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: July 22, 2004
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)
1324 N. Magnolia Avenue
El Cajon, California 92020
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(Address of Principal Executive Offices)
(619) 444-1919
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(Registrant's Telephone Number, Including Area Code)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On July 21, 2004, Axia Group, Inc. (Axia) signed an agreement with Jody R. Regan
and Dawnelle Patrick that provided for the acquisition of a 100% interest in D &
R Crane, Inc. (D&R), a California corporation owned by Mr. Regan and Ms. Patrick
in which the purchasers received 100,000,000 shares of restricted common stock
and 5,000,000 shares of Series B Preferred stock in exchange for the transfer of
D & R Crane.
The transfer of these shares decreases the percentage ownership of Axia by Mr.
Regan, who is also the president and CEO of Axia, to 52.36% of the issued and
outstanding common stock and his holdings include ownership of 100% of the
issued and outstanding shares of Series A Preferred stock (1,000 shares with
voting rights equal to 10 shares of common stock each) and 50% (2,500,000
shares) of the 5,000,000 shares of Series B preferred stock that are currently
outstanding. Ms Patrick, the spouse of Mr. Regan, now holds 43.64% of the
common stock issued and outstanding and 50% (2,500,000 shares) of the Series B
preferred stock that is currently outstanding. Series B preferred stock has a
designation that provides for voting rights equal to 100 shares of common stock
for each shares of Series B preferred.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Axia signed on July 21, 2004, an agreement to acquire 100% ownership of D & R.,
a total of 600 shares of common stock, from Jody R. Regan, president of Axia and
his spouse Dawnelle Patrick, president of D & R Crane, in exchange for the
issuance of 100,000,000 shares of Axia's restricted common stock and 5,000,000
shares of Axia's Series B Preferred stock. Effective July 22, 2004, D & R
became a wholly owned subsidiary of Axia.
As a result of Axia acquiring a 100% interest in D&R, all of the assets of D&R
which consist primarily of accounts receivable, fixed assets, contractual rights
and obligations, intellectual property and equipment which are used by D & R in
its operations will be consolidated with the financial of Axia. D&R will
continue to use such assets in the same manner as a wholly owned subsidiary of
Axia.
D & R operates from El Cajon, California, a suburb of San Diego. D&R was
established in 1991 as an overhead crane and hoist service company. The company
subsequently began manufacturing material handling systems. D & R has customers
throughout southern California. D & R provides the market with quality overhead
material handling solutions, reliable and professional technical support and
customer service.
Mr. Regan, president of Axia has been serving as the vice president and general
manager of D & R and has over 30 years experience as a field technician,
estimator, sales and management. Ms. Patrick is president of D & R and has 23
years of management experience in the material handling business.
2
ITEM 5. Other Events and Regulation FD Disclosure
On July 21, 2004 the board of directors of Axia approved a Certificate of
Designation to create Series B Convertible Preferred Stock. Ten Million shares
of Axia's authorized preferred stock was approved for designation as Series B
Convertable Preferred Stock. The stock will have voting rights equal to 100
shares of common stock. The par value of the stock remained at $0.001 and the
liquidation value was set at the same $0.001 value. The stated conversion value
of the stock was set at 100 shares of common stock. The designation, a copy of
which is attached hereto, has been prepared for submission and recording with
the Nevada Secretary of State's office. Five Million of these shares are to be
issued to Mr. Regan and Ms. Patrick pursuant to the purchase agreement as set
forth in Item 2 above.
The information set forth herein is only a summary 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.
ITEM 7. Financial Statements and Exhibits
Financial Statements: Pro forma financial statements or consolidated quarterly
statements will be filed by amendment within the time allowed by rule.
The following exhibits are included as part of this report:
EXHIBIT PAGE
NO. NO. DESCRIPTION
- --- --- -----------
10(i) 4 Stock Purchase Agreement dated July 22, 2004
99(i) 7 Certificate of Determination of the Rights and
Preferences of Preferred Stock of Axia Group, Inc.,
Series B Convertible Preferred Stock, dated July 21,
2004
SIGNATURES
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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: July 22, 2004
Axia Group, Inc.
