EXHIBIT 4.1
FORM OF CERTIFICATE OF DESIGNATION
CLASS A PREFERRED STOCK
CERTIFICATE OF DESIGNATION
(Class A Preferred Stock)
ANDREW CIMERMAN and ROBERT CASHMAN each certify that he is the President
and Secretary, respectively, of HOMELIFE, INC., a Nevada corporation
(hereinafter referred to as the "Corporation" or the "Company"); that, pursuant
to the Corporation's Articles of Incorporation, and Nevada General Corporation
Law, the Board of Directors of the Corporation adopted the following resolutions
as of _____________, 199__; at which point none of the Class A Preferred Stock
had been issued.
1. CREATION AND DESIGNATION OF CLASS A PREFERRED STOCK. As of
_____________, 199_, the Company created a series of preferred stock consisting
of 10,000 shares and designated as the "Class A Preferred Stock," having the
voting powers, preferences, relative, participating, optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth below. Each share of Class A Preferred Stock has a face value of $______
per share (the "Face Value").
2. DIVIDEND PROVISIONS. The holders of shares of Class A Preferred
Stock (collectively, "Holders", each a "Holder") shall be entitled to receive,
when and as declared by the Board of Directors out of any funds at the time
legally available therefor, dividends accruing at the rate of _______ percent
(_____%) of the Face Value per year from the date of issuance through the date
of conversion (the "Coupon Dividend"), as well as dividends paid with respect to
each share of common stock for each share of Class A Preferred Stock at the
same time and on a parity with dividends paid on each share of common stock (the
"Common Dividend") less any Coupon Dividend paid for any such period. Each
share of Class A Preferred Stock shall rank on a parity with each other share
of Class A Preferred Stock with respect to dividends. Dividend payments to the
Holders of shares of Class A Preferred Stock shall be payable quarterly, in
cash by delivery of a check to each entitled Holder's address which is
registered with the Secretary of the Company. Any Coupon Dividend on the Class
A Preferred Stock which has accrued pursuant to this Section 2 but which, for
any reason whatsoever, (a) has not been declared, or (b) has been declared but
has not been timely paid, shall be deemed in arrears and shall accumulate until
paid.
3. REDEMPTION. The Holder has the right to require the Company to redeem
the shares of Class A Preferred Stock (the "Right of Redemption"). Shares of
Class A Preferred Stock shall be redeemable, in whole or in part, by the Holder,
at any time within one (1) year after the date such shares were issued to
Holder, upon thirty (30) calendar days written notice (the "Redemption Notice")
to the Company, at a redemption price equal to the Face Value per share. For
purposes of establishing the date of the Redemption Notice, the date of the
Redemption Notice shall be deemed the date of the post-mark, by prepaid mail, of
the Holder's notice of its intention to redeem the shares of Class A Preferred
Stock as addressed to the Company, at the Company's principal place of business.
The redemption of the shares shall be subject to any reasonable procedures the
Company establishes in connection with the redemption.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, subject to the rights of series of
Preferred Stock that may from time to time come into existence, the Holders of
Class A Preferred Stock shall be entitled to receive, pari passu among them, but
prior and in preference to any distribution of any of the assets of the Company
to the holders of Common Stock by reason of their ownership thereof, an amount
per share equal to the sum of (A) the Face Value of each outstanding share of
Class A Preferred Stock, and (B) an amount equal to declared but unpaid and
accrued dividends on such share. If upon the occurrence of such event, the
assets and funds thus distributed among the Holders of the Class A Preferred
Stock shall be insufficient to permit the payment to such Holders of the full
aforesaid preferential amounts, then the entire assets and funds of the Company
legally available for distribution shall be distributed ratably among the
Holders of the Class A Preferred Stock in accordance with the priorities set
forth herein and in proportion to the preferential amount each such holder is
otherwise entitled to receive.
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(b) After the distributions described in subsection (a) above have
been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence, the remaining assets of the Company available
for distribution to shareholders shall be distributed among the Holders of Class
A Preferred Stock and the holders of Common Stock pro rata based on the number
of shares of Common Stock held by each (as if all such shares of Class A
Preferred Stock had been converted to Common Stock).
