UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) June 12, 2015

 

Net Element, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

 

001-34887

 

90-1025599

(State or Other Jurisdiction
of Incorporation) 		  (Commission File
Number) 		 

(IRS Employer
Identification No.)

 

3363 NE 163rd Street, Suite 705, North Miami Beach, FL 33160

 

(Address of Principal Executive Offices) (Zip Code)

 

(305) 507-8808

 

(Registrant’s telephone number, including area code)

 

Not Applicable

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On June 15, 2015, Net Element, Inc. (the “Company”) amended its Bylaws by adding new provisions to Article 6 of such Bylaws (the “Amendment”). The Amendment provides that, to the fullest extent permitted by law, (a) in the event that (i) any stockholder initiates or asserts any claim or counterclaim or joins, offers substantial assistance to, or has a direct financial interest in any claim or counterclaim against the Company and/or any director, officer,  employee or affiliate of the Company (together, the “Company Parties”) and (ii) such stockholder does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought, then such stockholder will be obligated jointly and severally to reimburse the Company Parties the greatest amount permitted by law of all fees, costs and expenses (including all reasonable attorney’s fees and other litigation expenses) incurred by the Company Parties in connection with such claim; and (b) in the event that any stockholder initiates or asserts any claim or counterclaim or joins, offers substantial assistance to, or has a direct financial interest in any claim or counterclaim against the Company Parties, then, regardless whether such stockholder is successful on its claim in whole or in part, (i) such stockholder will bear its own litigation costs, and (ii) such stockholder his, her or its attorneys will not be entitled to recover any litigation costs or, in a derivative or class action, to receive any fees or expenses as the result of the creation of any common fund, or from a corporate benefit purportedly conferred upon the Company.

 

The foregoing is only a brief description of the terms of the Amendment, does not purport to be a complete description of the Amendment, and is qualified in its entirety by reference to the Amendment which is filed as Exhibit 3.2 to this Current Report on Form 8-K and incorporated by reference herein.

 

Item 5.07 Submission of Matters to a Vote of Security Holders.

 

The Company held its 2015 annual meeting of stockholders (the “Annual Meeting”) on June 12, 2015. The matters voted upon at the Annual Meeting and the results of such voting are set forth below.

 

Proposal 1 : Election of Directors:

 

Name of Director   For   Withheld   Broker Non-Vote
             
Oleg Firer   25,504,885   101,968   6,860,157
             
William Healy   25,535,226   71,627   6,860,157
             
Kenges Rakishev   25,539,535   67,318   6,860,157
             
Drew Freeman   25,534,556   72,297   6,860,157
             
David P. Kelley II   25,531,506   75,347   6,860,157
             
James Caan   25,547,506   59,347   6,860,157

 

All director nominees were duly elected.

 

 
 

 

Proposal 2 : To approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase authorized common stock to 300 million shares.

 

For   Against   Abstain    
29,157,616   3,245,011   64,383    

 

Proposal 2 was approved.

 

 

Proposal 3 : To approve the issuance by the Company, for purposes of the NASDAQ Listing Rules 5635(a) and (b), of Common Stock of the Company issued and issuable pursuant to the terms of the Certificate of Designations of the 5,500 shares of Series A Convertible Preferred Stock, par value $0.01 upon conversion, amortization, payment of dividends, as part of the make-whole amount or otherwise of, or with respect to, such Series A Convertible Preferred Stock, in each case, without giving effect to the limitations and restrictions set forth in such NASDAQ Listing Rules 5635(a) and (b).

 

For   Against   Abstain   Broker Non-Vote
22,246,073   191,952   4,791   6,860,157

 

Proposal 3 was approved.

 

 

Proposal 4 : To approve the issuance by the Company for purposes of the NASDAQ Listing Rule 5635(d), of Common Stock of the Company issued and issuable (x) pursuant to the terms of the Senior Convertible Notes of the Company upon conversion, amortization, payment of interest, and as part of the make-whole amount, or otherwise of, or with respect to, such Senior Convertible Notes and (y) upon exercise of the accompanying Warrants, in each case, without giving effect to the limitations and restrictions set forth in such NASDAQ Listing Rules 5635(a) and (b).

 

For   Against   Abstain   Broker Non-Vote
22,267,422   170,503   4,891   6,860,157

 

Proposal 4 was approved.

 

 
 

 

Item 8.01 Other Events.

 

On June 15, 2015, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Amended and Restated Certificate of Incorporation, which increased authorized common stock of Net Element, Inc. to 300 million shares (after the requisite approval by the Company’s stockholders at the Annual Meeting).

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
     
3.1   Certificate of Amendment to Amended and Restated Certificate of Incorporation, to increase authorized common stock to 300 million shares.
     
3.2   Amendment No. 1 to the Bylaws of the Company.

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: June 16, 2015

 

  NET ELEMENT, INC.
   
   
  By:  /s/ Jonathan New
  Name:
Title: 		Jonathan New
Chief Financial Officer

 

 
 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
3.1   Certificate of Amendment to Amended and Restated Certificate of Incorporation, to increase authorized common stock to 300 million shares.
     
3.2   Amendment No. 1 to the Bylaws of the Company.

 

 
 

 

Exhibit 3.1

 

CERTIFICATE OF AMENDMENT

TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK TO 300 MILLION SHARES

 

Net Element, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies as follows:

 

1.            The Corporation filed its original Certificate of Incorporation with the Secretary of State of the State of Delaware on October 2, 2012 (the “Original Certificate”).

