STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATION
FILED 09:00 AM 02/12/1999
991060073-- 2977488
Certificte of Designation of Rights of Series A Perferred Shares
of
MILINX MARKETING GROUP, INC
Pursuant to Section 151 (g )of Title 8.of the General Corporate Law of the Sate
of Delaware and Article V of the Articles of Incorporation, the Directors hereby
designate The voting powers, designations, preferences, rights and
qualification, limitations and restrictionsof:
"Series A Preferred Shares'
And there is authorized to be issued 5,000,000 shares thereof with the following
rights, terms and preferences:
1. Dividends.
Right to Preferential Dividends. Subject to the rights and preferences
of other classes or series of Preferred Shares, the Holders of the then
outstanding Series A Preferred Shares {.except when there' shall have been
either a.notification of election for conversion by the Holders under Section
5(a), hereunder, or the conditions shall have been fulfilled for a conversion by
the Company as provided in Section 5(b)hereunder, whether or not notification
thereof has been made by the Company, (unless the Company shall expressly give
notice it elects not to require such conversion)) shall be entitled to receive,
if, when, and as declared by the Board, out of any funds legally available
_herefore, a non-cumulative preference of 10% on cash dividends up to S .32
maximum total accumulated dividends per Seres A Preferred Share held thereby.
These dividends shall be payable, when and as declared by the Board. Dividends
on the Series A Preferred Shares shall be non-cumulative, there shall be no
minimum dividends, and no rights shall accrue to the Holders of the Series A
Preferred Shares in the event that the Company shall fail to declare or pay
dividends on the Series A Preferred Shares, whether or not the earnings of the
Company in that previous fiscal year were sufficient to pay such dividends in
whole or in part. In the event that the number of outstanding Series A Preferred
Shares are adjusted by stock split, reverse split, or other corporate action,
the prefereace stated herein shall be adjusted accordingly. The balance of any
such dividends so declared shall be allocated as between Series A Preferred
Shares and Common Shares as if said Series A Preferred Shares had been converted
to Common Shares based on the Conversion Ratio (as adjusted) provided hereion,
and as to any other classes or series of Perferred Shares in accordance with the
rights and preference thereof.
2. Liquidation Rights of Series A Perferred Shares.
(a) Perference. Subject to the rights and preferences of
other classes or series of Perferred Shares in the
event of any liquidation, dissolution, or winding-up of
the Company, whether voluntary, {except when there
shall have been either a notifcation of election for
conversion by the Holders under Section 5(a),
hereunder, or the conditions shall have been fulfilled
for a conversion by the Company as provided in Section
5(b) hereunder, whether or not notification thereof has
been made by the
Milinx Preferred Shares. Series A Page 2
Company, (unlcss the Company shall expressly give notice it elects not to
require such conversion)) the Holders of the Series A Preferred Shares then
outstanding shall be entitled to be paid out of the assets of the Company
availablefor distribution to its shareholders, whether such assets are capital,
surplus, or earnings, before any payment or declaration and setting apart for
payment of any amount shall be made in respect of the Common Stock, an amount
equal to $ .32 per Series A Preferred Share held thereby plus an amount equal to
all declared and unpaid dividends thereon, less accumulated total dividends paid
thereto (but not less than zero). If upon any liquidation, dissolution, or
winding up of the Company, whether voluntaty or involuntary, the assets to be
distributed to the Holders of the Series A Preferred Shares shall be
insufficient to permit the payment to such shareholders of the full preferential
amount aforesaid, then all of the assets of the Company to be distributed
shailbe distributed ratably to the Holders of the Series A Preferred Shares,
subject to any r guts or preferences of any other classes or series of Preferred
Shares, on the basis of the number of shares of Series A Preferred Shares so
held. -
(b) Payments to Common Stock. After thc preferred payment of S .32 per Serics A
Preferred Share is made to Holders of the Series A Preferred Shares the Holders
of the Series A Preferred Shares shall be entitled to share with Common Shares,
based on the adjusted conversion ratio of Preferred Series A Shares to Common
Shares as if converted, and as to other Classes or Series of Preferred Shares
based on the conversion ratio of said Shares to Common as if converted'or as
otherwise provided in the rights and designations thereof as may from time to
time beniade by the Board of Directors, all remaining assets of the Company to
be distributed.