By: /s/ Jody R. Regan
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Jody R. Regan, President and Director
3
Exhibit 10(i)
STOCK PURCHASE AGREEMENT
BETWEEN
D & R CRANE, INC.
JODY R. REGAN, DAWNELLE PATRICK
AND
AXIA GROUP, INC.
4
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Purchase and Sale..............................................................2
Purchase Price.................................................................2
Warranties and Representations of Sellers and DRC..............................2
Warranties and Representations of Axia.........................................4
Term...........................................................................5
Conditions Precedent to Closing................................................5
Termination....................................................................5
Miscellaneous Provisions.......................................................6
Closing........................................................................6
Governing Law..................................................................7
Counterparts...................................................................7
1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") agreement dated July 21,
2004, by, between and among JODY R. REGAN, and Dawnelle Patrick, individuals and
residents of the state of California ("Sellers") and D & R Crane, Inc., a
California Corporation ("DRC"), and AXIA GROUP, INC., a Nevada corporation
("Axia").
WHEREAS, Sellers owns 100% of the issued and outstanding common stock of
DRC; and
WHEREAS, Sellers desire to sell and Axia desires to purchase 100% of the
issued and outstanding shares of common stock of DRC, relying upon the
representation that Sellers hold 100% of the issued and outstanding shares of
DRC, in exchange for the transfer of 100,000,000 shares of the common stock of
Axia to Sellers and the transfer of 5,000,000 shares of the Series B Preferred
stock of Axia to Sellers;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
I. Purchase and Sale. Sellers hereby agree to sell, transfer,
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assign and convey to Axia and Axia hereby agrees to purchase and
acquire from Sellers, Six Hundred (600) shares of the common
voting stock of DRC, a California corporation.
II. Purchase Price. The aggregate purchase price to be paid by Axia
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for the Six Hundred (600) shares of common stock of DRC is One
Hundred Million (100,000,000) shares of the common stock of Axia
and Five Million (5,000,000) shares of Series B Preferred Stock
of Axia, these shares to be equally dividend between the two
named Sellers.
III. Warranties and Representations of Sellers and DRC. In order to
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induce Axia to enter into the Agreement and to complete the
transaction contemplated hereby, Sellers and DRC warrants and
represents to Axia that:
A. Organization and Standing. DRC is a corporation duly
--------------------------
organized, validly existing and in good standing under the
laws of the State of its incorporation, is qualified to do
business as a foreign corporation in every other state or
jurisdiction in which it operates to the extent required
by the laws of such states and jurisdictions, and has full
Power and authority to carry on its business as now
conducted and to own and operate its assets, properties
and business.
B. Ownership of the Shares. As of the Date hereof, Sellers
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are the only owners of the Six Hundred (600) shares,
representing 100% of the issued and outstanding shares of
DRC being purchased by Axia pursuant to this Agreement,
free and clear of all liens, encumbrances and
restrictions, other
2
then those imposed due to the fact the shares have not
been registered with the Securities and Exchange
Commission and carry a Rule 144 legend.
C. Taxes. DRC has filed all federal, state and local income
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or other tax returns and reports that it is required to
file with all governmental agencies, wherever situate, and
has paid or accrued for payment all taxes as shown on such
returns, such that a failure to file, pay or accrue will
not have a material adverse effect on DRC or the shares of
DRC stock which are the subject of this Agreement.
D. Pending Actions. There are no material legal actions,
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lawsuits, proceedings or investigations, either
administrative or judicial, pending or to the knowledge of
Sellers or DRC threatened, against or affecting DRC and or
the DRC shares of common stock, except as has been
disclosed to Axia. DRC is not in violation of any
material law, ordinance or regulation of any kind
whatever, including, but not limited to the Securities Act
of 1933, (the "33 Act"), the Securities Exchange Act of
1934, as amended (the "34 Act") the Rules and Regulations
of the U.S. Securities and Exchange Commission ("SEC"), or
the Securities Laws and Regulations of any state.
