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EXHIBIT 4.1
REDOX TECHNOLOGY CORPORATION
DESIGNATION OF RIGHTS, PRIVILEGES, AND PREFERENCES OF
CONVERTIBLE PREFERRED STOCK
Pursuant to the provisions of Section 151 of the Delaware General Corporation
Law, REDOX Technology Corporation (hereinafter, the "Corporation") hereby adopts
the following Designation of Rights, Privileges, and Preferences of Convertible
Preferred Stock (the "Designation").
FIRST: The name of the Corporation is REDOX Technology Corporation.
SECOND: The following resolution establishing a series of Convertible Preferred
stock designated as the "Convertible Preferred Stock" consisting of Ten Million
(10,000,000) shares, $0.001 par value per share, was duly adopted by the Board
of Directors of the Corporation on July 1, 1996 in accordance with the
certificate of incorporation, as amended, amended, of the Corporation and the
corporation laws of the state of Delaware.
RESOLVED, there is hereby created a series of preferred stock of the
Corporation to be designated as the "Convertible Preferred Stock"
consisting of Ten Million (10,000,000) shares, $0.001 par value per share,
with the following powers, preferences, rights, qualifications,
limitations, and restrictions:
1. Liquidation
1.1 In the event of the voluntary or involuntary liquidation
(whether partial or complete), dissolution, or winding up of the
Corporation, the holders of the Convertible Preferred Stock shall
be entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders, whether from
capital, surplus, or earnings, an amount of cash equal to One
dollar ($1.00) per share plus all unpaid dividends previously
declared thereon to the date of final distribution. No
distribution shall be made on any Common stock or other series of
Preferred stock of the Corporation by reason of voluntary or
involuntary liquidation (whether partial or complete),
dissolution, or winding up of the Corporation unless each holder
of any Convertible Preferred Stock shall have received all
amounts to which such holder shall be entitled under this
subsection.
1.2 If on any liquidation (whether partial or complete),
dissolution, or winding up of the Corporation, the assets of the
Corporation available for distribution to holders of Convertible
Preferred Stock shall be insufficient to pay the holders of the
Convertible Preferred Stock the full amounts to which they would
otherwise be entitled under Section 1.1, above, the assets of the
Corporation available for distribution to holders of Convertible
Preferred Stock shall be distributed to them pro rata on the
basis of the number of shares of Convertible Preferred Stock held
by each such holder.
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2. Voting Rights
The Convertible Preferred Stock shall be voted with the Common stock
of the Corporation and with each other series of Preferred stock as a
single class and shall not be entitled to vote as a separate class,
except to the extent that the consent of the holders of Convertible
Preferred Stock, voting as a class, is specifically required by the
provisions of the corporation law of the state of Delaware, as now
existing or as hereafter amended.
3. Subordination
Any payment of any dividend or any redemption hereunder shall be
subordinated to payment in full of all Senior Debt as defined herein.
"Senior Debt" shall mean the principle and premium, if any, and
interest on all indebtedness of the Corporation to any financial
institution, including, but not restricted to, (i) banks, whether
currently outstanding or hereinafter created, and whether or not such
loans are secured, (ii) any other indebtedness, liability,
obligations, contingent or otherwise of the Corporation to guarantee
endorsement of the contingent obligation with respect to any
indebtedness, liability, or obligation whether created, assumed, or
incurred by the Corporation and after the date of the creation of the
Convertible Preferred Stock, which is, when created, specifically
designated by the Corporation as Senior Debt, and (iii) any refunding,
renewals, or extensions of any indebtedness or similar obligations
described as Senior Debt in sub-paragraphs (i) and (ii) of this
subsection.
4. Dividends
4.1 The Corporation shall pay to the holders of the Convertible
Preferred Stock out of the assets of the Corporation at any time
for the payment of dividends at the times and in the amounts so
declared by the Board of Directors of the Corporation and in the
manner prescribed in this Section.
4.2 The holders of the Convertible Preferred Stock shall be
entitled to receive dividends, if any, as may be declared from
time to time by the Board of Directors, provided that there are
Corporation funds legally available for the payment of such
declared dividends. The Convertible Preferred Stock shall not
have any preference as to dividends.
