Attached files
| file | filename |
|---|---|
| 8-K - IndiePub Entertainment, Inc. | v167640_8k.htm |
| EX-3.1 - IndiePub Entertainment, Inc. | v167640_ex3-1.htm |
| EX-4.1 - IndiePub Entertainment, Inc. | v167640_ex4-1.htm |
| EX-10.1 - IndiePub Entertainment, Inc. | v167640_ex10-1.htm |
| EX-10.3 - IndiePub Entertainment, Inc. | v167640_ex10-3.htm |
| EX-10.2 - IndiePub Entertainment, Inc. | v167640_ex10-2.htm |
CERTIFICATE
OF DESIGNATION, PREFERENCES
AND
RIGHTS OF
SERIES
B CONVERTIBLE PREFERRED STOCK
OF
ZOO
ENTERTAINMENT, INC.
(Pursuant
to Section 151 of the
Delaware
General Corporation Law)
Zoo
Entertainment, Inc., a Delaware corporation (the “Corporation”), hereby
certifies that the following resolution was duly approved and adopted by the
Board of Directors of the Corporation (the “Board of Directors”)
at a meeting of the Board of Directors held on November 13, 2009, which
resolution remains in full force and effect on the date hereof:
RESOLVED,
that pursuant to the authority expressly granted to and vested in the Board by
the provisions of the Certificate of Incorporation of the Corporation (the
“Certificate of
Incorporation”) and its By-Laws (the “Bylaws”), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware (the “DGCL”), there is
hereby created, out of the 5,000,000 shares of preferred stock, par value,
$0.001 per share (the “Preferred Stock”), of
the Corporation remaining authorized, unissued and undesignated, a series of the
Preferred Stock consisting of 1,200,000 shares, which series shall have the
powers, designations, preferences and relative, participating, optional or other
rights as set forth herein:
SECTION 1 Designation of
Amount.
(a) One
Million Two Hundred Thousand (1,200,000) shares of Preferred Stock shall be, and
hereby are, designated as the “Series B Convertible Preferred Stock” (the “Series B Preferred
Stock”), par value $0.001 per share.
(b) Subject
to the requirements of the DGCL, the Certificate of Incorporation and this
Certificate of Designation, the number of shares of Preferred Stock that are
designated as Series B Preferred Stock may be increased or decreased by vote of
the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than the number of such shares then outstanding plus the number of
such shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any other outstanding securities
issued by the Corporation that are convertible into or exercisable for Series B
Preferred Stock. Any shares of Series B Preferred Stock converted,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall, automatically and without further action, be retired and
canceled promptly after the acquisition thereof, and shall become authorized but
unissued shares of Preferred Stock when the Corporation shall take such action
as may be necessary to reduce the number of authorized shares of the Series B
Preferred Stock and may be reissued as part of a new series of any class or
series of Preferred Stock in accordance with the Certificate of Incorporation
and this Certificate of Designation.
SECTION 2 Certain
Definitions.
Unless
the context otherwise requires, the terms defined in this Section 2 shall have,
for all purposes of this resolution, the meanings specified (with terms defined
in the singular having comparable meanings when used in the
plural).
“Common Stock” shall
mean the common stock, par value $0.001 per share, of the
Corporation.
“Common Stock
Equivalents” means any securities of the Company or subsidiaries which
would entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Conversion Price”
shall mean $0.01, subject to adjustment from time to time in accordance with
Section 6(c).
“Fair Market Value”
shall mean, with respect to any listed security, its Market Price, and with
respect to any property or assets other than cash or listed securities, the fair
value thereof determined in good faith by the Board of Directors with the
consent of the Requisite Holders.
“Initial Issue Date”
shall mean the date that shares of Series B Preferred Stock are first issued by
the Corporation.