E. Governmental Regulation. The completion of the
------------------------
transactions contemplated by the Agreement will not, in
and of themselves, violate any governmental law, rule or
regulation which would in any way affect or jeopardize the
validity of this Agreement.
F. Ownership of Assets. Sellers have good, marketable
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title, without any liens or encumbrances of any nature
whatever, to the DRC shares which are the subject of this
Agreement.
G. No Misleading Statements or Omissions. Neither the
--------------------------------------
Agreement nor any financial statement, exhibit, schedule
or document attached hereto, contains any materially
misleading statement, or omits any fact or statement
necessary to make the other statements or facts therein
set forth not materially misleading.
H. Validity of the Agreement. All corporate action and other
--------------------------
proceedings required to be taken by DRC in order to enter
into and to carry out the Agreement have been duly and
properly taken. No additional corporate or other action on
the part of DRC or Sellers is required in connection with
this Agreement, or the transaction contemplated herein.
The Agreement has been duly executed by Sellers and DRC,
and constitutes the valid and binding obligation of both,
except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws
relating to or affecting generally the enforcement of
creditors rights. The execution and delivery of the
Agreement and the carrying out of its purposes will not
result in the breach of any of the terms or conditions of,
or constitute a default under or violate BCI's Certificate
of Incorporation or document of undertaking, oral
3
or written, to which DRC is a party or is bound or may be
affected, nor will such execution, delivery and carrying
out violate any order, writ, injunction, decree, law, rule
or regulation of any court, regulatory agency or other
governmental body; and the business now conducted by DRC
can continue to be so conducted after completion of the
transaction contemplated hereby.
I. Enforceability of the Agreement. When duly executed and
--------------------------------
delivered, the Agreement and the Exhibits hereto which are
incorporated herein and made a part hereof are legal,
valid, and enforceable by Axia according to their terms,
except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws
relating to or affecting generally the enforcement of
creditors rights and that at the time of such execution
and delivery, Axia will have acquired title in and to the
DRC common shares free and clear of all claims, liens and
encumbrances.
IV. Warranties and Representations of Axia. In order to induce
---------------------------------------
Sellers to enter into the Agreement and to complete the
transaction contemplated hereby, Axia warrants and represents to
Sellers that:
A. Organization and Standing. Axia is a corporation duly
--------------------------
organized, validly existing and in good standing under the
laws of the State of Nevada, is qualified to do business
as a foreign corporation in every other state in which it
operates to the extent required by the laws of such
states, and has full power and authority to carry on its
business as now conducted and to own and operate its
assets, properties and business.
B. No Misleading Statements or Omissions. Neither the
--------------------------------------
Agreement nor any financial statement, exhibit, schedule
or document attached hereto or presented to Axia in
connection herewith contains any materially misleading
statement, or omits any fact or statement necessary to
make the other statements of facts therein set forth not
materially misleading.
C. Validity of the Agreement. All corporate action and
--------------------------
proceedings required to be taken by Axia in order to enter
into and to carry out the Agreement have been duly and
properly taken. The Agreement has been duly executed by
Axia, and constitutes a valid and binding obligation of
Axia. The execution and delivery of the Agreement and the
carrying out of its purposes will not result in the breach
of any of the terms or conditions of, or constitute a
default under or violate, Axia's Certificate of
Incorporation or By-Laws, or any agreement, lease,
mortgage, bond, indenture, license or other document or
undertaking, oral or written, to which Axia is a party or
is bound or may be affected, nor will such execution,
delivery and carrying out violate any order, writ,
injunction, decree, law, rule or regulation of any court
regulatory agency or other governmental body.
4
D. Enforceability of the Agreement. When duly executed and
--------------------------------
delivered, the Agreement and the Exhibits hereto which are
incorporated herein and made a part hereof are legal,
valid, and enforceable by Sellers according to their
terms, and that at the time of such execution and
delivery, Sellers will have acquired good, marketable
title in and to the Axia shares acquired herein, free and
clear of all liens and encumbrances.
