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| 8-K - 8-K - ProText Mobility, Inc. | v199646_8k.htm |
AMENDED
AND RESTATED
CERTIFICATE
OF DESIGNATIONS
OF
SERIES
B PREFERRED STOCK
OF
ECHO
METRIX, INC.
Pursuant
to Section 151(g) of the General
Corporation
Law of the State of Delaware
Echo
Metrix, Inc., a Delaware corporation (the “Company”), hereby certifies
that pursuant to the authority conferred upon the Board of Directors of the
Company (the “Board”) by
its certificate of incorporation (the “Certificate of
Incorporation”), and pursuant to the provisions of Section 151(g) of the
General Corporation Law of Delaware, the Board, by unanimous written consent,
adopted the following recitals and resolution, which resolution remains in full
force and effect as of the date hereof:
WHEREAS,
pursuant to the Certificate of Incorporation, the Company is authorized to issue
up to 25,000,000 shares of preferred stock, par value $0.0001 per share (the
“Preferred Stock”), with
such designations, preferences, rights and qualifications, limitations or
restrictions as may be determined by the Board from time to time, of which
1,526,718 shares are designated as Series A Convertible Preferred Stock, par
value $0.0001 per share (“Series A Preferred Stock”) and
901,237 shares of such Series A Preferred Stock are issued
and outstanding;
WHEREAS,
on September 9, 2009, the Board created, out of the 25,000,000 shares of
Preferred Stock authorized by the Certificate of Incorporation, a series of
Preferred Stock, designated as “Series B Preferred Stock,” consisting of 550,055
shares (the “Series B Preferred
Stock”), and authorized the Company to file a Certificate of Designation
of Series B Preferred Stock with the Secretary of State of the State of Delaware
setting forth the powers, designations, preferences and rights, as well as the
qualifications, limitations and restrictions of the Series B Preferred
Stock;
WHEREAS,
on October 20, 2010, the Board increased the authorized number of shares of
Series B Preferred Stock from 550,055 shares to 1,000,000 shares.
NOW
THEREFORE, BE IT
RESOLVED,
that pursuant to the authority expressly granted to and vested in the Board by
the provisions of the Certificate of Incorporation, the Board hereby authorizes
that the Certificate of Designations of the Series B Preferred Stock of the
Company, filed with the Secretary of State of the State of Delaware on September
9, 2009, is hereby amended and restated in its entirety, thereby
fixing the powers, designations, preferences and rights, as well as the
qualifications, limitations and restrictions as follows:
1. Designation. This
series of Preferred Stock shall be designated as the “Series B Preferred
Stock.”
2. Authorization. The
Company shall have the authority to issue 1,000,000 shares of the Series B
Preferred Stock, par value $0.0001 per share, of the Company (the “Series B Preferred
Stock”).
3. Dividend
Provisions.
(a) The
holders of Series B Preferred Stock shall be entitled, while shares of the
Series B Preferred Stock are outstanding, to cash dividends consisting in the
aggregate of $3,375,000 (the “Special Dividend Amount”)
subject to the conditions set forth in this Section 3(a). For the
holders of the Series B Preferred Stock to be entitled to receive such
dividends, the Company must, for at least two fiscal quarters during any period
of 12 consecutive months generate revenues of more than $2,000,000 per fiscal
quarter and, during the same 12 month period, have a positive cash flow from
operations of more than $500,000 per fiscal quarter (the “Benchmark”). Once
the Benchmark is met, one dividend per fiscal quarter shall be paid to the
holders of Series B Preferred Stock, pro rata based on the number of shares of
Series B Preferred Stock held, equal to (i) 10% of the Special Dividend Amount
for each immediately preceding fiscal quarter that the Company had a positive
cash flow of more than $500,000 (regardless of its revenues for such fiscal
quarter), (ii) 20% of the Special Dividend Amount for each immediately preceding
fiscal quarter that the Company had a positive cash flow of more than $1,000,000
(regardless of its revenues for such fiscal quarter), or (iii) if less than the
portion of the Special Dividend Amount required to be paid under (i) or (ii)
immediately above remains after previous dividends have been paid under this
subsection, then such remaining amount. If the Special Dividend
Amount is paid in full, no further dividends will be payable under this
subsection.