“Market Price” means,
as to any class of listed securities, the average of the closing prices of such
security’s sales on all United Sates securities exchanges on which such security
may at the time be listed, or, if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted by Pink
Sheets, LLC as of 4:00 P.M., New York time, on such day, or, if on any day such
security is not quoted by the Pink Sheets, LLC, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar or
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which “Market Price” is being determined and the 20
consecutive business days prior to such day. If the applicable security is not
listed on any securities exchange or listed and traded in a manner that the
prices or quotations referred to above are available for the period required
hereunder, the Market Price shall be deemed to be the fair value per share of
such security as mutually agreed upon by the Corporation and the Requisite
Holders.
“Original Purchase
Price” shall mean $10.00.
“person” shall mean
any individual, partnership, company, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or agency or political subdivision thereof, or other entity.
-2-
“Purchase
Agreement” shall mean that certain Securities Purchase
Agreement, by and among the Corporation and the investors set forth therein,
which contemplates a financing to raise a maximum of up to $20,000,000 through
the sale of shares of Series A Preferred Stock.
“Requisite Holders”
shall mean the holders of at least 75% of the then outstanding shares of Series
B Preferred Stock.
“Series B Recapitalization
Event” shall mean any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification, or other similar event
involving a change in the capital structure of the Series B Preferred
Stock.
“Series A Certificate of
Designation” shall mean the Company’s Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock.
“Series A Preferred
Stock” shall mean the shares of the Company’s Series A Convertible
Preferred Stock, par value $0.001 per share, issued on the terms set forth in
the Series A Certificate of Designation.
“Subsidiary” means,
with respect to any person, (a) a company a majority of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such person, by a subsidiary of such person, or
by such person and one or more subsidiaries of such person, (b) a partnership in
which such person or a subsidiary of such person is, at the date of
determination, a general partner of such partnership, or (c) any other person
(other than a company) in which such person, a subsidiary of such person or such
person and one or more subsidiaries of such person, directly or indirectly, at
the date of determination thereof, has (i) at least a majority ownership
interest, (ii) the power to elect or direct the election of the directors or
other governing body of such person, or (iii) the power to direct or cause the
direction of the affairs or management of such person. For purposes
of this definition, a person is deemed to own any capital stock or other
ownership interest if such person has the right to acquire such capital stock or
other ownership interest, whether through the exercise of any purchase option,
conversion privilege or similar right. A Subsidiary shall, where applicable,
also include any direct or indirect subsidiary of the Corporation formed or
acquired after the date hereof.
SECTION 3 Voting
Rights.
(a) General. Except
as otherwise provided by the DGCL and in addition to any voting rights provided
by the DGCL or other applicable law, the holders of Series B Preferred Stock
shall be entitled to vote (or render written consents) together with the holders
of the Series A Preferred Stock, Common Stock and any other class or series of
capital stock of the Corporation entitled to vote together with the holders of
the Common Stock as a single class on all matters submitted for a vote of (or
written consents in lieu of a vote as permitted by the DGCL, the Certificate of
Incorporation and the Bylaws) holders of Common Stock; and shall have such other
voting rights as are specified in the Certificate of Incorporation and this
Certificate of Designation. When voting together with the holders of
Series A Preferred Stock and Common Stock, each share of Series B Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of shares of Common Stock (including
fractions of a share) into which each share of such Series B Preferred Stock is
then convertible (regardless of whether sufficient shares of Common Stock are
then authorized or reserved for issuance, it being understood that whenever any
provision of this Certificate of Designations refers to the number of shares of
Common Stock into which the Series A Preferred Stock is then convertible, such
calculation shall be on a pro forma basis assuming that sufficient shares of
Common Stock are authorized) on the record date for the determination of the
stockholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited. The holders of Series B Preferred Stock
shall be entitled to receive notice of any stockholders’ meeting in accordance
with the Certificate of Incorporation and Bylaws of the
Corporation.
