UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Event Requiring Report: August 23, 2001
AXIA GROUP, INC.
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(Exact Name of Registrant as Specified on its Charter)
I-9418 87-0509512
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(Commission File Number) (IRS Employer Identification Number)
NEVADA
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(State or Other Jurisdiction of Incorporation or Organization)
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
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(Address of Principal Executive Offices)
(801) 575-8073
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
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On the 23rd day of August, 2001, Axia Group, Inc. (the "Company") filed with the
Secretary of State for Nevada a "Certificate of Determination of the Rights and
Preferences of Preferred Stock of Axia Group, Inc." This document sets forth and
designates the rights and privileges of the Preferred Stock of the Company that
are designated as Series A Preferred and authorized in the amount of 5,000,000
shares, out of the total number of 20,000,000 preferred shares authorized by the
Company's Articles of Incorporation.
The Series A Convertible Preferred Stock is designated as having a par value of
$5.00 per share and designated as senior to the Common Stock of the Company. In
the event of liquidation the shares have a priority right to $5.00 per share in
any distribution as a result of liquidation. These shares are given the same
voting rights as Common Shares on a ten-for-one basis and any proposal upon
which a vote of shareholders is taken must receive a majority of the votes from
both the Series A Preferred shares and the Common Stock to be approved.
Rights to dividends are granted to the Series A Convertible Preferred Stock
equal to those of the Common Stock, when, as and if declared by the Directors of
the Company, to be paid in cash or in common stock equal to market value at the
election of the Company. Conversion rights into shares of Common Stock are given
to the Series A Convertible Preferred Stock based upon that number of shares of
the Company's Common Stock equal in market value to $5.00 at the time of
conversion.
The information provided hereinabove is merely a synopsis of the basic terms of
the determination document referenced above, which descriptions are qualified in
their entirety by the terms of the document itself, which document is attached
hereto as an exhibit and thereby incorporated herein by reference
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ITEM 7. Financial Statements and Exhibits
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The following exhibit(s) are included as part of this report:
EXHIBIT PAGE
NO. NO. DESCRIPTION
(4)(i) * Copy of the Certificate of Determination of the Rights and
Preferences of Preferred stock of Axia Group, Inc., date
August 8, 2001, filed with the Nevada Secretary of State on
August 23, 2001.
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: August 24, 2001
Axia Group, Inc.
/s/ Richard D. Surber
By:_________________________
Richard D. Surber, President
CERTIFICATE OF DETERMINATION
OF THE RIGHTS AND PREFERENCES OF PREFERRED STOCK
OF AXIA GROUP INC.
WHEREAS, the Articles of Incorporation of AXIA GROUP INC., a
corporation organized and existing under the laws of Nevada (the "Company"), as
amended, provide that the Company has authorized Twenty Million (20,000,000)
shares of par value $0.001 preferred stock ("Preferred Stock") and, further,
that the designation, powers, preferences and relative participating, option or
other special rights and qualification, limitations or restrictions of the
shares of such Preferred Stock may be issued from time to time in one or more
series, each of such series to have such voting powers, designation,
preferences, and relative participating, optional or other special rights and
the qualifications, limitations or restrictions thereof, as expressed herein or
in a resolution or resolutions, providing for the issuance of such series,
adopted by the directors; and
WHEREAS, THE COMPANY DOES HEREBY CERTIFY that pursuant to the authority
contained in its Articles of Incorporation, and in accordance with the
provisions of applicable law of Nevada, the Company's directors have duly
adopted the following resolutions determining the Designations, Rights and
Preferences of a special class of its authorized Preferred Stock, herein
designated as Series A Convertible participating Preferred Stock.
