AMENDMENT NO. 5 TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Exhibit
10.2
AMENDMENT
NO. 5
TO
AMENDMENT NO. 5 to the SERIES B
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated October 19, 2010 (“Amendment”), among
Echo Metrix, Inc., a Delaware corporation (the “Company”) and Rock
Island Capital, LLC, and or assigns, a Florida limited liability company (the
“Buyer”).
BACKGROUND
Pursuant to that certain Series B
Convertible Preferred Stock Purchase Agreement, dated July 29, 2009, and entered
into by and among the Company and the Buyer, as amended by that certain
Amendment ▇▇. ▇, ▇▇▇▇▇▇▇▇▇ ▇▇. ▇, ▇▇▇▇▇▇▇▇▇ ▇▇. ▇ and Amendment No. 4 to the
Series B Convertible Preferred Stock Purchase Agreement, dated September 4,
2009, March 4, 2010, May 28, 2010, and July 29, 2010, respectively, in
addition to any and all other addenda thereto (collectively the “Agreement”), the
Company has agreed to sell to the Buyer or its designees, and the Buyer has
agreed to purchase from the Company, an aggregate of 550,055 shares of the
Company’s Series B Preferred Stock, the Cashless Warrants, the Non-Cashless
Warrants and the Additional Shares for an aggregate price of
$5,000,000.
Subject to the terms and conditions of
this Amendment, the Buyer desires to commit an additional
$1,750,000 to the Company, and in exchange for such additional
funding, the Company desires to sell to the Buyer or its designees, and the
Buyer desires to purchase from the Company, up to 192,500 units (the “Units”), with each
Unit consisting of (i) one (1) share of Series B Preferred Stock, (ii) 81.818181
shares of the Company’s common stock and (iii) warrants to purchase 181.818181
shares of the Company’s common stock at an exercise price of $0.01, which
warrants shall be identical to the Cashless Warrants, at a per Unit price of
$9.090909, for an aggregate purchase price of up to $1,750,000 (the “Additional
Consideration”). As inducement for the Buyer to provide the
additional funding, the parties further desire to enter into this Amendment to
effect an exchange of 33,000,000 of the outstanding Non-Cashless Warrants for an
equal number of Cashless Warrants pursuant to Section 3(a)(9) of the Securities
Act and to amend the Agreement so that the Company will no longer be obligated
to issue the additional 17,000,000 Non-Cashless Warrants thereunder, but instead
will be required to issue an additional 17,000,000 Cashless Warrants (in
addition to the other Cashless Warrants that the Company is obligated to issue
under the Agreement). For clarity, the parties desire to substitute Cashless
Warrants for all Non-Cashless Warrants that were issued or are issuable under
the Agreement in accordance with the terms and conditions of this
Amendment.
All capitalized terms used but not
defined herein shall have the meanings assigned them in the
Agreement.
NOW, THEREFORE, in consideration of the
mutual promises of the parties and the terms and conditions hereof, the parties
hereby agree to amend the Agreement as follows:
1. Additional
Consideration. In addition to the aggregate Purchase
Price of $5,000,000 pursuant to the Agreement, the Buyer shall purchase from the
Company, and the Company shall sell to the Buyer,an aggregate of up to 192,500
Units, in exchange for the Additional Consideration, which Additional
Consideration shall be paid by the Buyer in installments of at least $100,000 on
or before the thirtieth (30th)
calendar day following the date of the payment of the prior installment until
the total Additional Consideration has been paid, with the first installment of
the Additional Consideration to be paid on or before the thirtieth (30th)
calendar day following the final payment of the aggregate Purchase Price in
accordance with Section 2.4(e) of the Agreement (as amended in Amendment No. 3
to the Agreement). Following receipt by the Company of each payment
of the Additional Consideration as set forth above, the Company shall issue and
deliver to the Buyer, within five (5) days of such payment, certificates
representing the pro rata portion paid for by such installment of the Series B
Shares, the shares of the Company’s common stock and the warrants underlying the
Units. In the event that the Buyer shall fail to timely pay any
installment of the Additional Consideration and does not notify the Company in
writing at least five (5) days prior to such installment due date (upon which
notice the Buyer shall be granted a 7-day extension), the Company may, from and
after the expiration of any and all applicable cure periods, terminate the
Agreement (as amended) and the same shall become null and void, provided however
that Company shall, in any event, retain the portion of the Additional
Consideration paid. If Buyer shall fail to timely pay any installment
of the Additional Consideration, the Company shall have no right to pursue any
other remedy against Buyer except as set forth in this Section
1(a). As further inducement for the Buyer to enter into this
Amendment and provide the Additional Consideration, the Company and Buyer agree
that all outstanding warrants to purchase shares of Common Stock of the Company
held by the Buyer and/or its members or assigns shall, as of the date of this
Amendment, be amended and hereinafter shall be on terms identical to the
Cashless Warrants. Upon surrender of any outstanding warrant
certificate or agreement by the Buyer and/or its members or assigns to the
Company, the Company shall promptly cancel such warrant certificate and reissue
a new warrant certificate for the same number of warrants on terms identical to
the Cashless Warrants.