4.3 Any payment of dividends declared and due under this Section
with respect to any shares of the Convertible Preferred Stock
shall be made by means of a check drawn on funds immediately
available for the payment thereof to the order of the holder of
such share(s) at the address for such holder of record shown on
the stock records maintained by or for the Corporation, which
check shall be mailed by United States Postal Service first-class
mail, postage pre-paid. Any such payment shall be deemed to have
been paid by the Corporation on the date that such payment is
deposited in the United States mail as provided above, provided
that in the event that the check or other medium by which any
payment shall be made shall prove not to be immediately
collectible on the date of payment, such payment shall not be
deemed to have been made until cash in the amount of such payment
shall actually be received by the person entitled to receive such
payment.
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4.4 Registration of transfer of any share of the Convertible
Preferred Stock on the stock records maintained by or for the
Corporation to a person other than the transferor shall
constitute a transfer of any right which the transferor may have
had to receive any accrued but unpaid dividends as of the date of
transfer, whether declared or undeclared, and the Corporation
shall have no further obligation to the transferor with respect
to such accrued but unpaid dividends. Any shares of Convertible
Preferred Stock represented by a new certificate issued to a new
holder shall continue to accrue dividends as provided in this
Section.
5. Conversion
5.1 Each share of the Convertible Preferred Stock is convertible
into Common Stock of the Corporation, par value $0.00005, (the
"Common Stock") at the times, in the manner, and subject to the
conditions provided in this Section.
5.2 Each share of the Convertible Preferred Stock may be
converted at any time at the election of the holder of the
presentation and surrender of the certificate representing the
share, duly endorsed, with written instructions specifying the
number of shares of the Convertible Preferred Stock to be
converted and the name and address of the person to whom
certificate(s) representing the Common Stock issuable on the
conversion are to be issued at the principal office of the
Corporation.
5.3 Each share of the Convertible Preferred Stock shall be
convertible into Common Stock of the Corporation at the rate of
Five (5) shares of Common Stock for each share of Convertible
Preferred Stock (the "Conversion Rate"). The Conversion Rate
shall be subject to adjustment pursuant to Section 5.4, below.
5.4 In order to prevent dilution of the rights granted
hereunder, the Conversion Rate and liquidating voting rights
shall be subject to adjustment from time to time in accordance
with this subsection.
(a) In the event the Corporation shall declare a dividend or
make other distribution on any capital stock of the
Corporation payable in Common Stock, options to purchase
Common Stock, or securities convertible into Common Stock of
the Corporation shall at any time subdivide (other than by
means of a dividend payable in Common Stock) its outstanding
shares of Common Stock into a greater number of shares, or
combine such outstanding stock into a smaller number of
shares, then in each such event, the Conversion Rate in
effect immediately prior to such combination shall be
adjusted so the holders of the Convertible Preferred Stock
shall be entitled to receive the kind and number of shares
of Common Stock or other securities of the Corporation which
they would have owned or have been entitled to receive after
the happening of any of the events described above, had such
shares of the Convertible Preferred Stock been converted
immediately prior to the happening of such event or any
record date with respect thereto; an adjustment made
pursuant to this subsection shall become effective
immediately after the effective date of such event
retroactive to the record date for such event.
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(b) If any capital reorganization or reclassification of the
capital stock of the Corporation, consolidation, or merger
of the Corporation with another Corporation, or the sale of
all or substantially all of its assets to another
corporation shall be effected in such a way the holder of
Common Stock shall be entitled to receive stock, other
securities, or other assets with respect to or in exchange
for Common Stock, then as a condition of such
reorganization, reclassification, consolidation, merger, or
sale, lawful adequate provisions shall be made whereby the
holders of the Convertible Preferred Stock shall thereafter,
subject to prior redemption by the Corporation, have the
right to acquire and receive on conversion of the
Convertible Preferred Stock such shares of Common Stock,
other securities, or other assets as would have been
issuable or payable (as part of the reorganization,
reclassification, consolidation, merger, or sale) with
respect to or in exchange for such number of outstanding
shares of the Corporation's Common Stock as would have been
received on conversion of the Convertible Preferred Stock
immediately before such reorganization, reclassification,
consolidation, merger, or sale. In any such case,
appropriate provisions shall be made with respect to the
rights and interests of the holders of the Convertible
Preferred Stock to the end that the provisions hereof
(including, without limitations, provisions for adjustments
of the Conversion Rate and for the number of shares issuable
on conversion of the Convertible Preferred Stock) shall
thereafter be applicable in relation to any shares of Common
Stock, other securities, or other assets of the Corporation
thereafter deliverable on the conversion of the Convertible
Preferred Stock. In the event of a merger or consolidation
of the Corporation with or into another corporation or the
sale of all or substantially all of its assets as a result
of which a number of shares of Common Stock of the surviving
or purchasing corporation greater or less than the number of
shares of Common Stock of the Corporation outstanding
immediately prior to such merger, consolidation, or purchase
are issuable to holders of Common Stock of the Corporation,
then the Conversion Rate in effect immediately prior to such
merger, consolidation, or purchase shall be adjusted in the
same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock of the
Corporation.