-3-
(b) Waivers. Except
to the extent otherwise provided in this Certificate of Designation or required
by the DGCL, the Requisite Holders may, via affirmative vote or written consent
in lieu thereof, waive any rights of the holders of the Series B Preferred Stock
set forth in this Certificate of Designation. However, as long as any
shares of Series B Preferred Stock are outstanding, the Corporation shall not,
without the prior affirmative vote of the Requisite Holders, including, in each
case, by merger, consolidation, reorganization or any other means: (a) (i)
amend, waive, add to or repeal any provision of, or add any provision to, the
Corporation’s Certificate of Incorporation, as amended (including this
Certificate of Designation), or Bylaws if such action would adversely alter or
change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series A Preferred Stock, except for the filing
of the Series A Certificate of Designation, or (ii) amend, waive, add to or
repeal any provision of, or add any provision to, the Series A Certificate of
Designation unless a corresponding action has been approved under this
Certificate of Designation under the terms hereof, (b) authorize or create any
class of stock ranking as to dividends, redemption or distribution of assets
upon a liquidation (as set forth in Section 5) senior to, or otherwise pari passu with, the
Series B Preferred Stock, except for the Series A Preferred Stock, (c) amend its
certificate of incorporation or other charter documents in any manner that
adversely affects any rights of the holders of Series B Preferred Stock, (d)
increase the number of authorized shares of Preferred Stock or any series
thereof, (e) (i) increase the number of shares of Series B Preferred Stock
authorized pursuant to this Certificate of Designation or increase the number of
shares of Series A Preferred Stock authorized pursuant to the Series A
Certificate of Designation, (ii) except in connection with the
conversion of the Company’s senior secured convertible notes in the aggregate
principal amount of $11,150,000 into shares of Series B Preferred Stock, issue
any shares of Series B Preferred Stock, or (iii) except at a closing pursuant to
the Purchase Agreement as in effect on the date hereof, issue any shares of
Series A Preferred Stock; or (f) enter into any agreement with respect to any of
the foregoing. The Company shall not provide any consideration to a holder of
Series B Preferred Stock or Series A Preferred Stock in connection with any
consent, waiver or approval under this Section 3(b) or Section 7 or under the
Series A Certificate of Designation unless identical per-share consideration is
provided to each other holder of Series B Preferred Stock and Series A Preferred
Stock.
SECTION 4 Dividends.
(a) Dividend
Amount. The Series B Preferred Stock shall not bear any
mandatory dividend. Dividends on the Series B Preferred Stock shall be payable
pari passu with
dividends on the Series A Preferred Stock, and only if, as and when declared by
the Board of Directors of the Corporation and shall be non-cumulative, and in
preference and priority to any payment of any dividend on the Common
Stock. If the assets of the Corporation shall be insufficient to pay
the holders of Series B Preferred Stock and Series A Preferred Stock the full
amount of unpaid dividends to which they shall be entitled, then the holders of
Series B Preferred and Series A Preferred Stock shall share in any such payment
of dividends on a pro
rata basis according to the respective amounts each such holder would
have received had there been sufficient assets therefor. After
payment of such preferential dividends to the holders of shares of the Series B
Preferred Stock and Series A Preferred Stock, if the Board of Directors of the
Corporation shall declare a dividend payable upon the then outstanding shares of
the Common Stock, the Board shall declare at the same time a dividend upon each
outstanding share of the Series B Preferred Stock and Series A Preferred Stock,
payable at the same time as the dividend paid on the Common Stock, in an amount
per share of the Series B Preferred and Series A Preferred Stock equal to the
amount payable on the largest number of whole shares of the Common Stock into
which each share of the Series B Preferred Stock and Series A Preferred Stock is
then convertible pursuant to the applicable provisions of this Certificate of
Designation and the Series A Certificate of Designation, as
applicable.
-4-
(b) Distributions Other than
Cash. Whenever the distributions provided for in this Section 4 shall be
payable in property other than cash, the value of such distribution shall be
the Fair
Market Value thereof. All distributions (including distributions
other than cash) made hereunder shall be made pro rata to the holders
of Series B Preferred Stock.
(c) Equitable
Adjustments. All numbers relating to the calculation of
dividends shall be subject to an equitable adjustment in the event of any Series
B Recapitalization Event.
SECTION 5 Liquidation
Preference.