(c) Effect of Adjusiments of Shares. In the event that the number of outstanding
Series A Preferred Shares are adjusted by stock split, reverse split, or other
corporate action, the preference stated herein shall be adjusted accordingly.
3. Merger, Consolidation.
(a) Preference. Subject to the rights and preferences of other classes
or series of Preferred Shares in the event of any merger or share exchange of
the Company, or a sale or other disposition of all or substantially aU of the
assets of the Company (except when there shall have been either a notification
of election for conversion by the Holders under Section 5(a), hereunder, or the
conditions shall have been fulfilled for a conversion by the Company a.s
provided in Section 5(b) hereunder, whether or not notification thereof has been
made by the Company, (unless the Company shall expressly give notice it elects
not iorequirc such convcrsion)} ihc Holders of the Series A Preferred Shares
thcn outstanding shall be entitled to receive, before any payment or declaration
and setting apart for payment of any amount shall be made in respect of the
Common Stock, for each share of such Series A Preferred Stock so held, in cash
or in securities (including, without limitation, debt securities) received from
the acquiring corporation, at the closing of any such transaction, an amount
equal to S .32 per Series A Preferred Shar; plus an amount equal to all declared
and unpaid dividends thereon, less total accumulated dividends paid thereto (but
not less than zero). In the event that the number of outstanding Series A
Page 2
Preferred Shares are adjustedby stock split, reverse split, or other corporate
action, the preference stated herein shall be adjusted accordingly
(b) RemainingProceeds. Subject to the rights and preferences of other
classes or series of Preferred Shares after the payment or distribution to the
Holders of the Series A Preferred Shares of the full preferential amount the
Holders of the Series A Preferred Shares, Holders of other Series or Classes of
Preferred Shares according to the Rights and Designations thereof and Holders of
Common Stock then outstanding shall be entitled to receive ratably, with all
Series A Preferred Shares treated as if it had been converted into Common Stock
pursuant to Section 5 hereof, all remaining proceeds of the Company to be
distributed.
(c) Valuation of securities received pursuant to a merger, share
exchange, sale of substantially all the assets or similar transaiction. In the
event that a transaction occurs pursuant to which non-cash assets are-received
and to which this Section applies, the assets -received for the purposes of this
Section shall be valued as follows:
(i) If the assets received are securities that are listed on
NASDAQ or an exchange, the value shall be deemed to be the 3 day high
average closing price (or average between bid/ask if OTC) on such
exchange or NASDAQ over the 30 day period prior to the closing of the
transaction by which the securities are received.
(ii) If the assets received are of readily ascertainable market
value, then that value shall be used.
(iii) If the assets are unlisted securities or other assets
that do not have a readily ascertainable value, the Board of Directors
in good faith will value said assets.
(iv) The fact that assets exist which-may require a valuation
process as described herein shall not delay closing the transaction by
which the assets are being received.
(d) Notice. With respect to any transaction which involves merger or
exchange of shares, or a sale of substantially all the assets not in the
ordinary course of business, the Series A shareholders shall receive not less
then ten days notice of the transaction and the terms and conditions thereof.
4. Voting Rights~
(a) Each Holder of Series A Preferred Shares shall be entitled to vote
on all matters whatever upon which shareholders may vote, including election of
the Board of Directors and, except as otherwise expressly provided herein, shall
be entitled to the number of votes that equal twice the number of Common Shares
to which said Series A Preferred Shares could be converted, but not less than 4
Common Shares for eachh 1 Series A Preferred Share (adjusted for consolidations
and dividends of Common Shares).
(b) Unless otherwise required -by law, Series A Preferred shareholders
and Commen shareholders shall vote together on all matters upon which
shareholders are permitted to vote and not as separate classes. In those cases
where Series A Perferred Shareholders are required by law to vote as a sepal-ate
class, the vote required by said class for approval of the proposed action shall
be a simple majority of the class.
(c) Voting rights shall be adjusted in-the event of adjustments in -the
Conversion Ratio, except that -increases or reductions that apply equally to
Series A Preferred Shares and Common Shares shall not cause an adjustment to be
made.
