CERTIFICATE OF DESIGNATIONS
OF
SERIES B CONVERTIBLE PREFERRED
STOCK
COPSYNC, INC.
The undersigned, Russell D. Chaney, Chief
Executive Officer of COPsync, Inc., does hereby certify:
(a) that
he is, and at all times mentioned herein was, the duly elected and
acting Chief Executive Officer of COPsync, Inc., a Delaware
corporation (the “ Corporation ”);
(b) that
the Corporation’s Amended and Restated Certificate of
Incorporation, as amended, (the “ Certificate of
Incorporation ”), authorizes the directors to adopt
resolutions fixing the designations, powers, preferences and
rights, and such qualifications, limitations or restrictions
thereof, of any unissued series of Preferred Stock; and
(c) the
Board of Directors adopted the following resolutions on October 14,
2009:
WHEREAS, the Certificate of Incorporation
authorizes a class of stock designated Preferred Stock (the “
Preferred Stock ”), comprising 1,000,000 shares, par
value $0.0001 per share, provides for a series of Preferred Stock
designated Series A Preferred Stock (the “ Series A
Stock ”), consisting of 100,000 shares, and provides that
all or any remaining shares of the Preferred Stock may be issued
from time to time in one or more series, and vests authority in the
Board of Directors of the Corporation, within the limitations and
restrictions stated in Article IV of the Certificate of
Incorporation, to fix, in one or more series, for each such series
such designations, powers, preferences and rights and such
qualifications, limitations or restrictions thereof, as may be
stated and expressed in the resolution or resolutions adopted by
the Board of Directors providing for the issue of such series (a
“ Preferred Stock Designation ”) within the
limitations set forth in the Delaware General Corporation
Law;
WHEREAS, the Corporation has not previously
filed with the Secretary of the State of Delaware a Preferred Stock
Designation with respect to any remaining shares of the
Corporation’s authorized but unissued Preferred
Stock;
WHEREAS, based on the foregoing, there remains
900,000 shares of the Corporation’s authorized but unissued
Preferred Stock eligible for Preferred Stock Designations by the
Corporation with respect to new series thereof;
WHEREAS, the Corporation proposes to make an
offering of up to 375,000 shares of Preferred Stock (the “
Offering ”); and
WHEREAS, it is the desire of the Board of
Directors to designate a series of Preferred Stock and to fix the
powers, preferences and rights, and the designations, powers,
preferences and rights and such qualifications, limitations or
restrictions thereof in connection with the Offering;
NOW,
THEREFORE, BE IT RESOLVED, that the Corporation, does hereby
designate 375,000 shares of authorized but unissued Preferred Stock
as Series B Convertible Preferred Stock (the “ Series B
Preferred Stock ”) and does hereby fix the designations,
powers, preferences and rights, and such qualifications,
limitations or restrictions thereof, of the Series B Preferred
Stock as follows:
1.
Definitions . For purposes of this Preferred
Stock Designation, the following definitions shall
apply:
(a) “
Common Stock ” means the Common Stock, $0.0001 par
value, of the Corporation.
(b) “
Conversion Price ” means $0.10 per share for the
Series B Preferred Stock (subject to adjustment from time to
time for Recapitalizations and as otherwise set forth elsewhere
herein).
(c) “
Convertible Securities ” means any evidences of
indebtedness or other obligations of the Corporation, shares or
other securities convertible into or exchangeable for Common
Stock.
(d) “
Corporation ” means COPsync, Inc., a Delaware
corporation.
(e) “
Distribution ” means the transfer of cash or other
property without consideration whether by way of dividend or
otherwise, other than dividends on Common Stock payable in Common
Stock, or the purchase or redemption of shares of the Corporation
by the Corporation for cash or property other than:
(i) repurchases of Common Stock issued to or held by
employees, officers, directors or consultants of the Corporation
upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase,
(ii) repurchases of Common Stock issued to or held by
employees, officers, directors or consultants of the Corporation or
its subsidiaries pursuant to rights of first refusal contained in
agreements providing for such right, (iii) repurchase of
capital stock of the Corporation in connection with the settlement
of disputes with any stockholder, and (iv) any other
repurchase or redemption of capital stock of the Corporation
approved by the stockholders of the Corporation; provided,
however , that any purchase or redemption described in clauses
(i) through (iv) above must be subject to the unanimous approval of
the Corporation’s Board of Directors, with any director whose
shares are being purchased or redeemed, if any abstaining from such
vote.
(f) “
Dividend Rate ” means an annual rate of 7.0%, or $0.28
per share, for the Series B Preferred Stock (subject to
adjustment from time to time for Recapitalizations as set forth
elsewhere herein).
(g) “
Investors’ Rights Agreement ” means that certain
Investors’ Rights Agreement, of even date hereof, by and
among the Corporation and the initial purchasers of the Series B
Preferred Stock, as amended.
(h) “
Liquidation Preference ” means $4.00 per share for the
Series B Preferred Stock (subject to adjustment from time to
time for Recapitalizations as set forth elsewhere
herein).