(a) Liquidation Preference of
Series B Preferred Stock. In the event of any liquidation,
dissolution, or winding up of the Corporation, whether voluntary or involuntary,
or in the event of its insolvency, the holders of Series B Preferred Stock shall
be entitled, pari passu
with distributions on the Series A Preferred Stock, to have set apart for them,
or to be paid, out of the assets of the Corporation available for distribution
to stockholders (whether such assets are capital, surplus or earnings) after
provision for payment of all debts and liabilities of the Corporation in
accordance with the DGCL, before any distribution or payment is made with
respect to any shares of Common Stock or any other class or series of capital
stock of the Corporation designated to be junior to the Series B Preferred Stock
and Series A Preferred Stock and subject to the liquidation rights and
preferences of any class or series of Preferred Stock authorized under Sections
3 and 7 hereof and designated to be senior to, or on a parity with, the Series B
Preferred Stock with respect to liquidation preferences, including the Series A
Preferred Stock, an amount equal to $10.00 per share of Series B Preferred Stock
(which amount shall be subject to an equitable adjustment in the event of any
Series B Recapitalization Event).
(b) Insufficient
Assets. If, upon any liquidation, dissolution, or winding up
of the Corporation, whether voluntary or involuntary, the assets legally
available for distribution among the holders of the Series B Preferred Stock and
Series A Preferred Stock shall be insufficient to permit payment to such holders
of the full preferential amount as provided for in Section 5(a) above, then such
holders shall share ratably in any distribution of available assets according to
the respective amounts which would otherwise be payable with respect to the
shares of Series B Preferred Stock and Series A Preferred Stock held by them
upon such liquidating distribution if all amounts payable on or with respect to
such shares were paid in full, based upon the aggregate liquidation value
payable upon all shares of Series B Preferred Stock and Series A Preferred Stock
then outstanding.
-5-
(c) Distributions Other than
Cash. Whenever the distribution provided for in this Section 5 shall be
payable in property other than cash, the value of such distribution shall be
the fair
market value thereof as determined in good faith by the Board of Directors. All distributions
(including distributions other than cash) made hereunder shall be made pro rata to the holders
of Series B Preferred Stock and the Series A Preferred Stock.
(d) Equitable
Adjustments. The amounts to be paid or set aside for payment
as provided above in this Section 5 shall be proportionately increased or
decreased in inverse relation to the change in the number of outstanding shares
resulting from any Series B Recapitalization Event.
(e) Notwithstanding
anything else in this Certificate of Designations, a liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation shall be deemed to
include (A) (i) the acquisition of the Corporation by another Person by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger, consolidation or similar transaction,
whether of the Corporation with or into any other Person or Persons or of any
other Person or Persons with or into the Corporation, but excluding any merger
effected exclusively for the purpose of changing the domicile of the
Corporation); or (ii) a sale of all or substantially all of the assets of the
Corporation on a consolidated basis; provided that a consolidation or merger as
a result of which the holders of capital stock of the Corporation immediately
prior to such merger or consolidation possess (by reason of such holdings) 50%
or more of the voting power of the corporation surviving such merger,
consolidation or similar transaction (or other Person which is the issuer of the
capital stock into which the capital stock of the Corporation is converted or
exchanged in such merger or consolidation) shall not be treated as a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation within the meaning of this Section 5, (B) a transaction or series of
transactions in which a person or group of persons (as defined in Rule
13d-5(b)(1) of the Exchange Act) acquires beneficial ownership (as determined in
accordance with Rule 13d-3 of the Exchange Act) of more than 50% of the Common
Stock or the voting power of the Corporation, or (C) the sale or exclusive
license of all or substantially all of the intellectual property rights of the
Company and its subsidiaries.. The Corporation shall take all steps
necessary to ensure that no liquidation, dissolution or winding up transaction
shall be effected without compliance with this Section 5. Without
limiting the foregoing, if necessary in order to accomplish the objectives of
this Section 5, the Corporation shall make payment of the Liquidation Preference
of the Series B Preferred Stock by way of redemption of the outstanding shares
of Series B Preferred Stock immediately after the consummation of the
liquidation, dissolution or winding up.
-6-
SECTION 6 Conversion
Rights.