5. Conversion.
The Company and the Holders of Series A Preferred Shares shall have the
following conversion rights:
(a) Right to Convert. Each share of Series A Preferred Shares shall be
convertible, if there shall be sufficent Common Shares authorized and issuable
therefor at the option of the Holder as follows, (i)none for the 12 month period
following issuance to the Holder unless-a greater amount is approved by the
Company-, (ii) 100% of the Series A Preferred Shares held by the Holder may be
converted to Common Shares following the initial twelve months after issuance to
the Holder thereof into fully paid and non assessable shares of Common Stock at
the Conversion Rate set forth in Section 5(c) hereunder (as adjusted). In the
event that Series A Preferred-Shares subject thereto shall have been
transferred, the-time period for conversion shall be measured from the date of
issuance to the initial Holder hereof.
(b) Automatic Conversion at Election of Company.
--------- ------------- -------- -- -------
(i) Each share of Series A Preferred Shares shall automatically
at the election of the Company be converted into shares of Common
Stock based on the then effective Conversion Rate set forth in
Section 5(c) hereunder (as adjusted) if any one of the following
-shall-ocour: (A) The Holders of 51% of the Series A Preferred
Shares outstanding have given notice of election to convert as
provided herein in Section 6; (B) The Board-of Directors of the
Company shall have approved a plan of reorganization, exchange,
merger or consolidation to which the Company is a party, or an
acquisition of the Company, (C) Immediately upon the closing of
an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as
amended, with respect to the Common Stock of the Company
(including shares registered by selling Series A Preferred
shareholders) where the amount of such securities sold is
S5,000,000 or more; (D) When the Company shall have a net worth
of (pound)5,000,000 or more; (E) After the Common Shares shall
have been listed - on NASDAQ for a period of not less than three
months.
(ii) Upon the occurrence of any of the events specified in
paragraph 5(b)(i) and the election (if applicable) being so made
by the Company, the outstanding shares of Series A Preferred
Shares shall be converted automatically without any further
action by the Holders of such Series A Preferred Shares and
whether or not the certificates representing such Series A
Preferred Shares are surrendered to the Company or its transfer
agent-, provided however, that the Company shall not be obligated
to issue certificates evidencing the shares of Common Stock
issuable upon the conversion unless the certificates evidencing
such Series A Preferred Shares are either delivered to `the
Company or its transfer agent, or the Holder notifies the Company
or its transfer agent that such certificate have been lost,
stolen~or destroyed and executes an agreement satisfactory to the
Company to indemnify the Company from any Loss incurred by it in
connection with such certificates. The conversion shall be deemed
to have occurred immediately prior to `the business day on which
the Series A certificates are to be surrendered, and the person
entitled to receive the. Common shares upon such a conversion
shall be deemed a Common Shareholder of record as of that date.
(c) Conversion Rate, adjustments. Except as provided elsewhere herein
for adjustment of conversion based on share price, recapitalization or other
factors, the Conversion Rate `is Two Common Shares for One Series A Preferred
Share. The Conversion Rate shall be subject to adjustment from time to time as
provided below; no adjustment shall apply after a Series-A Preferred Share has
been converted.
(d) Mechanics of Conversion. Each Holder of Series A Preferred Shares
who desires to convert the same into shares of Common Stock shall surrender the
certificate, duly endorsed, at the office of the Company orof any transfer agent
for the Series A Preferred Shares or Common Stock, and shall give written notice
to the Company at such office that such Holder elects to convert the same and
shall state therein the number of shares of Series A Preferred Shares being
converted. Thereupon the Company shall promptly issue and deliver to such Holder
a certificate or certificates for the number of shares of Common Stock to which
such Holder is entitled. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
certificate representing the Series A Preferred Shares to be converted, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record Holder of such shares
of Common Stock on such date.
(e) Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time effects a subdivision of the outstanding Common Stock,
the Conversion Rate then in effect immediately before that subdivision shall be
proportionately increased, and conversely, if the Company at any time or from
time to `time combines the outstanding shares of Common Stock into a smaller
number of shares, the Conversion Rate then in effect immediately before the
combination shall be proportionately decreased. Any adjustment under this
subsection (e) shall become effective at the close of business on the date the
subdivision or combination becomes effective. Subdivisions or combinations of
Series A Preferred Shares shall be similarly considered to compute the final
adjustment to the Conversion Rate to reflect stock splits and combinations.