 

2.            The Corporation amended and restated the Original Certificate by filing the Corporation’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on October 2, 2012 (the “Amended and Restated Certificate”).

3.            The Corporation further amended the Amended and Restated Certificate by filing an amendment thereto with the Secretary of State of the State of Delaware on December 5, 2013.

 

4.            The Corporation further amended the Amended and Restated Certificate, as amended, by filing an amendment thereto with the Secretary of State of the State of Delaware on December 16, 2014.

 

5.            The Corporation further amended the Amended and Restated Certificate, as amended, by filing the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware on April 30, 2015 (together with the Amended and Restated Certificate, as amended, the “Certificate.”)

 

6.            This Certificate of Amendment amends the provisions of the Certificate.

 

7.            Article IV Section A of the Certificate is hereby amended and restated in its entirety to be and read as follows:

 

“ ARTICLE IV : A. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 301,000,000 shares consisting of:

 

1. 300,000,000 shares of Common Stock, with a par value of $0.0001 per share (the “Common Stock”); and

 

2. 1,000,000 shares of Preferred Stock, with a par value of $0.01 per share (the “Preferred Stock”). ”

 

8.            Pursuant to resolution of its Board of Directors of the Corporation setting forth this proposed amendment of the Certificate, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration and approval, among other agenda items, of this proposed amendment, an annual meeting of the stockholders of said corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

 

 
 

 

9.            This amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

 

10.            All other provisions of the Certificate shall remain in full force and effect.

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed this 15 th day of June, 2015.

 

  NET ELEMENT, INC., a Delaware corporation
   
   
  By:  /s/ Steven Wolberg
  Name:
Title: 		Steven Wolberg
Chief Legal Officer

 

 
 

 

 

Exhibit 3.2

 

AMENDMENT NO. 1

TO THE

BYLAWS

OF

NET ELEMENT, INC.

 

This Amendment No. 1 (this “ Amendment ”) to the Bylaws of Net Element, Inc., a Delaware corporation (the “ Corporation ”), formerly Net Element International, Inc., is made and entered into as of June 15, 2015.

 

WHEREAS, pursuant to Article VII of the Amended and Restated Certificate of Incorporation of the Corporation, as amended, the Board of Directors is expressly empowered to adopt, amend, alter or repeal the bylaws of the Corporation.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment agree that the bylaws of the Corporation shall be amended as follows:

 

1.             Amendments . Article 6 of the bylaws of the Corporation is hereby amended by adding to Article 6 new Sections 6.07 and 6.08 as follows:

 

“Section 6.07. Reimbursement for Litigation Costs.

 

(a)            To the fullest extent permitted by law, in the event that (i) any current or prior stockholder or anyone on their behalf (“ Claiming Party ”) initiates or asserts any claim or counterclaim (“ Claim ”) or joins, offers substantial assistance to, or has a direct financial interest in any Claim against the Corporation and/or any director, officer,  employee or affiliate (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of the Corporation (together, the “ Corporation Parties ”) and (ii) the Claiming Party (or the third party that received substantial assistance from the Claiming Party or in whose Claim the Claiming Party had a direct financial interest) does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought, then each Claiming Party shall be obligated jointly and severally to reimburse the Corporation Parties the greatest amount permitted by law of all fees, costs and expenses of every kind and description (including but not limited to, all reasonable attorney’s fees and other litigation expenses) (collectively, “ Litigation Costs ”) that the Corporation Parties may incur in connection with such Claim.

 

(b)            To the fullest extent permitted by law, in the event that any Claiming Party initiates or asserts any Claim or joins, offers substantial assistance to, or has a direct financial interest in any Claim against any Corporation Parties, then, regardless whether the Claiming Party is successful on its Claim in whole or in part, (i) the Claiming Party shall bear its own Litigation Costs, and (ii) the Claiming Party and the Claiming Party’s attorneys shall not be entitled to recover any Litigation Costs or, in a derivative or class action, to receive any fees or expenses as the result of the creation of any common fund, or from a corporate benefit purportedly conferred upon the Corporation.

 

 
 

 

Section 6.08. Severability. If any provision (or any part thereof) of these bylaws shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of these bylaws (including, without limitation, each portion of any section of these bylaws containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of these bylaws (including, without limitation, each such portion containing any such provision held to be invalid, illegal or unenforceable) shall be construed for the benefit of the Corporation to the fullest extent permitted by law so as to (a) give effect to the intent manifested by the provision held invalid, illegal or unenforceable, and (b) permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service.  Reference herein to laws, regulations or agencies shall be deemed to include all amendments thereof, substitutions therefor and successors thereto, as the case may be.”

 

2.             Limited Effect . Except as expressly amended and modified by this Amendment, the bylaws of the Corporation shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

3.             Execution . Delivery of an executed signature page of this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be as effective as delivery of a manually executed original counterpart of this Amendment.

 

IN WITNESS WHEREOF, the Corporation has executed this Amendment as of the date set forth above.

 

  NET ELEMENT, INC.
   
   
  By:  /s/ Steven Wolberg
  Name:
Title: 		Steven Wolberg
Chief Legal Officer