(a) General. Immediately
upon the effectiveness of the filing of an amendment to the Corporation’s
Certificate of Incorporation authorizing a sufficient number of shares of Common
Stock to permit the conversion of the shares of Series B Preferred Stock into
shares of Common Stock, all shares of Series B Preferred Stock shall
automatically be converted, without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent, into the number of fully
paid and nonassessable shares of Common Stock equal to the number obtained by
dividing (i) the applicable Original Purchase Price of such Series B Preferred
Stock, plus the amount of any accumulated but unpaid dividends as of the
Conversion Date, by (ii) the Conversion Price in effect at the close of business
on the Conversion Date (determined as provided in this Section 6).
(b) Fractions of
Shares. No fractional shares of Common Stock shall be issued
upon conversion of shares of Series B Preferred Stock. If more than
one share of Series B Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common Stock to be issued
shall be computed on the basis of the aggregate number of shares of Series B
Preferred Stock so surrendered. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any shares of
Series B Preferred Stock, the Corporation shall pay a cash adjustment in respect
of such fractional share in an amount equal to the product of such fraction
multiplied by the Market Price of one share of Common Stock on the Conversion
Date.
(c) Adjustments to Conversion
Price.
(i) Upon Stock Dividends,
Subdivisions or Splits. If, at any time after the date hereof,
the number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up of
shares of Common Stock, then, following the record date for the determination of
holders of Common Stock entitled to receive such stock dividend, or to be
affected by such subdivision or split-up, the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of Series B Preferred Stock shall be increased in proportion to such
increase in outstanding shares.
(ii) Capital Reorganization,
Merger or Sale of Assets. If, at any time while this Series B
Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the
Corporation with or into another Person, (ii) the Corporation, 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 the Corporation or another Person) is
completed pursuant to which holders of 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 50% or more of the outstanding Common Stock,
(iv) the Corporation, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Corporation, 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 Common Stock (not including
any shares of 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, upon any subsequent conversion of this Series
B Preferred Stock, the holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion immediately
prior to the occurrence of such Fundamental Transaction, the number of shares of
Common Stock of the successor or acquiring corporation or of the Corporation, if
it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Series B Preferred Stock is convertible immediately prior to such Fundamental
Transaction. For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the
Corporation shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the holder of the Series B Preferred
Stock shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Series B Preferred Stock following such
Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Corporation or surviving entity in
such Fundamental Transaction shall file a new Certificate of Designation with
the same terms and conditions and issue to the holders new preferred stock
consistent with the foregoing provisions and evidencing the holders’ right to
convert such preferred stock into Alternate Consideration. The
Corporation shall cause any successor entity in a Fundamental Transaction in
which the Corporation is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Corporation under this Certificate of
Designation in accordance with the provisions of this paragraph pursuant to
written agreements in form and substance reasonably satisfactory to the holder
and approved by the holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of this Series B
Preferred Stock, deliver to the holder in exchange for this Series B Preferred
Stock a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Series B Preferred Stock
which is convertible for a corresponding number of shares of capital stock of
such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Series B Preferred Stock
(without regard to any limitations on the conversion of this Series B Preferred
Stock) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to
such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being for the
purpose of protecting the economic value of this Series B Preferred Stock
immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the holder. Upon the
occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Certificate of Designation
referring to the “Corporation” shall refer instead to the Successor Entity), and
may exercise every right and power of the Corporation and shall assume all of
the obligations of the Corporation under this Certificate of Designation with
the same effect as if such Successor Entity had been named as the Corporation
herein.
-7-
(iii) Deferral in Certain
Circumstances. In any case in which the provisions of this
Section 6(c) shall require that an adjustment shall become effective immediately
after a record date of an event, the Corporation may defer until the occurrence
of such event (1) issuing to the holder of any Series B Preferred Stock
converted after such record date and before the occurrence of such event the
shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event and issuing to such holder only the shares of
capital stock issuable upon such conversion before giving effect to such
adjustments, and (2) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to Section 6(b) above; provided, however, that the
Corporation shall deliver to such holder an appropriate instrument or due bills
evidencing such holder’s right to receive such additional shares and such
cash.