COPsync Series B Certificate of
Designations (execution).doc
(i) “
Options ” means rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities.
(j) “
Original Issue Price ” means $4.00 per share for the
Series B Preferred Stock (subject to adjustment from time to
time for Recapitalizations as set forth elsewhere
herein).
(k) “
Purchase Agreement ” means that certain Securities
Purchase Agreement, of even date hereof, by and among the
Corporation and the initial purchasers of the Series B Preferred
Stock.
(l) “
Recapitalization ” means any stock dividend, stock
split, combination of shares, reorganization, recapitalization,
reclassification or other similar event.
2.
Dividends .
(a)
Series B Preferred Stock . In any calendar year,
the holders of outstanding shares of Series B Preferred Stock shall
be entitled to receive and shall accrue dividends, out of any
assets at the time legally available therefor, at the Dividend Rate
specified for the Series B Preferred Stock, which dividends shall
be payable in preference and priority to any declaration or payment
of any Distribution on Common Stock or Series A Stock of the
Corporation in such calendar year. Such dividends shall
be cumulative and shall accrue on each share from day to day,
beginning on the date of original issuance of such share, whether
or not earned or declared. Dividends accruing on each
share of Series B Preferred Stock shall be added to the Liquidation
Preference of such share from day to day, and will remain a part
thereof until such dividends are paid as provided
herein. No Distributions shall be made with respect to
the Common Stock or the Series A Stock unless dividends, through
the end of the calendar year in which such Distribution is made, on
the Series B Preferred Stock have been declared in accordance with
the preferences stated herein and all declared dividends on the
Series B Preferred Stock have been paid or set aside for payment to
the Series B Preferred Stock holders.
(b)
Additional Dividends . The Corporation shall not
declare, set aside or pay any dividends on any share of Common
Stock or the Series A Stock (other than dividends on Common Stock
payable solely in Common Stock) unless a dividend (including the
amount of any dividends paid pursuant to the above provisions of
this paragraph 2) is declared and set aside or paid with respect to
all outstanding shares of Series B Preferred Stock in an amount for
each share of Series B Preferred Stock at least equal to the
aggregate amount of the dividends for all shares of Common Stock
into which each such share of Series B Preferred Stock could then
be converted, calculated on the record date for determination of
holders entitled to receive such dividend.
(c)
Non-Cash Distributions . Whenever a Distribution
provided for in this paragraph 2 shall be payable in property
other than cash, the value of such Distribution shall be deemed to
be the fair market value of such property as determined in good
faith by the Board of Directors.
COPsync Series B Certificate of
Designations (execution).doc
(d)
Waiver of Dividends . Any dividend preference of
the Series B Preferred Stock may be waived, in whole or in part, by
the consent or vote of the holders of all of the outstanding shares
of such series.
3.
Liquidation Rights .
(a)
Liquidation Preference . In the event of any
liquidation, dissolution or winding up of the Corporation, either
voluntary or involuntary, the holders of the Series B Preferred
Stock shall be entitled to receive, prior and in preference to any
Distribution of any of the assets of the Corporation to the holders
of the Common Stock by reason of their ownership of such stock, an
amount per share for each share of Series B Preferred Stock held by
them equal to the sum of (i) the Liquidation Preference
specified for each share of Series B Preferred Stock and
(ii) all declared but unpaid dividends (if any) on each share
of Series B Preferred Stock, or such lesser amount as may be
approved by the holders of all of the outstanding shares of Series
B Preferred Stock. If upon the liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation
legally available for distribution to the holders of the Series B
Preferred Stock are insufficient to permit the payment to such
holders of the full amounts specified in this paragraph
3 (a) ,
then the entire assets of the Corporation legally available for
distribution shall be distributed pro rata among the holders
of the Series B Preferred Stock in proportion to the number of
shares of Series B Preferred Stock held by them.
(b)
Remaining Assets . After the payment or setting
aside for payment to the holders of Series B Preferred Stock of the
full amounts specified in paragraph 3 (a) above, the
entire remaining assets of the Corporation legally available for
distribution shall be distributed pro rata to holders of the
Common Stock of the Corporation in proportion to the number of
shares of Common Stock held by them.
(c)
Shares not Treated as Both Preferred Stock and Common Stock Upon
Liquidation . Upon the liquidation of the
Corporation, shares of Series B Preferred Stock shall not be
entitled to be converted into shares of Common Stock in order to
participate in any Distribution, or series of Distributions, as
shares of Common Stock, without first foregoing participation in
the Distribution, or series of Distributions, as shares of Series B
Preferred Stock.
(d)
Deemed Liquidation . For purposes of this
paragraph 3 , a liquidation,
dissolution or winding up of the Corporation shall be deemed to be
occasioned by, or to include, (i) the acquisition of the
Corporation by another entity by means of any transaction or series
of related transactions to which the Corporation is party
(including, without limitation, any stock acquisition,
reorganization, merger or consol