CEO Blog - Nov 14, 2010
Sunday, November 14 2010 14:56
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Question: Does the Preferred Convertible Stock get force converted into Common Stock as soon as the share price hits $4.50?

Answer: The Preferred Convertible Stock (that is, only the Series A-2 and B) will be forced to convert into shares of common stock, if the daily volume weighted average price (VWAP) exceeds $4.50 for any 20 trading days during any 30 consecutive trading day period AND all the common stock underlying the Preferred Stock have been registered for resale (or may be sold without volume or manner of sale restrictions under Rule 144).  The Company will provide each holder with notice within one trading day of meeting the requirements specifying the date three trading days later when the conversion will take effect. 

If a forced conversion takes place, each share of Series A-2 and Series B preferred stock will convert into a number of shares of common stock equal to $1,000 (plus accrued and unpaid dividends) divided by the conversion price at such time.  If the forced conversion occurs before the third anniversary of the Series A-2 and Series B preferred stock, the holders will also receive a make-whole payment equal to the net present value (as of the date the conversion is effected) of the remaining dividend payments for that same three-year period.  If the make-whole payment is made in shares of common stock, the amount of additional shares of commons stock delivered will be equal to the amount of the make-whole payment calculated as set forth in the previous sentence divided by the average of the daily VWAPs for the 5 consecutive trading days ending on the trading day that is immediately prior to the date that the conversion will take effect.

Kindest regards,

Corrado De Gasperis
President and CEO