2. Amendment to
Definitions. The definition of “Non-Cashless Warrants” in Section 1.1 of
the Agreement is deleted in its entirety. The definition of “Cashless
Warrants” in Section 1.1 of the Agreement is deleted in its entirety and, in
lieu thereof, the following new definition of “Cashless Warrants” is
inserted.
“Cashless
Warrants” shall mean warrants to purchase 100,000,000
shares of Common Stock with an exercise price per share of $0.01 and a term of
five years, which warrants shall be exercisable on a cashless
basis.
3. Amendment to Section
2.2. Section 2.2 of the Agreement shall be deleted in its entirety and,
in lieu thereof, the following new Section 2.2 is inserted:
2.2 Issuance and Delivery of the
Purchase Shares; Cashless Warrants and Additional Shares.
(a) Following
receipt by the Company of each payment of the Purchase Price in accordance with
Section 2.4 below, the Company shall issue and deliver to the Buyer, within five
(5) days of such payment, certificates representing the pro rata portion paid
for by such tranche of each of the Purchase Shares, the Cashless Warrants and
the additional 45 million shares of Common Stock (such 45 million shares of
Common Stock being referred to herein as the “Additional
Shares”). References to Purchase Shares in this Agreement shall
include references to the Cashless Warrants, the Additional Shares, and the
shares of common stock issuable upon exercise of the Cashless
Warrants.
(b) For
clarity, subject to the terms and conditions of the Agreement, as amended by
this Amendment, the Company shall issue to the Buyer, (i) with respect to
tranche one, 40% of the Purchase Shares, consisting of 220,022 shares of Series
B Preferred Stock, Cashless Warrants to purchase 40,000,000 shares of Common
Stock, and 18,000,000 Additional Shares, (ii) with respect to tranche two, 6% of
the Purchase Shares, consisting of 33,003 shares of Series B Preferred Stock,
Cashless Warrants to purchase 6,000,000 shares of Common Stock, and 2,700,000
Additional Shares, (iii) with respect to tranche three, 4% of the Purchase
Shares, consisting of 22,002 shares of Series B Preferred Stock, Cashless
Warrants to purchase 4,000,000 shares of Common Stock, and 1,800,000 Additional
Shares, (iv) with respect to tranche four, 10% of the Purchase Shares,
consisting of 55,006 shares of Series B Preferred Stock, Cashless Warrants to
purchase 10,000,000 shares of Common Stock, and 4,500,000 Additional Shares, and
(v) with respect to tranche five (in accordance with Section 2.4(e), 40% of the
Purchase Shares, consisting of 220,022 shares of Series B Preferred Stock,
Cashless Warrants to purchase 40,000,000 shares of Common Stock, and 18,000,000
Additional Shares.
