TBIO Telesis Bio Inc (PK)

Elimination of Old Preferred Stock

On the Closing Date, New Precipio filed a certificate (the “ Certificate of Elimination ”) pursuant to Sections 103 and 151(g) of the Delaware General Corporation Law (the “ DGCL ”) eliminating from New Precipio’s Certificate of Incorporation the matters set forth in the Certificates of Designation for the Series A Convertible Preferred Stock originally established by Transgenomic on December 28, 2010, the Series B Convertible Preferred Stock originally established by Transgenomic on March 5, 2014 and the Series A-1 Convertible Preferred Stock originally established by Transgenomic on January 8, 2016 (the “ Eliminated Preferred Stock ”). No shares of the Eliminated Preferred Stock were outstanding at the time of the filing of the Certificate of Elimination.

The Certificate of Elimination is filed as Exhibit 3.3 to this Current Report on Form 8-K and is incorporated by reference herein.

New Preferred Stock

In connection with the Merger and the other transactions described in this Current Report on Form 8-K and the Concurrent Form 8-K, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware on June 29, 2017, designating 4,100,000 shares of the Company’s Preferred Stock, par value $0.01 per share, as Series A Senior Convertible Preferred Stock and establishing the rights, preferences and privileges of the New Preferred Stock. Generally, the holders of the New Preferred Stock are entitled to vote as a single voting group with the holders of the New Precipio common stock, and the holders of the New Preferred Stock are generally entitled to that number of votes as is equal to the number of whole shares of New Precipio common stock into which the New Preferred Stock may be converted as of the record date of such vote or consent.

So long as the shares of New Preferred Stock are outstanding certain actions will require the separate approval of at least two-thirds of the New Preferred Stock, including: changes to the terms (requires three-fourths approval) of the series of New Preferred Stock, changes to the number of authorized shares of New Preferred Stock, issuing a series of preferred stock that is senior to the New Preferred Stock, changing the size of the board of directors, certain changes to the capital stock of company, bankruptcy proceedings and granting security interests in the company’s assets.

The New Preferred Stock will be convertible into New Precipio common stock at any time at the then applicable conversion price. The initial conversion price for the New Preferred Stock issued in connection with the Merger and the other transactions described herein is $3.736329, but will be subject to anti-dilution protections including adjustments for stock splits, stock dividends, other distributions, recapitalizations and the like. Additionally, each holder of the New Preferred Stock will have a right to convert their New Preferred Stock into securities issued in any future private offering of New Precipio securities at a 15% discount to the proposed price in such private offering.

The New Preferred Stock will be entitled to an annual 8% cumulative payment in lieu of interest or dividends, payable in-kind for the first two years and in cash or in-kind thereafter, at the option of New Precipio. The New Preferred Stock stock also will be entitled to share in any dividends paid on the New Precipio common stock.

In the event of New Precipio’s liquidation, dissolution or winding up, holders of the New Preferred Stock will be entitled to receive assets or surplus funds of New Precipio in an amount equal to the greater of (i) 1.5 times the original purchase price of the New Preferred Stock, plus an amount equal to all unpaid and accrued dividends and dividend equivalents and (ii) the amount that would be payable on the New Preferred Stock if it were converted into New Precipio common stock (the “ Liquidation Preference ”). This Liquidation Preference also would be due in the event of a future merger or sale of New Precipio, unless a supermajority of holders of New Preferred Stock elect otherwise.

The foregoing description of the Certificate of Designation does not purport to be complete and is qualified in its entirety by reference to the copy of the Certificate of Designation, which is included in the Certificate of Incorporation filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.