(f) Adjustments for Reclassification. Exchange and Substitution. In the
event that at any time or from time to time, the Common Stock issuable upon the
conversion of the Series A Preferred Shares is changed into `the same or a
different number Of shares of any class or classes of stock, `whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger, exchange of
shares, or sale of assets, provided for elsewhere in this Section), then and in
any such event each Holder of Series A Preferred Shares shall have the right
thereafter to convert such stock into the kind and the maximum amount of stock
and other securities and property receivable upon such recapitalization,
reclassification or other change, by Holders of shares of Common Stock into
which such shares of Series A Preferred Shares could have been converted
immediately prior to such recapitalization, reclassification or change, all
subject to further adjustment as provided herein.
(g) Reorganizations, Mergers1 Consolidations or Sales of Assets. If at
any time or from time to time there is a. capital reorganization of the Common
Stock (other than a recapitalization, subdivision, combination, reclassification
or exchange of shares provided for elsewhere in this Section) or a merger or
exchange of shares of the Company with or into another corporation, or the sale
of all or substantially all of the Company's properties and 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 Sales A Preferred Shares
shall have the right thereafter to convert such stock into the number of shares
of stock or other securities or property to which a Holder of the number of
shares of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section with respect to the rights of the Holders of the Series A Preferred
Shares after the reorganization, merger, consolidation or sale to the end `that
the provisions of this Section (including adjustment of the Conversion Rate then
in effect and the number of shares receivable upon conversion of the Series A
Preferred Shares) shall be applicable after that event and be as nearly
equivalent as may be practicable.
(11) Sale of Common Shares Below $1.00 per Share
(1) After June 1, 1999, if at any time or from time to time, the
Company issues or sells, or is deemed by the express
provisions of this subsection (i) to `have issued or sold,
additional shares of Common Stock (as hereinafter defined),
for an effective price (as hereinafter defined) that is less
than $1.00Share (or as adjusted after application of
adjustments provided in sections (e),(f),(g) hereabove), then
in addition to any other adjustments provided herein and in
each such case the then existing Conversion Rate shall be
increased, the increase being computed to reflect the
proportionate decrease in price over all of the previously
existing Common Shares such lower price would produce. Thus,
if (before any other adjustments provided herein) there were
10,000,000 Shares of Common Stock outstanding and 1,000,000
Common Shares were sold at $.20/ share, the 10,000,000 Common
Shares would be valued at $1.00/share
($10,000,000), plus the 1,000,000 Common Shares newly sold at
$200,000, and the result, 1.1,000,000 Common Shares would be
divided
into $10,200,000. The resultant difference between such number
and $1.00 per Comnon Share would be the basis to adjust the
Conversion Rate to reflect the dilution.
(ii)For the purpose of making any adjustment required under
subsection 5(h)(i), the consideration received by the Company
for any issue or sale of securities shall (aa) to the extent
it consists of cash be computed at the amount of cash for
which the securities are sold, (bb) to the extent it consists
of property other than cash, be computed at the fair value of
that property as determined in good faith by the Board.
(i) Fractional Shares. Series A Preferred Shares may be issued in
fractional amounts.
(j)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 Series A Shares, 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 ihe Series A Preferred Shares that shall be convertible at
that time; 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 Series A Preferred Shares that shall'be convertible at
that time, 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 purpose.
Should this action require the affinnative vote of the Holders of Series A
Preferred Shares, whether as a `Class or voted with Common Shares, said Holders
of Series A Preferred Shares shall be deemed solely for this purpose to have
consented thereto, and shall be deemed to irrevocably constituted management of
the Company as their proxy and attorney in fact solely for this purpose to
execute such documents as may be required to effect this consent.
6. Registration Rights
(a) At any time after Series A Preferred Shares shall have been converted
into Common Shares at the election of the Company as provided in Section 5(b)
and the Company shall have exercised its right to require conversion thereunder,
or if the Holders of a majority of the Series A Preferred Shares shall have
given notice of election for Conversion as provided in Section 5(a), the Holders
of a majority of the Series A Preferred Shares may request "piggyback'
registration of the Common Shares in conjunction with a registration planned by
the Company subject to underwriter approval.
(b) Upon such a request being made by the Holders of a majority of the
series A Preferred Shares, the Company will notify all of the remaining Holders
of Series A Preferred Shares as well as all Holders of Common Share who shall
have previously converted
Series A,Perfered shares (but not the successor thereof if by sale)
shall be deemed to have requested the registration and shall be fully subjected
thereto.
