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EXHIBIT 3.4
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATION
FILED 09:00 AM 01/31/1997
971034629 - 2583237
GRAPHIX ZONE, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
(Pursuant to Section 242 of the General Corporation Law
of the State of Delaware)
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Graphix Zone, Inc., a Delaware corporation (the "Corporation"), in
accordance with the provisions of Section 103 of the General Corporation Law of
the State of Delaware (the "DGCL") DOES HEREBY CERTIFY:
That pursuant to authority vested in the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, the Board
of Directors of the Corporation, by unanimous written consent, dated January
__, 1997, adopted a resolution providing for an amendment of the Certificate of
Designations of Series A Convertible Preferred Stock, $.01 par value, as
heretofore amended, which resolution is as follows:
RESOLVED, that pursuant to authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation, the Board of Directors
does hereby provide for the amendment of the Certificate of Designations, as
heretofore amended (the "Certificate of Designations"), of Series A Convertible
Preferred Stock, $.01 par value, as follows:
1. Section 1 of the Certificate of Designations is hereby amended by
deleting the existing Section 1 in its entirety and substituting in lieu
thereof the following:
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Convertible Preferred Stock" (the "Series A
Convertible Preferred Stock"), and the number of shares constituting the
Series A Convertible Preferred Stock shall be 3,500, and shall not be
subject to increase.
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2. Section 9(a) of the Certificate of Designations is hereby
amended by deleting the existing Section 9(a) in its entirety and substituting
in lieu thereof the following:
(a) CONVERSION AT OPTION OF HOLDER. The holders of the Series
A Convertible Preferred Stock may, upon surrender of the certificates
therefor, convert any or all of their shares of Series A Convertible
Preferred Stock into fully paid and nonassessable shares of Common Stock
and such other securities and property as hereinafter provided. At any
time to and including the day prior to the Mandatory Conversion Date,
each share of Series A Convertible Preferred Stock may be converted at
the principal executive offices of the Corporation, the office of any
transfer agent for the Series A Convertible Preferred Stock, if any, the
office of any transfer agent for the Common Stock or at such other
office or offices, if any, as the Board of Directors may designate,
initially into such number of fully paid and nonassessable shares of
Common Stock (calculated as to each conversion to the nearest 1/100th of
a share) determined by dividing (x) the sum of (i) the Conversion
Amount, (ii) accrued but unpaid dividends to the Conversion Date on the
share of Series A Convertible Preferred Stock being converted, and (iii)
accrued but unpaid interest on the dividends on the share of Series A
Convertible Preferred Stock being converted in arrears to the Conversion
Date by (y) the lower of (1) the product of the Conversion Percentage
times the arithmetic average of the Closing Price of the Common Stock on
the five consecutive trading days immediately preceding the Conversion
Date or (2) $3.375 (subject to equitable adjustments for stock splits,
stock dividends, combinations, recapitalizations, reclassifications and
similar events occurring on or after September 26, 1996), in each case
subject to adjustment as hereinafter provided (the "Conversion Rate");
provided, however, that in no event shall any holder be entitled to
convert any shares of Series A Convertible Preferred Stock in excess of
that number of shares of Series A Convertible Preferred Stock upon
conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by such holder and any person whose beneficial
ownership of shares of Common Stock would be aggregated with such
holder's beneficial ownership of shares of Common Stock for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as
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amended (the "Exchange Act"), and Regulation 13D-G thereunder (each a
"Restricted Person" and collectively, the "Restricted Persons") (other
than shares of Common Stock deemed beneficially owned through the
ownership of unconverted shares of Series A Convertible Preferred Stock
and unexercised Warrants) and (2) the number of shares of Common Stock
issuable upon the conversion of the number of shares of Series A
Convertible Preferred Stock with respect to which the determination in
this proviso is being made, would result in beneficial ownership by any
Restricted Person of more than 4.9% of the outstanding shares of Common
Stock. For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and Regulation 13D-G thereunder,
except as otherwise provided in clause (1) of the proviso to the
immediately preceding sentence. The "Conversion Price" shall be equal to
the Conversion Amount divided by the Conversion Rate.
3. The third paragraph of Section 9(c)(3) of the Certificate of
Designations is hereby amended by deleting the existing third paragraph of
Section 9(c)(3) in its entirety and substituting in lieu thereof the following:
The right of the holders of Series A Convertible Preferred Stock
to convert their shares shall be exercised by delivering (which may be
done by telephone line facsimile transmission) to the Corporation or its
agent, as provided above, a written notice, duly signed by or on behalf
of the holder, stating the number of shares of Series A Convertible
Preferred Stock to be converted. If a holder of Series A Convertible
Preferred Stock elects to convert any shares of Series A Convertible
Preferred Stock in accordance with section 8(a), such holder shall not
be required to physically surrender the certificate(s) representing such
shares of Series A Convertible Preferred Stock to the Corporation unless
all of the shares of Series A Convertible Preferred Stock represented
thereby are so converted. Each holder of shares of Series A Convertible
Preferred Stock and the Corporation shall maintain records showing the
number of shares so converted and the dates of such conversions or
shall use such other method, satisfactory to such holder and the
corporation, so as to not require physical surrender of such
certificates upon each such conversion. In the event of any dispute or
discrepancy, such records of the
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Corporation shall be controlling and determinative in the
absence of manifest error. Notwithstanding the foregoing, if
any shares of Series A Convertible Preferred Stock evidenced by
a particular certificate therefor are converted as aforesaid,
the holder of Series A Convertible Preferred Stock may not
transfer the certificate(s) representing such shares of Series A
Convertible Preferred Stock unless such holder first physically
surrenders such certificate(s) to the Corporation, whereupon the
Corporation will forthwith issue and deliver upon the order of
such holder of shares of Series A Convertible Preferred Stock
new certificate(s) of like tenor, registered as such holder of
shares of Series A Convertible Preferred Stock (upon payment by
such holder of shares of Series A Convertible Preferred Stock of
any applicable transfer taxes) may request, representing in the
aggregate the remaining number of shares of Series A Convertible
Preferred Stock represented by such certificate(s). Each holder
of shares of Series A Convertible Preferred Stock, by acceptance
of a certificate for such shares, acknowledges and agrees that
(1) by reason of the provisions of this paragraph and Section
8(d)(1), following conversion of any shares of Series A
Convertible Preferred Stock represented by such certificate, the
number of shares of Series A Convertible Preferred Stock
represented by such certificate may be less than the number of
shares stated on such certificate and the number of shares of
Common Stock from the Maximum Share Amount (as defined herein)
allocated to the shares of Series A Convertible Preferred Stock
represented by such certificate for purposes of conversion of
such shares may be less than the number thereof on such
certificate and (2) the Corporation may place a legend on the
certificates of shares of Series A Convertible Preferred Stock
which refers to or describes the provisions of this paragraph.
The Corporation shall pay any tax arising in connection with any
conversion of shares of Series A Convertible Preferred Stock
except that 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 upon conversion of shares of
Common Stock or other securities or property in a name other
than that of the holder of the shares of the Series A
Convertible Preferred Stock being converted, and the Corporation
shall not be required to issue or deliver any such shares or
other securities or property unless and until the person or
persons requesting the issuance thereof
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shall have paid to the Corporation the amount of any such tax or
shall have established to the satisfaction of the Corporation
that such tax has been paid.
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IN WITNESS WHEREOF, Graphix Zone, Inc. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Norman H.
Block, its President, as of the 31 day of January, 1997.
By: /s/ N. H. BLOCK
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Norman H. Block
President
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