"RESOLVED, that pursuant to the authority vested in the directors of
this Company by its Articles of Incorporation, a special class of preferred
stock of the Company be and is hereby created out of the 20,000,000 shares of
Preferred Stock available for issuance, such series to be designated as Series A
Convertible Preferred Stock (the "Series A Preferred"), consisting of Five
Million (5,000,000) shares, of which the preferences and relative rights and
qualifications, limitations or restrictions thereof (in addition to those set
forth in the Company's Articles of Incorporation), shall be as follows:
1. DEFINITIONS
Common Stock. The term "Common Stock" shall mean all shares now or
hereafter authorized of any class of Common Stock of the Company and
any other stock of the Company, howsoever designated, authorized after
the Issue Date, which has the right (subject always to prior rights of
any class or series of Preferred Stock) to participate in the
distribution of the assets and earnings of the Company without limit as
to per share amount.
Issue Date. The term "Issue Date" shall mean the date that shares of
Series A Preferred are first issued by the Company.
Junior Stock. The term "Junior Stock" shall mean, for purposes of these
resolutions, any class or series of stock of the Company authorized
after the Issue Date not entitled to receive any dividends in any
dividend period unless any dividends required to have been paid or
declared and set apart for payment on the Series A Preferred shall have
been so paid or declared and set apart for payment and, for purposes of
these resolutions, shall mean Common Stock and any other class or
series of stock of the Company authorized after the Issue Date not
entitled to receive any assets upon liquidation, dissolution or winding
up of the affairs of the Company until the Series A Preferred shall
have received the entire amount to which such stock is entitled upon
such liquidation, dissolution or winding up.
Parity Stock. The term "Parity Stock" shall mean, for purposes of these
resolutions the Common Stock and any other class or series of stock of
the Company authorized after the Issue Date entitled to receive payment
of dividends subject only to those preferential rights of dividends
granted to the Series A Preferred and, for purposes of these
resolutions, shall mean any class or series of stock of the Company
authorized after the Issue Date entitled to receive assets upon
liquidation, dissolution or winding up of the affairs of the Company
subject to only those preferential rights and preference granted to the
Series A Preferred.
Senior Stock. The term "Senior Stock" shall mean, for purposes of these
resolutions, any class or series of stock of the Company authorized
before the Issue Date of the Series A Preferred except for those
preferential rights as granted herein but the right to receive
dividends providing all dividends granted to the Series A Preferred
shall have been paid or set aside to be paid, and, for purposes of
these resolutions, shall mean any class or series of stock of the
Company authorized after the Issue Date ranking equal to the Series A
Preferred and the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of the Company
except for those preferential rights granted to the Series A Preferred
herein.
2. Rights, Powers and Preferences
The Series A Preferred shall have the voting powers, preferences and
relative, participating, optional and other special rights,
qualifications, limitations and restrictions as follows:
A. Designation and Amount. All of the present authorized Five Million
(5,000,000) shares of par value $0.001 preferred stock shall be
designated as shares of "Series A Convertible Preferred Stock" and par
value set at $5.00 per share.
B. Rank. The Series A Preferred shall be senior to the Common Stock and
any other series or class of the Company's Preferred Stock.
C. Liquidation Rights.
(i) In the event of any liquidation, dissolution, or winding up of
the Company, whether voluntary or involuntary, the holders of the
Series A Preferred then outstanding shall be entitled to be paid
out of the assets of the Company available for distribution to
its shareholders, before any payment or declaration and setting
apart for payment of any amount shall be made in respect of any
outstanding capital stock of the Company, an amount equal to Five
Dollars ($5.00) per share, plus the Redemption provision (as
defined below). Then all of the assets of the Company available
to be distributed shall be distributed ratably to the holders of
the Series A Preferred and then to the holders of other
outstanding shares of capital stock of the Company. If upon any
liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary, the assets to be distributed to the
holders of the Series A Preferred shall be insufficient to permit
the payment to the holders thereof the full preferential amount
as provided herein, then such available assets shall be
distributed ratably to the holders of the Series A Preferred.
(ii) None of the following events shall be treated as or deemed to be
a liquidation hereunder:
(a) A merger, consolidation or reorganization of the
Company;
(b) A sale or other transfer of all or substantially all of
the Company's assets;
(c) A sale of 50% or more of the Company's capital stock
then issued and outstanding;
(d) A purchase or redemption by the Company of stock of any
class; or
(e) Payment of a dividend or distribution from funds
legally available therefor.