(c) The Company will use its best efforts to effect a single public
registration on the appropriate form available thereto of all converted shares.
The Company will be under no obligation to secure an underwriter or other seller
`for the shares and sales of shares after the registration will be solely the
responsibility of the Holder thereof.
(d) To the extent required to effect the registration, converting
shareholders shall fully cooperate with the Company and its counsel. Failure to
cooperate will entitle the Company to exclude a Holder from the registration.
Effect of Issuance of other Series of Preferred Share~
(a) Nothing contained in this designation of rights shill limit the
ability of the Company to authorize and issue other Series of
Preferred Shares or other classes of Preferred Shares with rights or
preferences that are senior to these Series A Preferred Shares or that
limit or reduce the rights or preferences of these Series A Preferred
Shares. In the event that other Series or Classes of Preferred Shares
are authorized and issued, unless otherwise provided in the
designation of rights of said other Series or Classes, these Series A
Preferred Shares shall vote on all matters based on the conversion
rates adjusted into common shares provided herein, and said such other
preferred shares shall have such voting rights as is provided in the
designation thereof~ thus, if there were 1000 Series A Preferred
Shares Issued, they would have the voting rights of 1,000,000 Shares
of Common Stock, and if 1000 other preferred shares had voting rights
of 1,000,000 shares of Common Stock, and there were 10,000,000 shares
of Common Stock issued and outstanding, then in all votes for the
Board of Directors, or any other matters in which shareholders may
vote, all Common Shareholders, and a.1l Preferred Shareholders shall
vote together, and Preferred Shares would have the weight based on
their conversion into comrnon. There shall be no class votes of these
Series A Preferred Shares unless said vote is non-waivable and is
required by law
(b) Unless otherwise provided in the designation of rights and preferences
of other preferred shares, any preferences of these Series A Preferred
Shares shall be ratable with other series or classes of Preferred
Shares that may be hereafter designated.
Dated this 11th day of February, 1999
By /s/ Barry W. Phillips, Treasurer and Designated Officer
AMENDED
Certificate of Designation of Rights of Series A Preferred Shares
Of
Milinx Business Group, Inc.
Pursuant to Section 151 (g) of the Title 8 of the General Corporate Law of the
State of Delaware and Article V of the Articles of Incorporation, the Directors
hereby designate The voting powers, designations, preferences, rights and
qualifications, limitations and restrictions of
"Series A Preferred Shares"
1. Dividends
Right to Preferential Dividends. Subject to the rights and preferences
of other classes or series of Preferred Shares, the Holders of the then
outstanding Series A Preferred Shares {except when there shall have been either
a notification of election for conversion by the Holders under Section 5 (a),
hereunder, or the conditions shall have been fulfilled for a conversion by the
Company as provided in Section 5(b) hereunder, whether or not notification
thereof has been made by the Company, (unless the Company shall expressly give
notice it elects not to require such conversion} shall be entitled to receive,
if, when, and as declared by the Board, out of any funds legally available
thereof, a non-cumulative preference of 10% on cash dividends up to $ .32
maximum total accumulated dividends per Series A Preferred Share held thereby.
These dividends shall be payable, when and as declared by the Board. Dividends
on the Series A Preferred Shares shall be non-cumulative, there shall be no
minimum dividends, and no rights shall accrue to the Holders of the Series A
Preferred Shares in the event that the Company shall fail to declare or pay
dividends on the Series A Preferred Shares, whether or not the earnings of the
Company in that previous fiscal year were sufficient to pay such dividends in
whole or in part. In the event that the number of outstanding Series A Preferred
Shares are adjusted by stock split, reverse split, or other corporate action,
the preference stated herein shall be adjusted accordingly. The balance of any
such dividends so declared shall be allocated as between Series A Preferred
Shares and Common Shares as if said Series A Preferred Shares had been converted
to Common Shares based on the Conversion Ratio (as adjusted) provided herein,
and as to any other classes or series of Preferred Shares in accordance with the
rights and preferences thereof.
