE APPROPRIATE BOX ABOVE. IF NO BOX IS MARKED ABOVE WITH RESPECT TO EACH PROPOSAL, THE UNDERSIGNED WILL BE DEEMED TO HAVE CONSENTED TO THE PROPOSAL.
MAIL: Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Protea Biosciences Inc., c/o Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760, Attention: Ms. Anna Kotlova.
TELEPHONE: Call 1-727-289-0010 and follow the instructions.
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FACIMILE: Mark, sign and date your proxy card and return it via fax to 1-727-289-0069.
INTERNET: Visit
www.islandstocktransfer.com
. Click on Vote Your Proxy. Enter your control number. Enter your vote.
EMAIL: Send email to akotlova@islandstocktransfer.com with Proxy Materials Protea Biosciences, Inc. in the subject line.
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Dated:
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[print name of record stockholder as set forth on stock certificate]
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[signature of record stockholder or person authorized to sign on behalf of record stockholder]
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[title or authority of authorized person, if applicable]
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[signature, if held jointly]
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If an individual, please sign exactly as the name appears on the certificate representing your shares of Common Stock. If a corporation, partnership, trust, limited liability company or other entity, please identify the entity as the name appears on the certificate representing your shares of Common Stock, cause an authorized person to sign on behalf of the entity, and clearly identify the title of such authorized person. This Written Consent of Stockholders shall vote all shares to which the signatory is entitled. This Written Consent of Stockholders, together with all written Consent in substantially the same form, shall be
treated as a single Consent of stockholders.
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