D. Voting Rights. In all matters the Series A Preferred shall have the
same voting rights as the Common Stock on a ten-for-one basis and any
proposal upon which a vote of shareholders is taken must receive a
majority of the votes from both the Series A Preferred shares and the
Common Stock to be approved. If the Company effects a stock split
which either increases or decreases the number of shares of Common
Stock outstanding and entitled to vote, the voting rights of the
Series A Preferred shall not be subject to adjustment unless such
stock split shall be applied to the Series A Preferred.
3. Dividends
The holders of the Series A Preferred shall be entitled to receive
Common Stock dividends when, as, and if declared by the directors of
the Company, to be paid in cash or in Market Value of the Company's
common stock at the election of the Company. "Market Value", for the
purposes of this Certificate of Determination shall mean the average of
the bid and ask prices for the common stock of the Company for the five
business days preceding the declaration of a dividend by the Board of
Directors.
Without prior written consent of the majority of the holders of Series
A Preferred, so long as any shares of Series A Preferred shall be
outstanding, the Company shall not declare or pay on any Junior Stock
any dividend whatsoever, whether in cash, property or otherwise, nor
shall the Company make any distribution on any Junior Stock, nor shall
any Junior Stock be purchased or redeemed by the Company or any of its
subsidiaries of which it owns not less than 51% of the outstanding
voting stock, nor shall any monies be paid or made available for a
sinking fund for the purchase or redemption of any Junior Stock, unless
all dividends to which the holders of Series A Preferred shall have
been entitled for all previous dividend periods shall have been paid or
declared and a sum of money sufficient for the payment thereof and the
Redemption Price is set apart.
4. Conversion
The Series A Preferred shall have the following conversion rights (the
"Conversion Rights"):
A. Holder's Optional Right to Convert. Each share of Series A Preferred
shall be convertible, at the option of the holder(s), on the
Conversion Basis in effect at the time of conversion. Such right to
convert shall commence as of the Issue Date and shall continue
thereafter for a period of ten years, such period ending on the tenth
anniversary of the Issue Date. In the event that the holder(s) of the
Series A Preferred elect to convert such shares into Common Stock, the
holder(s) shall have sixty (60) days from the date of such notice in
which to tender their shares of Series A Preferred to the Company.
B. Conversion Basis. Each share of Series A Preferred shall be
convertible into that number of shares of the Company's Common Stock,
equal in Market Value to Five Dollars ($5.00).
C. Mechanics of Conversion. Before any holder of Series A Preferred shall
be entitled to convert the same into shares of Common Stock, such
holder shall (i) give written notice to the Company, at the office of
the Company or of its transfer agent for the Common Stock or the
Preferred Stock, that he elects to convert the same and shall state
therein the number of shares of Series A Preferred being converted;
and (ii) surrender the certificate or certificates therefor, duly
endorsed. Thereupon the Company shall promptly issue and deliver to
such holder of Series A Preferred a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled. The conversion shall be deemed to have been made and the
resulting shares of Common Stock shall be deemed to have been issued
immediately prior to the close of business on the date of such notice
and surrender of the shares of Series A Preferred.
D. Adjustments to the Conversion Basis.
(i) Stock Splits and Combinations. At any time after the Company
first issues the Series A Preferred and while any of the shares
of Series A Preferred remain outstanding, if the Company shall
effect a subdivision or combination of the Common Stock subject
to the Protective Provisions (as defined below), the Conversion
Basis then in effect immediately before that subdivision or
combination shall be proportionately adjusted. Any adjustment
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(ii) Reclassification, Exchange or Substitution. At any time after the
Company first issues the Series A Preferred and while any of the
shares of Series A Preferred remain outstanding, if the Common
Stock issuable upon the conversion of the Series A Preferred
shall be changed into the same or a different number of shares of
any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation, or sale of assets), then
and in each such event the holder of each share of Series A
Preferred shall have the right thereafter to convert such shares
into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of
shares of Common Stock into which such shares of Series A
Preferred might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to
further adjustments as provided herein.