E. Designation of Series B Preferred Stock. The designation
----------------------------------------
of the Series B Preferred Stock of Axia to be delivered
to the Sellers shall be as set forth in Exhibit "B" as
attached hereto, such designation shall be filed with the
Nevada Secretary of State and shall set forth and
determine the rights of all holders of such shares.
V. Term. All representations, warranties, covenants and
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agreements made herein and in the exhibits attached hereto shall
survive the execution and delivery of the Agreement and payment
pursuant thereto.
VI. Conditions Precedent to Closing.
--------------------------------
A. The obligations of Sellers under the Agreement shall be
and are subject to fulfillment, prior to or at the
Closing of each of the following conditions:
1. That Axia and its management representations
and warranties contained herein shall be true
and correct at the time of closing date as if
such representations and warranties were made
at such time;
2. That Axia and its management shall have
performed or complied with all agreements,
terms and conditions required by the Agreement
to be performed or complied with by them prior
to or at the time of Closing;
B. The obligations of Axia under the Agreement shall be
and are subject to fulfillment, prior to, at the
Closing or subsequent to the Closing of each of the
following conditions:
1. That Sellers' and DRC's representations and
warranties contained herein shall be true and
correct at the time of Closing as if such
representations and warranties were made at
such time; and
2. That Sellers shall have performed or complied
with all agreements, terms and conditions
required by the Agreement to be performed or
complied with by them prior to or at the time
of Closing.
VII. Termination. The Agreement may be terminated at any time
------------
before or; at Closing, by:
5
A. The mutual agreement of the parties;
B. Any party if:
1. Any provision of the Agreement applicable to
a party shall be materially untrue or fail
to be accomplished.
2. Any legal proceeding shall have been
instituted or shall be imminently
threatening to delay, restrain or prevent
the consummation of the Agreement.
Upon termination of the Agreement for any reason, in accordance with
the terms and conditions set forth in this paragraph, each said party shall bear
all costs and expenses as each party has incurred and no party shall be liable
to the other.
VIII. Miscellaneous Provisions. This Agreement is the entire
-------------------------
agreement between the parties in respect of the subject matter
hereof, and there are no other agreements, written or oral, nor
may the Agreement be modified except in writing and executed by
all of the parties hereto. The failure to insist upon strict
compliance with any of the terms, covenants or conditions of the
Agreement shall not be deemed a waiver or relinquishment of such
right or Power at any other time or times.
IX. Closing. The Closing of the transactions contemplated by the
--------
Agreement ("Closing") shall take place at 1:00 P.M. on July
, 2004. The Closing shall occur at such place as the parties
hereto shall agree upon. At the Closing, all of the documents
and items referred to herein shall be exchanged.
X. Notice. Notice to a party herein or other communication
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required or permitted by this Agreement must be in writing and
will be deemed to be properly given when delivered in person to
an officer of the other party, when deposited in the United
States mails for transmittal by certified or registered mail,
postage prepaid, or when deposited with a public telegraph
company for transmittal, or when sent by facsimile transmission
charges prepared, provided that the communication is addressed:
Jody R. Regan & Dawnelle Patrick,
942 Harry Street
El Cajon, California 92020
Telephone: (619) 444-3159
Telefax: (619)444-1938
D & R Crane, Inc.
1324 N. Magnolia Avenue
El Cajon, California 92020
Telephone: (619) 444-1919
Axia Group, Inc.
1324 N. Magnolia Avenue
El Cajon, California 92020
Telephone (619) 444-1919
6
XI. Governing Law. The Agreement shall be governed by and
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construed in accordance with the internal laws of the State of
California.
XII. Counterparts. The Agreement may be executed in duplicate
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facsimile counterparts, each of which shall be deemed an
original and together shall constitute one and the same
binding Agreement, with one counterpart being delivered to
each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals as of the date and year above first written.
