Item 5.07 Submission of Matters to a Vote of Security Holders
On November 9, 2017, a special meeting of the stockholders of
Monster Digital, Inc. (the “
Company
” or “
Monster
”) was held at the offices of Manatt, Phelps
& Phillips, LLP located at 11355 West Olympic Boulevard, Los Angeles, CA 90064, (the “
Special Meeting
”),
for the stockholders to vote on the following proposals:
Proposal 1: To adopt an Agreement and Plan of Merger and Reorganization
(the ‘‘
Merger Agreement
’’) by and among Innovate Biopharmaceuticals, Inc., a Delaware corporation
(‘‘
Innovate
’’), Monster and Monster’s wholly owned subsidiary, Monster Merger Sub, Inc. (‘‘
Merger
Sub
’’), the transaction contemplated by the Merger Agreement is known as the ‘‘
Merger
’’.
Proposal 2: To amend the Company’s Amended Certificate
of Incorporation to effect a reverse stock split (the ‘‘
Reverse Split
’’) of its issued and outstanding
common stock by a ratio of not less than one-for-two and not more than one-for-ten at any time prior to December 31, 2017, with
the exact ratio to be set at a whole number within this range, as determined by Monster’s board of directors in its sole
discretion.
Proposal 3: To approve a spin-off transaction whereby all of
the business and assets of Monster and those liabilities of Monster not assumed by Innovate in connection with the Merger have
been acquired by MD Holding Co., Inc. (‘‘
Holdco
’’), and whereby holders of record of the Company’s
common stock immediately prior to the closing of the Merger (the ‘‘
Spin-Off Record Date
’’) will
receive a pro rata distribution of one share of Holdco’s common stock for each share of Monster common stock held at the
close of business on the Spin-Off Record Date immediately prior to, and expressly contingent upon, the consummation of the Merger.
Proposal 4: To approve the potential issuance by the Company,
in accordance with a convertible note financing transaction, of more than 20% of the Company’s issued and outstanding common
stock at a price that may be less than the greater of book or market value of the Company’s common stock.
Proposal 5: To approve the potential issuance by the Company,
in accordance with a common stock financing, the proceeds of which will be used to repay an outstanding obligation, of more than
20% of the Company’s issued and outstanding common stock at a price that may be less than the greater of book or market value
of the Company’s common stock.
Proposal 6: To approve the potential issuance of more than 20%
of the Company’s issued and outstanding common stock pursuant to a proposed reduction in the exercise price of outstanding
warrants.
Proposal 7: To approve the potential issuance by the Company
of convertible notes and warrants as described in Proposal No. 4 above to an affiliate of the Company and the participation by
said affiliate in the warrant transaction as described in Proposal No. 6 above.
Proposal 8: To approve a Certificate of Amendment to the Company’s
Amended and Restated Certificate of Incorporation to (i) increase the number of authorized shares of the Company’s common
stock from 100,000,000 to 350,000,000 and (ii) change the name of the Company after the effective date of the Merger to ‘‘Innovate
Biopharmaceuticals, Inc.’’.
Proposal 9: To approve a proposal to adjourn the Special Meeting
to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at
the time of the Special Meeting, Monster is not authorized to consummate the transactions contemplated by the aforementioned proposals.
The foregoing proposals were the only proposals to be acted
upon at the Special Meeting. For information regarding such proposals, see the Company’s definitive proxy statement filed
with the U.S. Securities Exchange Commission by the Company on October 12, 2017, with respect to the Special Meeting.
At the close of business on October 4, 2017, the record date
for the Special Meeting, there were 9,420,681 shares of the Company’s common stock outstanding and entitled to vote at the
Special Meeting (“Common Stock”). As the holders of 6,872,635 shares of Common Stock, having a majority of the votes
that could be cast by the holders of all outstanding shares of stock entitled to vote at any meeting of the Company’s stockholders,
were represented in person or by proxy at the Special Meeting, a quorum was present.
Each of the foregoing proposals was adopted and approved by
the stockholders at the Special Meeting. The number of votes cast for or against, as well as abstentions, with respect to each
of Proposals 1-9 presented at the Special Meeting, are set forth below:
Proposal 1: To adopt the Merger Agreement by and among Innovate,
Monster and Merger Sub.
FOR 5,463,238 AGAINST 17,061 ABSTAIN 9,401
Proposal 2: To amend the Company’s Amended Certificate
of Incorporation to effect the Reverse Split of its issued and outstanding common stock by a ratio of not less than one-for-two
and not more than one-for-ten at any time prior to December 31, 2017, with the exact ratio to be set at a whole number within this
range, as determined by Monster’s board of directors in its sole discretion.
FOR 6,559,006 AGAINST 307,406 ABSTAIN 6,223
Proposal 3: To approve a spin-off transaction whereby all of
the business and assets of Monster and those liabilities of Monster not assumed by Innovate in connection with the Merger have
been acquired by Holdco, and whereby holders of record of the Company’s common stock as of the Spin-Off Record Date will
receive a pro rata distribution of one share of Holdco’s common stock for each share of Monster common stock held at the
close of business on the Spin-Off Record Date immediately prior to, and expressly contingent upon, the consummation of the Merger.
FOR 5,384,010 AGAINST 35,513 ABSTAIN 70,177
Proposal 4: To approve the potential issuance by the Company,
in accordance with a convertible note financing transaction, of more than 20% of the Company’s issued and outstanding common
stock at a price that may be less than the greater of book or market value of the Company’s common stock.
FOR 5,330,190 AGAINST 128,487 ABSTAIN 31,023
Proposal 5: To approve the potential issuance by the Company,
in accordance with a common stock financing, the proceeds of which will be used to repay an outstanding obligation, of more than
20% of the Company’s issued and outstanding common stock at a price that may be less than the greater of book or market value
of the Company’s common stock.
FOR 5,317,636 AGAINST 120,694 ABSTAIN 51,370
Proposal 6: To approve the potential issuance of more than 20%
of the Company’s issued and outstanding common stock pursuant to a proposed reduction in the exercise price of outstanding
warrants.
FOR 5,343,574 AGAINST 92,111 ABSTAIN 54,015
Proposal 7: To approve the potential issuance by the Company
of convertible notes and warrants as described in Proposal No. 4 above to an affiliate of the Company and the participation by
said affiliate in the warrant transaction as described in Proposal No. 6 above.
FOR 5,347,368 AGAINST 51,839 ABSTAIN 90,493
Proposal 8: To approve a Certificate of Amendment to the Company’s
Amended and Restated Certificate of Incorporation to (i) increase the number of authorized shares of the Company’s common
stock from 100,000,000 to 350,000,000 and (ii) change the name of the Company after the effective date of the Merger to ‘‘Innovate
Biopharmaceuticals, Inc.’’.
FOR 5,283,450 AGAINST 173,529 ABSTAIN 32,721
Proposal 9: To approve a proposal to adjourn the Special Meeting
to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at
the time of the Special Meeting, Monster is not authorized to consummate the transactions contemplated by the aforementioned proposals.
FOR 6,752,780 AGAINST 77,923 ABSTAIN 27,244