(b) While
shares of Series B Preferred Stock are outstanding, the holders of Series B
Preferred Stock shall additionally be entitled to cumulative dividends, in
preference to any dividends on the Common Stock at the rate of 10% of $9.09 (the
“Purchase Price”) per
annum, compounded annually and payable upon conversion of the Series B Preferred
Stock as set forth herein (solely with respect to the Series B Preferred Stock
actually converted) or on such other date as determined by the Board of
Directors of the Company (each, a “Dividend Date”). Dividends
shall begin to accrue on the later of (i) the date of this Amended and Restated
Certificate of Designations of Series B Preferred Stock and (ii) the day
following the date of issuance of the Series B Preferred Stock If a
Dividend Date is not a business day, then the dividend shall be due and payable
on the business day immediately following such Dividend Date..
(c) After
payment of any dividends pursuant to Section 3(a), any additional dividends
shall be distributed among all holders of Common Stock and all holders of Series
B Preferred Stock in proportion to the number of shares of Common Stock which
would be held by each such holder of Series B Preferred Stock if all shares of
Series B Preferred Stock were converted to Common Stock at the then effective
conversion rate.
4. Liquidation
Preference.
(a) In
the event of a Liquidation Event (as defined below), the holders of Series B
Preferred Stock shall be entitled to receive, pro rata based on the number of
shares Series B Preferred Stock held, pari passu with the payment
or distribution of assets to the Series A Preferred Stock but prior
and in preference to any distribution of any of the assets of the Company to the
holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of (A) the Purchase Price plus an annualized
internal rate of return (“IRR”) of 8% for the period
from the issuance date of the issued and outstanding Series B Preferred Stock to
the date when all amounts under this Section 4(a) are paid in full, and
(B) an amount equal to all declared but unpaid dividends for each
outstanding share of Series B Preferred Stock (the “Preference Amount”),
proportionally adjusted for Recapitalizations. If upon the occurrence
of such an event, the assets and funds thus distributed among the holders of the
Series B Preferred Stock shall be insufficient to permit the payment to such
holders of the full Preference Amount, then the entire assets and funds of this
Company legally available for distribution to stockholders shall be distributed
ratably among the holders of the Series B Preferred Stock, pro rata based on the
number of shares of Series B Preferred Stock held, in proportion to the full
Preference Amount each such holder is otherwise entitled to receive under this
Section 4(a).
(b) Upon
completion of the distributions required by Section 4(a), all of the
remaining assets of the Company available for distribution to stockholders shall
be distributed among the holders of the Company’s Series A Preferred Stock,
Series B Preferred Stock and the Common Stock pro rata based on the number of
shares of Common Stock held by each holder, assuming full conversion of all such
Series A Preferred Stock and Series B Preferred Stock.
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(c) For
purposes of this Section 4, unless the holders of at least a majority of
the voting power of the Series B Preferred Stock then outstanding, voting
together as a single class on an as-converted basis, give prior written consent,
a “Liquidation Event” shall be deemed to be occasioned by a liquidation,
dissolution or winding up of the Company, either voluntary or
involuntary.
5. Conversion. The
holders of the Series B Preferred Stock shall have conversion rights as follows
(the “Conversion
Rights”):
(a) Right to
Convert. Each share of Series B Preferred Stock shall be
convertible, at no further cost to the holder thereof, at the option of the
holder thereof, at any time, at the office of the Company or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Purchase Price by the conversion
price (the “Conversion
Price”), determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. The initial Conversion
Price shall be $0.0909,
which implies that each share of Series B Preferred Stock is initially
convertible into Common Stock on a
1-to-100 basis; provided, however, that the Conversion Price shall be
subject to adjustment as set forth in this Section 5.
(b) Mechanics of
Conversion. Before any holder of Series B Preferred Stock
shall be entitled to convert the same into shares of Common Stock, he, she or it
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Company or of any transfer agent, and shall give written notice to
the Company at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Company
shall, as soon as practicable thereafter and in any event within three business
days after such notice, issue and deliver at such office to such holder of
Series B Preferred Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made on the date of the Company’s receipt of such notice of
the election to convert the shares of Series B Preferred Stock to be converted,
and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of such date. If
the conversion is in connection with an underwritten public offering of the
Company’s Common Stock, the conversion may, at the option of any holder
tendering Series B Preferred Stock for conversion, be conditioned upon the
closing with the underwriters of the sale of the Company’s Common Stock pursuant
to such offering, in which event the persons entitled to receive the Common
Stock upon conversion of the Series B Preferred Stock shall not be deemed to
have converted such Series B Preferred Stock until immediately prior to the
closing of such public offering.