2. Liquidation Rights of Series A Preferred Shares
(a) Preference. Subject to the rights and preferences of other classes
or series of Preferred Shares in the event of any liquidation, dissolution, or
winding-up of the Company, whether voluntary or involuntary, {except when there
shall have been either a notification of election for conversion by the Holders
under Section 5 (a), hereunder, or the conditions shall have been fulfilled for
a conversion by the Company as provided in Section 5(b) hereunder, whether or
not notification thereof has been made by the Company, (unless the Company shall
expressly give notice it elects not to require such conversion)}
Page 1
The Holders of the Series A Preferred Shares, then outstanding shall be entitled
to be paid out of the assets of the Company available for distribution to its
shareholders, whether such assts are capital, surplus, or earnings, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of the Common Stock, an amount equal to $.32 per Series A Preferred
Share held thereby plus an amount equal to all declared and unpaid dividends
thereon, less accumulated total dividends paid thereto (but not less than zero).
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 Shares shall be insufficient to permit the payment to such
shareholders of the full preferential amount aforesaid, then all of the assets
of the Company to be distributed shall be distributed ratably to the Holders of
the Series A Preferred Shares, subject to any rights or preferences of any other
classes or series of Preferred Shares, on the basis of the number of shares of
Series A Preferred Shares so held.
(b) Payments to Common Stock After the preferred payment of $.32 per Series A
Preferred Share is made to Holders of the Series A Preferred Shares the Holders
of the Series A Preferred Shares shall be entitled to share with Common Shares,
based on the adjusted conversion ratio of Preferred Series A Shares to Common
Shares as if converted, and as to other Classes or Series of Preferred Shares
based on the conversion ratio of said Shares to Common as if converted or as
otherwise provided in the rights and designations thereof as may from time to
time be made by the Board of Directors, all remaining assets of the Company to
be distributed.
(c) Effect of Adjustments of Shares. In the event that the number of outstanding
Series A Preferred Shares are adjusted by stock split, reverse split, or other
corporate action, the preference stated herein shall be adjusted accordingly.
3. Merger, Consolidation
(a) Preference. Subject to the rights and preferences of other classes
or series of Preferred Shares in the event of any merger or share exchange of
the Company, or a sale or other disposition of all or substantially all of the
assets of the Company {except when there shall have been either a notification
of election for conversion by the Holders under Section 5 (a), hereunder, or the
conditions shall have been fulfilled for a conversion by the Company as provided
in Section 5(b) hereunder, whether or not notification thereof has been made by
the Company, (unless the Company shall expressly give notice it elects not to
require such conversion)} the Holders of the Series A Preferred Shares then
outstanding shall be entitled to receive, before any payment or declaration and
setting apart for payment of any amount shall be made in respect of the Common
Stock, for each share of such Series A Preferred Stock so held, in cash or in
securities (including, without limitation, debt securities) received from the
acquiring corporation, at the closing of any
Such transaction, an amount equal to $.32 per Series A Preferred Shares, plus an
amount equal to all declared and unpaid dividends thereon, less total
accumulated dividends paid thereto (but not less than zero). In the event that
the number of outstanding Series A Preferred Shares are adjusted by stock split,
reverse split, or other corporate action, the preference stated herein shall be
adjusted accordingly.
(b) Remaining Proceeds. Subject to the rights and preferences of other
classes or series of Preferred Shares after the payment or distribution to the
Holders of the Series A Preferred Shares of the full preferential amount, the
Holders of the Series A Preferred Shares, Holders of other Series or Classes of
Preferred Shares according to the Rights and Designations thereof and Holders of
Common Stock then outstanding shall be entitle to receive ratably, with al
Series A Preferred Shares treated as if it had been converted into Common Stock
pursuant to Section 5 hereof, all remaining proceeds of the Company to be
distributed.
(c) Valuation of securities received pursuant to a merger, share
exchange, sale of substantially all the assets or similar transaction. In the
event that a transaction occurs pursuant to which a non-cash assts are received
an to which this Section applies, the assets received for the purposes of this
Section shall be valued as follows:
(i) If the assets received are securities that are listed on NASDAQ or
an exchange, the value shall be deemed to be the 3 day high average closing
price (or average between bid/ask if OTC) on such exchange or NASDAQ over the 30
day period prior to the closing of the transaction by which the securities are
received.
(ii) If the assets received are of readily ascertainable market value
then that value shall be used.
(iii) If the assets are unlisted securities or other assets that do not
have a readily ascertainable value, the Board of Directors in good faith will
value said assets.
(iv) If the fact that assets exist which may require a valuation
process as described herein shall not delay closing the transaction by which the
assets are being received.