(iii) Reorganization, Mergers, Consolidations or Sales of Assets. At
any time after the Company first issues the Series A Preferred
and while any of such shares remain outstanding, if there shall
be a capital reorganization of the Common Stock (other than a
subdivision, combination, reclassification, or exchange of
shares), or a merger or consolidation of the Company with or into
another Company, or the sale of all or substantially all of the
Company's assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, provision shall
be made so that the holders of the Series A Preferred thereafter
shall be entitled to receive upon conversion of the Series A
Preferred, the number of shares of stock or other
securities or property of the Company, or of the successor
Company resulting from such merger or consolidation or sale, to
which a holder of Series A Preferred deliverable upon conversion
would have been entitled on such capital reorganization, merger,
consolidation, or sale.
E. Notices of Record Date. In the event of any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company, or any transfer of all or substantially
all of the assets of the Company to any other Company, entity, or
person, or any voluntary or involuntary dissolution, liquidating, or
winding up of the Company, the Company shall mail to each holder of
Series A Preferred at least 30 days prior to the record date specified
therein, a notice specifying the date on which any such
reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation, or winding up is expected to become
effective, and the time, if any is to be fixed, as to when the holders
of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution,
liquidation, or winding up.
F. Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Company shall pay cash equal to the product of such fraction
multiplied by the fair market value of one share of the Company's
Common Stock on the date of conversion, as determined in good faith by
the Company's directors.
G. Reservation of Stock Issuable Upon Conversion. At such time as the
Company increases its authorized capital resulting in a sufficient
number of shares of Common Stock becoming available for the conversion
of the Series A Preferred, the Company shall 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
the Series A Preferred, a number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred.
5. Protective Provisions
Notwithstanding anything contained herein to the contrary, including
but not limited to paragraph 4.D above, so long as any of the Series A
Preferred shall be outstanding, the Company shall not without first
obtaining the approval (by vote or written consent, as provided by law)
of the holders of at least two-thirds of the total number of shares of
Series A Preferred outstanding:
A. Alter or change the rights, preferences or privileges of the Series A
Preferred by way of reverse stock split, reclassification, merger
consolidation or otherwise, so as to adversely affect in any manner
the voting rights including number of votes presently allowed or the
conversion basis by which the shares of Series A Preferred are
presently converted into shares of Common Stock.
B. Increase the authorized number of Series A Preferred.
C. Create any new class of shares having preferences over or being on a
parity with the Series A Preferred as to dividends or assets, unless
the purpose of creation of such class is, and the
proceeds to be derived from the sale and issuance thereof are to be
used for, the retirement of all Series A Preferred then outstanding.
D. Repurchase any of the Company's Common Stock.
E. Merge or consolidate with any other Company, except into or with a
wholly-owned subsidiary of the Company with the requisite shareholder
approval.
F. Sell, convey or otherwise dispose of, or create or incur any mortgage,
lien, charge or encumbrance on or security interest in or pledge of,
or sell and leaseback, all or substantially all of the property or
business of the Company.
G. Incur, assume or guarantee any indebtedness (other than such as may be
represented by the obligation to pay rent under leases) maturing more
than 18 months after the date on which it is incurred, assumed or
guaranteed by the Company, except purchase money obligations,
obligations assumed as part of the price of property purchased, or the
extension, renewal or refunding of any thereof.
6. Redemption
Subject to the applicable provisions of Nevada law, the Company, at
the option of its directors, may at any time or from time to time
redeem the whole or any part of the outstanding Series A Preferred.
Upon redemption the Company shall pay for each share redeemed the
amount of Two Dollars ($2.00) per share, payable in cash, plus a
premium to compensate the original purchaser(s) for the investment
risk and cost of capital equal to the greater of (a) Three Dollars
($3.00) per share, or (b) an amount per share equal to fifty percent
(50%) of the market capitalization of the Company on the date of
notice of such redemption divided by 5,000,000 (the "Redemption
Premium"), the redemption amount and the Redemption Premium
hereinafter being referred to as the "Redemption Price." Such
redemption shall be on an all-or-nothing basis.