(d) Mechanics of
Conversion. The Series B Preferred Stock shall be deemed to
have been converted immediately prior to the close of business on the date (the
“Conversion
Date”) of the event triggering automatic conversion pursuant to Section
6(a), and at such time the rights of the holder of such shares of Series B
Preferred Stock as a holder shall cease, and the person or persons entitled to
receive the Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as and after such
time. As promptly as practicable on or after the Conversion Date, and
upon surrender of the certificate evidencing such share of Series B Preferred
Stock, the Corporation shall issue and shall deliver at any office or agency of
the Corporation maintained for the surrender of Series B Preferred Stock a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 6(b).
(e) Obligation Absolute; Partial
Liquidated Damages. The Corporation’s obligation to issue and
deliver the shares of Common Stock upon conversion of the Series B Preferred
Stock (the “Conversion Shares”) in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by a holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such holder or any other Person of any obligation to
the Corporation or any violation or alleged violation of law by such holder or
any other person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to such holder in connection
with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by the Corporation of any such action
that the Corporation may have against such holder.
-8-
(f) Notice of Adjustment of
Conversion Price. Whenever the provisions of Section 6(c)
require that the Conversion Price be adjusted as herein provided, or at any
other time upon request of a holder of Series B Preferred Stock, the Corporation
shall compute the adjusted Conversion Price in accordance with Section 6(c) and
shall prepare a certificate signed by the Corporation’s chief executive officer
or chief financial officer setting forth the
adjusted Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed at each
office or agency maintained for such purpose for conversion of shares of Series
B Preferred Stock and mailed by the Corporation at its expense to all holders of
Series B Preferred Stock at their last addresses as they shall appear in the
stock register.
(g) Corporation to Reserve
Common Stock. Subject to the filing of an amendment to the
Corporation’s Certificate of Incorporation authorizing a sufficient number of
shares of Common Stock to permit the conversion of the shares of Series B
Preferred Stock into shares of Common Stock, the Corporation shall at all times
reserve and keep available, free from preemptive rights, out of the authorized
but unissued Common Stock or out of the Common Stock held in treasury, for the
purpose of effecting the conversion of Series B Preferred Stock, the full number
of shares of Common Stock then issuable upon the conversion of all outstanding
shares of Series B Preferred Stock. The Corporation covenants that
all shares of Common Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and nonassessable.
(h) Taxes on
Conversions. The Corporation will pay any and all original
issuance, transfer, stamp and other similar taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Series B
Preferred Stock pursuant hereto. The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name other
than that of the holder of the share(s) of Series B Preferred Stock to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established to the satisfaction of the Corporation that such tax has
been paid.
SECTION 7 Negative
Covenants. As long as any
shares of Series B Preferred Stock are outstanding, the Corporation shall not,
and shall not permit any of the Subsidiaries to, directly or indirectly, without
first obtaining the approval of the holders of not less than a majority of the
total number of shares of Series B Preferred Stock then outstanding, voting
together as a single class:
(a) enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness for
borrowed money of any kind, including but not limited to, a guarantee, on or
with respect to any of its property or assets now owned or hereafter acquired or
any interest therein or any income or profits therefrom;
(b) enter
into any agreement to issue or announce the issuance or proposed issuance of any
shares of Common Stock or Common Stock Equivalents at a price per share less
than $0.0025 (as adjusted for Series B Recapitalization Events and/or for any
stock dividend, stock split, combination, reorganization, recapitalization,
reclassification, or other similar event involving a change in the capital
structure of the Common Stock);
-9-
(c) repeal
any provision of, or add any provision to (including, in each case, by merger,
consolidation, reorganization or any other means), the Corporation’s Certificate
of Incorporation, as amended (including this Certificate of Designation), or
Bylaws if such action would adversely any rights of the holders of Series B
Preferred Stock as a class;
(d) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of
shares of its Common Stock, Common Stock Equivalents, Series A Preferred Stock
or Junior Securities;
(e) pay
dividends or distributions on Common Stock of the Corporation;
(f) enter
into any transaction with any Affiliate of the Corporation which would be
required to be disclosed in any public filing with the Securities and Exchange
Commission, unless such transaction is made on an arm’s-length basis and
expressly approved by a majority of the disinterested directors of the
Corporation (even if less than a quorum otherwise required for board approval);
or
(g) enter
into any agreement with respect to any of the foregoing.
