Item
5.03.
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On December 15,
2017, Rennova Health, Inc. (the “Company”) filed a Certificate of Designation with the Secretary of State of the
State of Delaware to authorize the issuance of up to 11,271 shares of Series I-2 Convertible Preferred Stock (the
“Preferred Stock”). The shares of Preferred Stock are issuable pursuant to the terms of the previously-announced
Exchange Agreements, dated as of October 30, 2017, between the Company and the holders of the Company’s Senior Secured
Original Issue Discount Convertible Debentures due September 19, 2019. The following summary of certain terms and provisions
of the Preferred Stock is subject to, and qualified in its entirety by reference to, the terms and provisions set forth in
the Company’s Certificate of Designation of the Preferred Stock.
General.
The Company’s board of directors has designated up to 11,281 shares of the 5,000,000 authorized shares of preferred
stock as the Preferred Stock. Each share of Preferred Stock has a stated value of $1,000.
Rank.
The Preferred Stock is senior in right of payment, including dividend rights and liquidation preference, to the Company’s
Series G Convertible Preferred Stock and Series H Convertible Preferred Stock.
Conversion.
Each share of Preferred Stock is convertible into shares of the Company’s common stock at any time at the option of
the holder at a conversion price equal to the lesser of (i) $1.00, subject to adjustment, and (ii) 85% of the lesser of the volume
weighted average market price of the common stock on the day prior to conversion or on the day of conversion. The conversion
price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the Certificate
of Designation of the Preferred Stock. Holders of the Preferred Stock are prohibited from converting Preferred Stock into
shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99%
(or, upon election of the holder, 9.99%) of the total number of shares of common stock then issued and outstanding.
However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any
increase in such percentage shall not be effective until 61 days after notice to the Company.
Liquidation
Preference.
Upon any liquidation, dissolution or winding-up of the Company, the holders of Preferred Stock shall be
entitled to receive an amount equal to the stated value of the Preferred Stock, plus any accrued and unpaid dividends thereon
and any other fees or liquidated damages then due and owing for each share of Preferred Stock, before any distribution or payment
shall be made on any junior securities.
Voting
Rights.
Shares of Preferred Stock generally have no voting rights, except as required by law and except that the affirmative
vote of the holders of a majority of the then outstanding shares of Preferred Stock is required to (a) alter or change adversely
the powers, preferences or rights given to the Preferred Stock or alter or amend the Certificate of Designation of the Preferred
Stock, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon liquidation
senior to, or otherwise pari passu with, the Preferred Stock, (c) amend the Company’s certificate of incorporation or other
charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares
of Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Dividends.
Holders of Preferred Stock shall be entitled to receive dividends on shares of Preferred Stock equal (on an as-converted to
common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if dividends are
paid on shares of common stock. No other dividends shall be paid on shares of Preferred Stock.
Redemption.
Upon the occurrence of certain Triggering Events (as defined in the Certificate of Designation of the Preferred Stock), the
holder shall, in addition to any other right it may have, have the right, at its option, to require the Company to either redeem
the Preferred Stock in cash or in certain circumstances in shares of common stock at the redemption prices set forth in
the Certificate of Designation.
Negative
Covenants.
As long as at least a specified number of shares of Preferred Stock are outstanding, unless the holders of
67% of the then outstanding shares of Preferred Stock shall have given prior written consent, the Company and its subsidiaries
are, with certain exceptions, limited from (a) incurring indebtedness, (b) creating liens, (c) amending its charter documents,
(d) repurchasing or acquiring shares of common stock or common stock equivalents, (e) paying cash dividends on junior securities,
(f) entering into transactions with affiliates, or (g) entering into any agreement with respect to the foregoing.
The
shares of Preferred Stock, to the extent issued, will be issued in reliance on the exemption from registration contained
in Section 3(a)(9) of the Securities Act of 1933, as amended. This Current Report on Form 8-K (this “Current Report”)
does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation
or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
The
foregoing description of the Preferred Stock does not purport to be complete and is qualified by reference to the
Certificate of Designation of the Preferred Stock, a copy of which is filed as an exhibit to this Current
Report and is incorporated herein by reference.