(c) (i) For purposes of this Section 4, a liquidation, dissolution
or winding up of the Company shall be deemed to be occasioned by, or to include,
(A) the acquisition of the Company by another entity by means of any transaction
or series of related transactions (including, without limitation, any
reorganization, merger or consolidation, but excluding any merger affected
exclusively for the purpose of changing the domicile of the Company); or (B) a
sale of all or substantially all of the assets of the Company; UNLESS the
Company's shareholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration for the Company's acquisition or sale or
otherwise) hold at least fifty percent (50%) of the voting power of the
surviving or acquiring entity.
(ii) In any of such events, if the consideration received by the
Company is other than cash, its value will be deemed its fair market value. Any
securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the 30-day period ending
three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the 30-day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined by the Board of Directors.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined by the Board of Directors.
(iii) In the event the requirements of this subsection 4(c) are
not complied with, the Company shall forthwith either:
(A) cause such closing to be postponed until such time as
the requirements of this Section 4 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the Holders of the Class A Preferred Stock shall
revert to and be the same as such rights, preferences and privileges of such
series existing immediately prior to the date of the first notice referred to in
subsection 4(c)(iv) hereof.
(iv) The Company shall give each holder of record of Class A
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such Holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 4, and the Company shall thereafter
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give such Holders prompt notice of any material changes. The transaction
shall in no event take place sooner than twenty (20) days after the Company
has given the first notice provided for herein or sooner than ten (10) days
after the Company has given notice of any material changes provided for
herein; provided, however, that such periods may be shortened upon the
written consent of the Holders of Class A Preferred Stock that are entitled
to such notice rights or similar notice rights and that represent at least a
majority of the voting power of all then outstanding shares of such Class A
Preferred Stock.
5. CONVERSION. Subject to the Right of Redemption as provided above, the
Holders of the Class A Preferred Stock shall have conversion rights as follows:
(a) RIGHT TO CONVERT. Each share of Class A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Company or any transfer agent for
such stock, into one (1) share of the Company's Common Stock.
(b) MECHANICS OF CONVERSION. Before any holder of Class A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Company or of any transfer agent for the Class A Preferred
Stock, and shall give written notice to the Company at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. The Company shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class A Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Class A Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.
If the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Class A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Class A Preferred Stock shall not be deemed
to have converted such Class A Preferred Stock until immediately prior to the
closing of such sale of securities.
(c) NOTICES OF RECORD DATE. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each holder of Class A Preferred Stock, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
(d) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall
at all times 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 Class A Preferred Stock, such 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 Class A Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Class A Preferred
Stock, in addition to such other remedies as shall be available to the holder of
such Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval on any necessary amendment to this Certificate of
Designation.
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(e) NOTICES. Any notice required by the provisions of this Section 5
to be given to the Holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Company.
6. REGISTRATION RIGHTS. All Common Shares into which the Class A
Preferred Shares are convertible have the following registration rights. The
Company is obligated to register the shares of Common Stock into which the
Preferred Shares are convertible in any subsequent registration statement filed
by the Company with the Securities and Exchange Commission, so that holders of
such Common Stock shall be entitled to sell the same simultaneously with and
upon the terms and conditions as the securities sold for the account of the
Company are being sold pursuant to any such registration statement, subject to
such lock-up provisions as may be proposed by the underwriter and agreed to by
the Holders.
7. MISCELLANEOUS PROVISIONS. The Class A Preferred Shares have no
voting rights and no sinking fund has or will be established to provide for
dividends or the repurchase of the Class A Preferred Shares.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Class A Preferred Stock to be duly executed by its President and attested to
by its Secretary and has caused its corporate seal to be affixed hereto, this
____ day of _____________, 1997.
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Andrew Cimerman, President
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Robert Cashman, Secretary
State of California }
}
County of Orange }
On __________________, 1997, before me, _______________________, personally
appeared ANDREW CIMERMAN, personally known to me or proved to me on the basis of
satisfactory evidence, to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument, the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
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(Signature of Notary Public)
Commission Expires:
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