At least thirty (30) days previous notice by mail, postage prepaid,
shall be given to the holders of record of the Series A Preferred to
be redeemed, such notice to be addressed to each such shareholder at
the address of such holder appearing on the books of the Company or
given by such holder to the Company for the purpose of notice, or if
no such address appears or is given, at the place where the principal
office of the Company is located. Such notice shall state the date
fixed for redemption and the redemption price, and shall call upon the
holder to surrender to the Company on said date at the place
designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or after the date fixed for
redemption and stated in such notice, each holder of Series A
Preferred called for redemption shall surrender the certificate
evidencing such shares to the Company at the place designated in such
notice and shall thereupon be entitled to receive payment of the
redemption price. If less than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. If such notice of
redemption shall have been duly given, and if on the date fixed for
redemption funds necessary for the redemption shall be available
therefore, notwithstanding that the certificates evidencing any Series
A Preferred called for redemption shall not have been surrendered, the
dividends with respect to the shares so called for redemption shall
forthwith after such date cease and determine, except only the right
of the holders to receive the redemption price without interest upon
surrender of their certificates therefore. If, on or prior to any date
fixed for redemption of Series A Preferred, the Company deposits, with
any bank or trust company as a trust fund, the number of shares of
Common Stock of a sum sufficient to redeem, on the date fixed for
redemption thereof, the shares called for redemption, with irrevocable
instructions and authority to the bank or trust company to give the
notice of redemption thereof (or to complete the giving of such notice
if theretofore commenced) and to pay, or deliver, on or after the date
fixed for redemption or prior thereto, the redemption price of the
shares to their respective holders upon the surrender of their share
certificates, then from and after the date of the deposit (although
prior to the date fixed for redemption), the shares so called shall be
redeemed and any dividends on those shares shall cease to accrue after
the date fixed for redemption. The deposit shall constitute full
payment of the shares to their holders and from and after the date of
the deposit the shares shall no longer be outstanding and the holders
thereof shall cease to be shareholders with respect to such shares,
and shall have no rights with respect thereto except the right to
receive from the bank or trust company payment of the redemption price
of the shares without interest, upon the surrender of their
certificates therefore. Any interest accrued on any funds so deposited
shall be the property of, and paid to, the Company. If the holders of
Series A Preferred so called for redemption shall not, at the end of
six years from the date fixed for redemption thereof, have claimed any
funds so deposited, such bank or trust company shall thereupon pay
over to the Company such unclaimed funds, and such bank or trust
company shall thereafter be relieved of all responsibility in respect
thereof to such holders and such holders shall look only to the
Company for payment of the redemption price.
7. Reissuance
No share or shares of Series A Preferred acquired by the Company by
reason of conversion or otherwise shall be reissued as Series A
Preferred, and all such shares thereafter shall be returned to the
status of undesignated and unissued shares of Preferred Stock of the
Company.
8. Headings or Subdivisions
The heading of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the
provisions hereto.
9. Severability of Provisions
If any right, preference or limitation of the Series A Preferred set
forth in this resolution (as such resolution may be amended from time
to time) is invalid, unlawful or incapable of being enforced by reason
of any rule of law or public policy, all other rights, preferences and
limitations set forth in this resolution (as so amended) which can be
given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and
effect, and no right, preference or limitation herein set forth shall
be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
10. Status of Reacquired Stock
Shares of Series A Preferred which have been issued and reacquired in
any manner shall, upon compliance with any applicable provisions of
Nevada law, have the status of authorized and unissued shares of
Preferred Stock and may be redesignated and reissued in any series or
class."
IN WITNESS WHEREOF, the undersigned Directors of AXIA GROUP INC., a Nevada
corporation, did hereby execute this Certificate effective the 8th day of
August, 2001.
/s/ Richard D. Surber
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Richard D. Surber, Director & President
/s/ Gerald Einhorn
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Gerald Einhorn, Director, V.P. & Secretary
/s/ Adrienne Bernstein
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Adrienne Bernstein, Director
/s/ John E. Fry, Jr.
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John E. Fry, Jr., Director