/s/Jody R. Regan, Individually
/s/Dawnelle Patrick, Individually
D & R Crane, Inc.
By: /s/ Dawnell Patrick
--------------------------
Dawnelle Patrick
Its President
Axia Group, Inc.
By: /s/ Jody R. Regan
--------------------------
Jody R. Regan
Its President
7
Exhibit 99(ii)
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 B 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 50,000,000 shares of Preferred
Stock available for issuance, such series to be designated as Series B
Convertible Preferred Stock (the "Series B Preferred"), consisting of Ten
Million (10,000,000) 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
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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 B 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 and Series B 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
8
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 Series B Preferred shares 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 and Series B 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 B
Preferred except for those preferential rights as granted herein
but the right to receive dividends providing all dividends
granted to the Series B 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 B 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 B Preferred
herein.
2. Rights, Powers and Preferences
The Series B 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
-----------------------
Ten Million (10,000,000) shares of par value $0.001
preferred stock shall be designated as shares of
"Series B Convertible Preferred Stock" and par value
set at $0.001 per share.
B. Rank. The Series B Preferred shall be senior to the
-----
Common Stock and any subsequently authorized 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 B 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 $0.001) per share. Then all
of the assets of the Company available to be
distributed shall be distributed ratably to
the holders of the Series A and B 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
9
Company, whether voluntary or involuntary, the
assets to be distributed to the holders of the
Series B 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 B 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 B Preferred
--------------
shall have the same voting rights as the Common Stock
on a one hundred-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, the Series B 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 B Preferred shall
not be subject to adjustment unless such stock split
shall be applied to the Series B Preferred.
3. Dividends
The holders of the Series B 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 B Preferred, so long as any shares of Series B 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
10
or redemption of any Junior Stock, unless all dividends to which
the holders of Series B 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 B Preferred shall have the following conversion
rights (the "Conversion Rights"):
A. Holder's Optional Right to Convert. Each share of
-----------------------------------
Series B 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 B 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 B
Preferred to the Company.
B. Conversion Basis. Each share of Series B Preferred
-----------------
shall be convertible into 100 shares of the Company's
Common Stock.
C. Mechanics of Conversion. Before any holder of Series B
------------------------
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 B 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 B 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 B Preferred.
D. Adjustments to the Conversion Basis.
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(i) Stock Splits and Combinations. At any time
------------------------------
after the Company first issues the Series B
Preferred and while any of the shares of
Series B 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 B Preferred and while any of the
11
shares of Series B Preferred remain
outstanding, if the Common Stock issuable upon
the conversion of the Series B 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 B 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 B 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
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Sales of Assets. At any time after the
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Company first issues the Series B 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 B Preferred thereafter
shall be entitled to receive upon conversion
of the Series B 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 B 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
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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 B
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
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Stock shall be issued upon conversion of the Series B
Preferred. In lieu of any fractional shares to
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which the holder would otherwise be entitled, the
Company shall issue a full share of the Company's
common stock.
G. Reservation of Stock Issuable Upon Conversion. At such
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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 B 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 B 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 B 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 B 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 B Preferred
outstanding:
A. Alter or change the rights, preferences or privileges
of the Series B 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 B Preferred are presently converted into shares
of Common Stock.
B. Increase the authorized number of Series B Preferred.
C. Create any new class of shares having preferences over
or being on a parity with the Series B 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 B 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.
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6. Reissuance
No share or shares of Series B Preferred acquired by the Company
by reason of conversion or otherwise shall be reissued as Series
B Preferred, and all such shares thereafter shall be returned to
the status of undesignated and unissued shares of Preferred
Stock of the Company.
7. 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.
8. Severability of Provisions
If any right, preference or limitation of the Series B 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.
9. Status of Reacquired Stock
Shares of Series B 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 sole Director, president and
secretary of AXIA GROUP INC., a Nevada corporation, did hereby execute this
Certificate effective the 22nd day of July, 2004.
/s/ Jody R. Regan
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Jody R. Regan, Director, President & Secretary
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