(c) No adjustment shall be made in the Conversion Rate of the
number of shares of Common Stock issuable on conversion of
Convertible Preferred Stock (i) in connection with the offer
and sale of Convertible Preferred Stock; (ii) in connection
with the issuance of any Common Stock, other securities, or
other assets on conversion or redemption of shares of
Convertible Preferred Stock; (iii) in connection with the
issuance of any share of Common Stock, other securities, or
other assets on account of the anti-dilution provisions of
this Section; (iv) in connection with the purchase or other
acquisition by the Corporation of any capital stock,
evidence of its indebtedness, or other securities of the
Corporation; or
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(v) in connection with the sale or exchange by the
Corporation of any Common Stock, evidence of its
indebtedness, or other securities of the corporation
including securities containing the right to subscribe for
or purchase Common stock or Convertible Preferred stock of
the Corporation.
5.5 The Corporation covenants and agrees that:
(a) The shares of Common Stock, other securities, or other
assets of the Corporation issuable on any conversion of any
shares of Convertible Preferred Stock shall be deemed to
have been issued to the person on the Conversion Date, and
on the Conversion Date, such person shall be deemed for all
purposes to have become the record holder of such Common
Stock, other securities, or other assets.
(b) All shares of Common Stock or other securities which may be
issued on conversion of the Convertible Preferred Stock
will, on issuance, be fully paid and nonassessable and free
from all taxes, liens, and charges with respect to the issue
thereof. Without limiting the generality of the foregoing,
the Corporation will, from time to time, take all action as
may be requisite to assure that the par value of the
unissued Common Stock or other securities acquirable on any
conversion of the Convertible Preferred Stock is at all
times equal to or less than the amount determined by
dividing the par value of a share of Convertible Preferred
Stock by the number of shares of Common Stock or other
securities issuable on conversion of such share.
(c) The issuance of certificates for Common Stock or other
securities on conversion of the Convertible Preferred Stock
shall be made without charge to the registered holder
thereof for any issuance tax in respect thereof or other
costs incurred by the Corporation in connection with the
conversion of the Convertible Preferred Stock and the
related issuance of Common Stock or other securities.
6. Redemption
6.1 Subject to the requirements and limitations of the
corporation laws of the state of Delaware, the Corporation shall
have the right to redeem the shares of the Convertible Preferred
Stock on the following terms and conditions.
6.2 The shares of the Convertible Preferred Stock are subject to
redemption by the Corporation at any time after issuance pursuant
to written notice of redemption given to the holders thereof on
not less than Thirty (30) days, specifying the date on which the
Convertible Preferred Stock shall be redeemed (the "Redemption
Date"). The Corporation may redeem a portion or all of the issued
and outstanding shares of Convertible Preferred Stock, provided
that, in the event that less than all of the outstanding shares
of Convertible Preferred Stock are redeemed, such redemption
shall be pro rata determined on the basis of the number of shares
of Convertible Preferred Stock outstanding.
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6.3 The redemption price for each share of Convertible Preferred
Stock shall be One dollar ($1.00) per share plus any accrued but
unpaid dividends, if applicable, on such share as of the
Redemption Date (the "Redemption Price"). The Redemption Price
shall be paid in cash.