“Junior
Securities” shall mean the Common Stock and all other Common Stock Equivalents
of the Corporation other than those securities which, subject to prior
compliance with Sections 3 and 7, are explicitly senior or pari passu to the
Series B Preferred Stock in dividend rights or liquidation
preference.
The
Corporation will not, by amendment of its Certificate of Incorporation, as
amended, 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 Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Certificate of Designations and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of the
Series B Preferred Stock against impairment.
SECTION 8 Miscellaneous.
(a) Notices. All
notices, requests and other communications hereunder shall be in writing, shall
be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile
transmission, (iii) sent by overnight courier, or (iv) sent by registered mail,
postage prepaid, return receipt requested. In the case of notices
from the Corporation to the holder of Series B Preferred Stock, they shall be
sent to the address furnished to the Corporation in writing by the last holder
who shall have furnished an address to the Corporation in
writing. All notices from the holder to the Corporation shall be
delivered to the Corporation at Zoo Entertainment, Inc., c/o Zoo Games, Inc.,
575 Broadway, New York, NY 10012, Attn: Chief Financial Officer, or
such other address as the Corporation shall so notify the holder. All
notices, requests and other communications hereunder shall be deemed to have
been given (i) by hand, at the time of the delivery thereof to the receiving
party at the address of such party described above, (ii) if made by telex,
telecopy or facsimile transmission, at the time that receipt thereof has been
acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight
courier, on the next business day following the day such notices is delivered to
the courier service, or (iv) if sent by registered mail, on the fifth business
day following the day such mailing is made.
-10-
(b) Lost or Mutilated Preferred
Stock Certificate. If a holder’s Series B Preferred Stock
certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall
execute and deliver, in exchange and substitution for and upon cancellation of a
mutilated certificate, or in lieu of or in substitution for a lost, stolen or
destroyed certificate, a new certificate for the shares of Series B Preferred
Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such certificate, and of the ownership
hereof reasonably satisfactory to the Corporation.
(c) Absolute Obligation.
Except as expressly provided herein, no provision of this Certificate of
Designation shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay liquidated damages and accrued interest, as
applicable, on the shares of Series B Preferred Stock at the time, place, and
rate, and in the coin or currency, herein prescribed.
(d) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware, without regard to the principles of conflict of laws
thereof. Each party agrees that all legal proceedings concerning the
interpretation, enforcement and defense of the transactions contemplated by this
Certificate of Designation (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the City of New
York, Borough of Manhattan (the “New York
Courts”). Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Certificate
of Designation and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by applicable law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Certificate of
Designation or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of this
Certificate of Designation, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys’ fees and
other costs and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.
(e) Waiver. Any
waiver by the Corporation or a holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Certificate of Designation or a waiver by any other holders of Series B
Preferred Stock. The failure of the Corporation or a holder to insist
upon strict adherence to any term of this Certificate of Designation on one or
more occasions shall not be considered a waiver or deprive that party (or any
other holder) of the right thereafter to insist upon strict adherence to that
term or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a holder must be in
writing.
-11-
(f) Severability. If
any provision of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall remain in
effect, and if any provision is inapplicable to any Person or circumstance, it
shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other amount
deemed interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law.
(g) Next Business
Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
(h) Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Certificate of Designation and shall not be deemed to limit or affect any
of the provisions hereof.
-12-
IN WITNESS WHEREOF, the
Corporation has caused this Certificate of Designation, Preferences and Rights
of Series B Convertible Preferred Stock to be signed by David Fremed, its Chief
Financial Officer, this 20th day of
November, 2009.
|
|
By:
|
/s/ David Fremed | |
| Name: David Fremed | |||
| Title: Chief Financial Officer | |||
-13-