(d) Notice With respect to any transaction which involves a merger or exchange
of shares, or a sale of substantially all the assets not in the ordinary course
of business, the Series A shareholders shall receive not less than ten days
notice of the transaction and the terms and conditions thereof.
4. Voting Rights
(a) Each Holder of Series A Preferred Shares shall be entitles to vote
on all matters whatever upon which shareholders may vote, including election of
the Board of
Directors.and,eShaitbe'entitledlb -theesslyprovided h-
number.-of-votes-that -.equal 1wice thenumbbr-,of GominonVW" Vilich"Said Sefies
A Preferred Shares~couldbe convertfor,eaclr,o~'Serieshiiii 6~06mm.OwSh A
Preferred Sbare~(adjusted for -cons6lidations~'giind-di.vidiftidg-'i6f-c,-
(b Unless otherwise required by law, Series A Preferr - ed shareholders and
Common,,sbareholders,shaH,vbtet6gpt,ber,'~on -all 4nattirsuMdrs are peffnitted
to e696,6_a'~sietillw.heft-Seirilea?A' Preferred
Shar-eholders'aex-askA"otiiequired'1by,saia~e..m1a!,"Sdp
- -~class.,.f6r,,fapproval~.,.of~4emaj6nity~of`'the~claisg.-shd bezwif -ghf
- ---"the J (c) --,Y, n Votingri s.shallibe-,adjusted'A' mventdfadjustmeh.ts"n
the-c-onversion -Ratio.,,,except ~that -increiscs,or,reductions thAvapply
eq6allyto'.Series X-Preferr&&Shares and Common Shares-shall not,cause an
adjustment to be made. 4
The, ,C7,omp ersvf-S-eri iany;_=d: -,old es,,APrcfar-ed- in's Pon -a -of
en'es-,-A,~.-P-rtfetT,-M--!Shar6s,shWI be (a), Rkghrlo Convert. -..E Ch share.
- -.S 'b -i 41~ ~suffic-ent,,C-ommn-Shar-es,,4Ahbriz~ed,-and7.iso~r at -follow"S4"
oneforth qZwedth Ip wur --gsuance to apFmv_ed.'kby 6ei.qbm 1QW, C e-S-eries A -f
ng-the -Preferred SharIder may be.converied:to:Common Shares- 611bV6 a
16-1h,606lident -fV-,irft1cW-- &Md7.&dh--` assemble shares of Common Stock at
the Conversion Rate sc hereunder (as adjusted). In the event that Series.A
Preferred Shares~subject thereto shall have been trans&rted- -the
timepcnod,for~-,onversion~shdPbe--measured-ftom the date of issuance here
,itothe-initidlof,lder (b) Automatic Conversion at Election of Cg=4M. (i ~-Jlach
shart-o-f Se ~es~A,~Pri~fer-red,;Sharits~shaU-,automaft)icaUy~at..the election n
of the Company be converted into'shares of Common'Sto6kbased on the then
effective Conversion Rate set forth in Section 5(c) hereunder (as ---,#ad
s*-Iiifqnc~of Jhe& dlowi,, -,shalfx b , ~v ~qg 1A) The' ju _;-ofi
Senc~s,A,--PreferrediShares;oikstanding~hav,,e-givennotice-of election
t9,conveq.-as:prDvided.- -ein,;in,.S 5~ e o r ct -her -6ct -4 B) Th -.Board,. M
e ors of the Company shallhaveapiproved, a plan.-of-,reorganization, texchange,
merger or consolidation to, which the Company is a party, or an acquisition,of
the Company; (C) Immediately upon the.,dosing: of an underwritten public
offering pursuant to an effective registration statem, ept under- the Securities
Aztof,49334~,A& amended, with respect to
the-, lbe-Company, including-shares registered-by selling Common Stock of,
Milinx PrelerrePagea4es, Arriended Series A Series A Preferred shareholders)
where the amount of such -securities sold is 35,000 ore-, (1p) When the, Company
- -shall have a net worth.of
000 or m_,I $5,000,900-or more. (E.) After the Common Shares, shalLhave been
listed on _NASDAQ for a period of not less than three months. (ii). upon'the
occurTence of any of the events specified- in -paragraph: 5(b.Xi) and the
eIecIiop.(ifapp!jc0te) being so made by the Company, the outstanding Shares of
Seq.'e:s A Preferred, Shares Ahall-be converted. automaticaU withou any
further.action.-by the Holders of such Series A t Preferred Shares and.-whether
or-not t.be.certificates-_representing.such Series A Preferred Shares are
surrendered to the Company or its transfer agent; providpdathowever, -that
the,,Compan y shallnot be oblig ed to ssu the sham o Commow Stock issuable upon
ie certificates evidencing . f the conv-ersion.uniess..the.cer,tificates
evidencing such Series A-Preferred Shares are eit* delivered to the. Corrtpzu~y
or its,trapffer Agent or the Holder notifiesany,orits transfer-agent that
such,certificate have beenlost,.istolen.pr.,destroved,.and~,exewtes an agreement
satisfactoryt.qft., inpapytOndemaj. 'the-Companyhromany,loss
incuro4_by_ii-:mlbppneaiort--witcates-. conversion,ghall be deemed.to.