6.4 Redemption of the Convertible Preferred Stock shall be made
in the following manner:
(a) The Corporation shall notify the transfer agent of the
Corporation's Common Stock (the "Transfer Agent") of its
intention to redeem the Convertible Preferred Stock. Such
notice shall include a list of all holders of the
Convertible Preferred Stock outstanding as of the most
recent practicable date and a statement of the number of
shares of the Convertible Preferred Stock to be redeemed and
the manner in which the Redemption Price is to be paid. At
least Ten (10) days prior to the date that written notice of
redemption is given to holders of the Convertible Preferred
Stock, the Corporation shall make appropriate arrangements
with the Transfer Agent for the delivery of funds and/or
Common Stock necessary to make payment of the Redemption
Price for all shares of Convertible Preferred Stock redeemed
by the Corporation.
(b) On the Redemption Date, all shares of the Convertible
Preferred Stock subject to redemption shall be automatically
redeemed unless earlier converted pursuant to Section 5,
above. The holder of any shares of the Convertible Preferred
Stock so redeemed shall be required to tender the
certificates representing such shares, duly endorsed, to the
Transfer Agent in exchange for payment of the Redemption
Price and reissuance of the balance of the Convertible
Preferred Stock not otherwise converted or redeemed. On such
surrender, the Transfer Agent shall cause to be issued and
delivered a check with all reasonable dispatch to the holder
and/or the holder's designatees or assigns.
(c) Following the expiration of a period of Thirty (30) days
following the Redemption Date, the Transfer Agent shall
provide to the Corporation a complete accounting of the
Convertible Preferred Stock redeemed and a list of all
shares of Convertible Preferred Stock remaining unconverted
and not returned to the Corporation for redemption. The
Corporation shall pay all costs associated with establishing
and maintaining any bank accounts for funds deposited with
the Transfer Agent, including the costs of issuing any
checks.
7. Additional Provisions
7.1 No change in the provisions of the Convertible Preferred
Stock set forth in this Designation affecting any interests of
the holders of any shares of Convertible Preferred Stock shall be
binding or effective unless such changes shall have been approved
or consented to by the holders of Convertible Preferred Stock in
the manner provided in the corporation laws of the state of
Delaware, as the same may be amended from time to time.
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7.2 The shares of Convertible Preferred Stock shall be
transferable only on the books of the Corporation maintained at
its principal office, on delivery thereof duly endorsed by the
holder or by his duly authorized attorney or representative or
accompanied by proper evidence of succession, assignment, or
authority to transfer. In all cases of transfer by an attorney,
the original letter of attorney, duly approved, or an official
copy thereof, duly certified, shall be deposited and remain with
the Corporation. In case of transfer by executors,
administrators, guardians, or other legal representatives, duly
authenticated evidence of their authority shall be produced and
may be required to be deposited and remain with the new
certificate representing the shares of Convertible Preferred
Stock so transferred to the person entitled thereto.
7.3 The Corporation shall not be required to issue any fractional
shares of Common Stock on the conversion or redemption of any
share of Convertible Preferred Stock.
7.4 Any notices required or permitted to be given to the holders
of the Convertible Preferred Stock under this Designation shall
be deemed to have been duly given if mailed by first-class mail,
postage prepaid, to such holders at their respective addresses
appearing on the stock records maintained by or for the
Corporation, and shall be deemed to have been given as of the
date deposited in the United States mail.
IN WITNESS WHEREOF, the foregoing Designation of Rights, Privileges, and
Preferences of Convertible Preferred Stock of the Corporation has been executed
this Second day of July, Nineteen Hundred Ninety-Six.
ATTEST:
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Richard Szymanski
Secretary and President
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STATE OF TEXAS )
:ss
COUNTY OF HARRIS )
On July 2, 1996, before me the undersigned, a notary public in and for the above
county and state, personally appeared Richard A. Szymanski, who being by me duly
sworn, did state for himself the he, Richard A. Szymanski, is the President and
Secretary of REDOX Technology Corporation, a Delaware corporation, and that the
foregoing Designation of Rights, Privileges, and Preferences of Convertible
Preferred Stock of REDOX Technology Corporation was signed on behalf of such
corporation by authority of a resolution of its Board of Directors, and that the
statements contained therein are true.
WITNESS MY HAND AND OFFICIAL SEAL
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NOTARY PUBLIC
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