(c) For clarity, any and all
Non-Cashless Warrants previously issued to the Buyer pursuant to the Agreement
and/or any prior amendment thereto are hereby exchanged pursuant to Section
3(a)(9) of the Securities Act for an equal number of Cashless
Warrants. The Buyer shall return the certificates representing any
such Non-Cashless Warrants to the Company within five business days of the
execution of this Amendment (provided that, the failure of the Buyer to return
such certificates to the Company shall not affect the exchange of such
Non-Cashless Warrants for an equal number of Cashless Warrants, which exchange
shall be effective upon execution of this Amendment).
(d) For clarity, the
obligation to issue warrants pursuant to this Section 2.2 is in lieu of the
obligation to issue warrants referenced on Schedule 1 to the
Agreement. Such reference to issuing warrants on Schedule 1 to the
Agreement is hereby deleted in its entirety.
4. Amendment to Section
2,4.(e). The following reference contained in Section 2.4(e)
of the Agreement (see Amendment No. 3) is hereby deleted in its
entirety:
Notwithstanding
anything to the contrary herein, the Buyer may, at its sole option and without
prior notice to the Company, prepay all remaining amounts of the Aggregate
Purchase Price due hereunder.
5. Amendment to Section
2.6(b). Section 2.6(b) of the Agreement shall be deleted in
its entirety and, in lieu thereof, the following new Section 2.6(b) is
inserted:
(b) The
Company shall allow the Buyer to designate for election to the Company’s Board
of directors such number of directors as will constitute a majority of the
members of the Company’s Board of Directors and such members will at all times
while the Buyer or the members of the buyer beneficially own at least 37% of the
shares of the Company’s Series B Stock purchased , constitute a majority of the
board of directors of the Company. Such elections are subject to
Delaware law, the Rules and Regulations of the Securities and Exchange
Commission and the procedures delineated in the Company’s current by-laws and
certificate of incorporation. The Buyer shall also have the right to
remove such designees and to fill any vacancy caused by the resignation, death
or removal of such designees.
6. Amendment to Section
2.8. Section 2.8(v) of the Agreement shall be deleted in its
entirety and, in lieu thereof, the following new Section 2.8(v) is
inserted:
(v) the
holders of Series B Preferred Shares shall be entitled to cumulative dividends
at a rate of 10% per annum, compounded annually and payable in cash
upon conversion of the Series B Shares into shares of common stock or upon such
other date as determined by the Board of Directors of the Company.
For the
avoidance of doubt, (i) the Buyer shall be entitled to retain all shares of
common stock issued as a dividend on the Series B Preferred Shares prior to the
date of this Amendment, and (ii) accrual of the cash dividend set forth in
Section 2.8(v), as amended herein, shall commence as of the date of this
Amendment.
7. Increase in Authorized
Common Stock. At any time following the date of this
Amendment, if it is determined that the Company’s authorized capital stock is
insufficient to satisfy the obligations under the Agreement (as amended),
including the purchase of the Units, as soon as practicable following the date
of such determination, the Company shall use its best efforts to file an
amendment to its certificate of incorporation to increase the total authorized
shares of common stock of the Company such that the Company is able to satisfy
all obligations under the Agreement (as amended).
8. Amendment to Series B
Certificate of Designations. As soon as practicable following
date of this Amendment, the Company shall amend and restate the Certificate of
Designations of Series B Preferred Stock in the form of Exhibit A hereto
(“the Amended COD”), and file the Amended COD with the Secretary of State of the
State of Delaware and with the U.S. Securities and Exchange
Commission.
9. No Other
Changes. All other terms and conditions of the Agreement shall
remain in full force and effect as provided in the Agreement.
10. Execution in
Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. Applicable
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to the
principles of conflicts of laws thereof.
12. Headings. The
headings contained in this Amendment are for convenience of reference only and
shall not affect the construction of this Amendment.
13. Consent. This
Amendment has been negotiated and executed with the mutual consent of both
Company and the Buyer.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have
duly executed this Amendment as of the date set forth above.
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By:/s/
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Name:
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Title:
Chief Financial Officer
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By:/s/▇▇▇▇▇
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Name:
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Title:
Interim Chief Executive Officer
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ROCK
ISLAND CAPITAL, LLC
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By:/s/▇▇▇▇▇▇▇
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Name:
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Title:
Managing Member
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