(c) Conversion Price Adjustments
of Preferred Stock. The Conversion Price of the Series B
Preferred Stock shall be subject to adjustment from time to time as
follows:
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(i)
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In
the event the Company should at any time or from time to time fix a record
date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as “Common Stock
Equivalents”) without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion
or exercise thereof), then, as of such record date (or the date of such
dividend distribution, split or subdivision if no record date is fixed),
the Conversion Prices shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of such
series shall be increased in proportion to such increase in the aggregate
number of shares of Common Stock outstanding and those issuable with
respect to such Common Stock
Equivalents.
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(ii)
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If
the number of shares of Common Stock outstanding at any time is decreased
by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price for
the Series B Preferred Stock shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of such Series B
Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
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(d) Other
Distributions. Subject to applicable law, in the event the
Company shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Company or other persons, assets
(excluding cash dividends) or options or rights not referred to in
Section 5(c)(i), then, in each such case for the purpose of this
Section 5(d), the holders of the Series B Preferred Stock shall be entitled
to a proportionate share of any such distribution as though they were the
holders of the number of shares of Common Stock of the Company into which their
shares of such Series B Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of the Company
entitled to receive such distribution.
(e) Recapitalizations. If
at any time or from time to time there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in Section 3(b) or this Section 5)
(a “Recapitalization”), provision shall be made so that the holders of the
Series B Preferred Stock shall thereafter be entitled to receive upon conversion
of such Series B Preferred Stock the number of shares of stock or other
securities or property of the Company or otherwise, to which a holder of the
number of shares of Common Stock deliverable upon conversion of the Series B
Preferred Stock held by such holder would have been entitled on such
recapitalization.
(f) No
Impairment. The Company will not, by amendment of this
Certificate of Designation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 5 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock against impairment.
(g) No Fractional Shares and
Certificate as to Adjustments.
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(i)
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No
fractional shares shall be issued upon the conversion of any share of
Series B Preferred Stock. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Company shall round the
number of fractional shares up to the nearest number of whole
shares.
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(ii)
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Upon
the occurrence of each adjustment or readjustment of the Conversion Price
of any Series B Preferred Stock pursuant to this Section 5(g)(ii),
the Company, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish
to each holder of the Series B Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall,
upon the written request at any time of any holder of Series B Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (A) such adjustment and readjustment, (B) the
Conversion Price at the time in effect, and (C) the number of shares
of Common Stock and the amount, if any, of other property that at the time
would be received upon the conversion of a share of such Series B
Preferred Stock.
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(h) Notices of Record
Date. In the event of any taking by the Company of a record of
the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Company shall mail to each holder
Series B Preferred Stock, at least ten (10) days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(i) Reservation of Stock
Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Series B Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series B Preferred Stock; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of Series B Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Series B Preferred Stock, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite stockholder approval of any necessary amendment to the certificate of
incorporation of the Corporation, as amended.
(j) Waiver of Adjustment to
Conversion Prices. Notwithstanding anything herein to the
contrary, any downward adjustment of the Conversion Price of the Series B
Preferred Stock may be waived, either prospectively or retroactively and either
generally or in a particular instance by the vote or written consent of the
holders of not less than 75% of the outstanding shares of the Series B Preferred
Stock. Any such waiver shall be binding upon all current and future
holders of shares of such Series B Preferred Stock.
6. Voting
Rights.
(a) The
holders of outstanding Series B Preferred Stock shall have the right to
such number of votes for each share of Common Stock into which such share of
Series B Preferred Stock may then be converted pursuant to Section 5 hereof
equal to fifty one percent (51%) of the outstanding Common Stock on
an as-converted basis, only with respect to a proposal (the “Proposal”) to amend the
Certificate of Incorporation to increase the number of shares of capital stock
authorized thereunder. With respect to such votes and except as
otherwise expressly provided herein or as required by applicable law, such
holder shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock with respect to the Proposal, and shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders’
meeting relating to the Proposal in accordance with the Bylaws of the Company
(the “Bylaws”), and
shall be entitled to vote, together with holders of Common Stock as a single
class, with respect to the Proposal.
