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Item 5.03
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Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
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On the Commencement Date,
Alder filed a Certificate of Designation of Preferences, Rights and Limitations of
Class A-1
Convertible Preferred Stock (the “Certificate of Designation”), designating 930,000 shares
of Alder’s authorized preferred stock as
Class A-1
Preferred Stock, with the office of the Secretary of State of the State of Delaware. Certain of the material rights, preferences, privileges, and
restrictions applicable to the
Class A-1
Preferred Stock are described below.
Conversion
. Each share of the
Class A-1
Preferred Stock will initially be convertible into
ten shares of Alder’s common stock. The conversion rate of the
Class A-1
Preferred Stock is subject to proportionate adjustments for stock splits, reverse stock splits and similar events, but is not
subject to price-based anti-dilution adjustments.
Dividends
. Subject to certain exceptions, holders of
Class A-1
Preferred Stock are entitled to receive dividends at a rate of 5% per annum of the
Class A-1
Original Issue Price (as defined below) from the Commencement
Date (the “Preferred Dividend”). The
“Class A-1
Original Issue Price” equals the Initial Purchase Price (subject to adjustment in the event of stock splits, combinations or similar
events). Preferred Dividends accrue and accumulate semi-annually commencing on the Commencement Date and are payable semi-annually in arrears on June 30 and December 31 of each year commencing on June 30, 2018. Alder may elect to pay
the Preferred Dividend in cash or by issuance of additional fully paid and nonassessable shares of
Class A-1
Preferred Stock (the “PIK Shares”) in an amount equal to (i) the aggregate
dollar amount of the Preferred Dividend payable with respect to the
Class A-1
Preferred Stock, divided by (ii) the
Class A-1
Original Issue Price. In
addition, holders of
Class A-1
Preferred Stock are entitled to receive dividends on such shares equal (on an
as-if-converted-to-common
stock basis) to, and in the same form as, dividends actually paid on shares of Alder’s common stock.
Voting Rights
. Except as required by applicable law, the
Class A-1
Preferred Stock shall
have no voting rights. However, as long as any shares of
Class A-1
Preferred Stock are outstanding, Alder shall not, without the affirmative vote of the holders of a majority of the then outstanding
shares of the
Class A-1
Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the
Class A-1
Preferred Stock or alter
or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) (except as provided in (ii) below) or
bylaws of Alder, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or
powers of, or restrictions provided for the benefit of the
Class A-1
Preferred Stock in a manner materially different than the effect on Alder’s common stock, regardless of whether any of the
foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise, (ii) issue further shares of
Class A-1
Preferred Stock (other than PIK
Shares) or increase (other than as needed to issue PIK shares) or decrease (other than by conversion) the number of authorized shares of
Class A-1
Preferred Stock, or (iii) enter into any agreement
with respect to any of the foregoing.
Liquidation Rights
. Upon any liquidation, dissolution or
winding-up
of Alder, whether voluntary or involuntary, or Deemed Liquidation (as defined below) the holders of
Class A-1
Preferred Stock are entitled to receive out
of the assets of Alder or proceeds thereof, an amount equal to the greater of (1) the
Class A-1
Original Issue Price, plus all accrued but unpaid dividends thereon (the
“Class A-1
Preference Amount”) or (2) the amount to which such holders would be entitled to receive if such shares of
Class A-1
Preferred Stock
had been converted to Alder’s common stock immediately prior to such liquidation or Deemed Liquidation. After the payment of the full liquidation preference of the
Class A-1
Preferred Stock, the
remaining assets of Alder available for distribution to its stockholders shall be distributed ratably to the holders of the shares of Alder’s common stock and
Class A-1
Preferred Stock.
Beneficial Ownership Limitation
. Alder may not effect any conversion of the Class A-1 Preferred Stock, and a holder does not have the
right to convert any portion of the Class A-1 Preferred Stock held by the holder, to the extent that, after giving effect to the conversion set forth in a notice of conversion, such holder, together with such holder’s affiliates, and any
persons acting as a group together with such holder or affiliates, would beneficially own in excess of the Beneficial Ownership Limitation. The “Beneficial Ownership Limitation” is 9.99% of the shares of Alder’s common stock then
issued and outstanding, which percentage may be changed at a holder’s election upon 61 days’ notice to Alder.
Fundamental
Transaction.
If, at any time while the
Class A-1
Preferred Stock is outstanding, (i) Alder, directly or indirectly, in one or more related transactions effects any merger or
consolidation of Alder with or into another person, (ii) Alder, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition, of all or substantially all of its assets in one or a series of
related transactions, (iii) any direct or indirect, purchase offer, tender offer or exchange offer (whether by Alder or another person) is completed pursuant to which holders of Alder’s common stock are permitted to sell, tender or
exchange their shares for other securities, cash or property and has been accepted by the holders of 35% or more of Alder’s outstanding common stock, (iv) Alder, directly or indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization of Alder’s common stock or any compulsory share exchange pursuant to which Alder’s common stock is effectively converted into or exchanged for other securities, cash or property, or
(v) Alder, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off
or scheme of arrangement) with another person whereby such other person acquires more than 50% of the outstanding shares of Alder’s common stock (not including any shares of Alder’s common stock
held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”),
then as of the effective date and time of the Fundamental Transaction, each outstanding share of
Class A-1
Preferred Stock shall be canceled without any further action on the part of Alder or the holder,
and in consideration for such cancellation, each holder shall automatically receive, for each share of Alder’s common stock that would have been issuable had such cancelled shares of
Class A-1
Preferred Stock been converted immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash and other property receivable upon the effectiveness of such Fundamental Transaction (the “Exchange
Property”) as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Alder’s common stock (the
“Alternate Consideration”); provided, however that in the event that the Fundamental Transaction is a Deemed Liquidation, each holder shall be entitled to receive with respect to each outstanding share of
Class A-1
Preferred Stock the greater of (1) the
Class A-1
Preference Amount or (2) the amount of cash, securities or other property to which such
holder would be entitled to receive in such Deemed Liquidation with respect to such shares if such shares had been converted to Alder’s common stock immediately prior to such Deemed Liquidation. A “Deemed Liquidation” occurs if
(A) Alder merges into or consolidates with any other entity, or any entity merges into or consolidates with Alder and, after giving effect to such transaction, the stockholders of Alder immediately prior to such transaction own less than 50% of
the aggregate voting power of Alder or the successor entity of such transaction or (B) Alder sells, leases, licenses or transfers all or substantially all of its assets to another person or entity and the stockholders of Alder immediately prior
to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction.
The foregoing summary of
the Certificate of Designation is not intended to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation filed as Exhibit 3.1 to this Current Report on Form
8-K,
and is incorporated herein by reference.