(b) Notwithstanding
anything to the contrary in Section 6(a) hereof, the holders of outstanding
Series B Preferred Stock shall have the right to two (2) votes for each share of
Common Stock into which such share of Series B Preferred Stock could then be
converted. With respect to such votes and except as otherwise
expressly provided herein or as required by applicable law, such holder shall
have full voting rights and powers equal to the voting rights and powers of the
holders of Common Stock, and shall be entitled, notwithstanding any provision
hereof, to notice of any stockholders’ meeting in accordance with the Bylaws,
and shall be entitled to vote, together with holders of Common Stock as a single
class, with respect to any matter upon which holders of Common Stock have the
right to vote.
7. Protective
Provisions. Provided that Rock Island or the members of
Rock Island beneficially own at least 37% of the shares of the Company’s Series
B Preferred Stock purchased pursuant to the Purchase Agreement, the Company
shall not, without first obtaining the approval of the holders of at least
two-thirds of the then outstanding shares of Series B Preferred Stock voting
together as a single class:
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(i)
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increase
or decrease the authorized size of the Board or any committee thereof or
create any new committee of the
Board;
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(ii)
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propose
to amend or waive any provision of the Company’s certificate of
incorporation or bylaws (except to increase the Company’s number of shares
of authorized Common Stock);
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(iii)
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except
with respect to an Exempt Issuance, sell or issue any equity or debt
security or warrant, option or other right to purchase any equity or debt
security (with the exception of any shares issued upon
conversion of shares of the Series B Preferred Stock or warrants issuable
pursuant to the Purchase Agreement) or declare or pay any dividend or
distribution or redeem or make, or engage in a transaction that results
in, any acquisition, sale of a substantial portion of equity or assets,
merger, consolidation, plan of arrangement, redomiciling, joint venture or
partnership arrangements or form any new subsidiary (including any
“variable interest entity”) or pass any resolution relating to reduction
of share capital, dissolution or liquidation;
or
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(iv)
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Other
than in the ordinary course of business, engage or enter into any
transaction or agreement with any of the Company’s affiliates,
shareholders, directors or officers, relatives of such shareholders,
directors or officers or affiliates of such relatives or other related
parties, unless such transaction or agreement has been approved by the
Company’s board of directors.
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For the
avoidance of doubt, this Section 7 does not intend to, nor does it, create and
recognize any additional rights (other than those rights already provided in the
General Corporation Law of the State of Delaware or other applicable laws) to
stockholders that are not holders of the Series B Preferred
Stock. The approval requirement of the holders of the Series B
Preferred Stock as set forth above for any matters listed in this Section 7 does
not, by itself, indicates that such matter must be determined or approved by
stockholders in general.
8. “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or
exchange of or conversion of any Securities issued pursuant to the Securities
Purchase Agreement between the Company and Rock Island, as amended (the
“Agreement”), (c) securities issuable pursuant to agreements outstanding as of
the date of this Amended and Restated Certificate of
Designations, and/or other securities exercisable or exchangeable for
or convertible into shares of Common Stock issued and outstanding on the date of
this Certificate of Designations, provided that such securities have not been
amended since the date of this Certificate of Designations to increase the
number of such securities or to decrease the exercise, exchange or conversion
price of such securities, (d) securities issuable pursuant to the Agreement or
this Amended and Restated Certificate of Designations, and (e) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (as defined in the Agreement) which is, itself or through
its subsidiaries, an operating company in a business synergistic with the
business of the Company and in which the Company receives benefits in addition
to the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities
9. Amendments. The
terms, conditions, rights and preferences contained in this Certificate of
Designation may be amended, modified, waived, amended and restated or replaced
in its entirety upon the approval of the Board with the consent of at least
two-thirds of the then outstanding shares of Series B Preferred Stock voting as
a separate class.
* * * * *
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IN
WITNESS WHEREOF, the foregoing Certificate of Designation has been duly executed
on behalf of the Company by the undersigned on October 20, 2010.
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Echo
Metrix, Inc.
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By:
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/s/
Erica Zalbert
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Erica
Zalbert
Chief
Financial Officer
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