haveoc.ourred immediatelyiprior to the,busines& day on
which the Series A 6ertificates are. to be Wn-endered, and the person entitled.
to g~i~,e P~Lqommpn , suqh-,a conversion.shall be deemed a Common
ShareholdCr-oftew dr .Of- -T, goo., ffiardate.~
,,,,,-.,,-,,,(c).Coriversion2Rate,gustments.. ,F-xcept-" vide"sewhereberein for
7.00 adjustment of.ponce,,iqp-based on;s other actors, the Conversion Rate is
Three Common Shares-for One-series APrqferred -Share.:. The Conversion Rate
shall'be subject to adjustment from time -to time as~provided below;Lno
adjustmerit-shall. Apply after a Series A Preferred Share. has-been
converted.,,.
(d) Mec cs of Conversio Each Holder of-Series A Preferred Shares who e-
sarnie'into, sharcate, Common Stock shall surrenderthe c desires to conv _rt be
ertifi duly endo,rsed,_iLt.the,office of the Company or of any transfer agent
for the Series A Prefen-ed.Shares, or Conanon Stock, and shall givewritten
notice tothe Company at- such office that,such -Holder elects to convert the
same and sball istate therein the number.of shares of Series- A Preferred Shares
beingconverted. ThereuponAhe.-Companyshall promptly issue and,deliYer to such
Holdera certificate Pr certificates for the number of shares of Comm.on.Stock to
which,such Holder is entitled. ~Such conversion shall be,, deemed to have been
made immediately,prior-to the close of business,on-the date of such surre:qde)r
ofthe certificate' representing the Series. A Preferred,Shares tobe converted,
And the person entitled to receive the shares of Common Stock issuable.upon such
conversion shall be treated for all purposes as the record Holder of such shares
of Common Stock on such date,
time totime~effects a--subdivisio'n of the butgandills Common Stock, the
Conversion tetheninelf :immed-a-tely-befrti natelyuincreased,shall-b P nb' the
outstanding and conversely, if the-C-om-pany at anytime or from time to-tune
con' ines shares of Common Stock into a smaller number of shares, the.Conversion
Rate then-in effectAmmediarely -before the coly~d__:oeasedlAnbe pro~ortibnate
ecr, y adjustmentitind~ffbctiirblift'(e) shall 6 ' k -- I he dlose of business
on the date the subdivisionLot-c6mbuiation becomes-effective. ' tibilivisions;
or combinations of Series A.Prefbrred'Sbards~ slidlfb6 kmiltily cons"ide r&d to"
compute the final adjustment to the Conve mi-onRate toreflect stotksp,lits and
66mDinations.-
- -~(f,).-~'Adjustment~-fj6rReclassificafim~'~-Exchabs~M, In the event that
at.~anytixne,orfrotnt el tirrieitthe-Co-m-mo'n'StidA,-e~'-u'pon~6e conversion
of-the Series,A~Preferred Shares-lis -changed-intb_Ahe salnieor,_ i'Merent
number of shares of any class or, clasw~6fvock-,,-w PM, auo, (other than c-o
irbinationof or-- it iliiLimoia,66k-dividiiiid~Orareorgm tonmerger,
any.such,event 6ad Ider-of Series A Preferrdd:Shar&~shalthay& the right thereaf*
to -c6hilmrsuch'. woka. h- 9& thie;~hw e kc iii if 6% s
and~pro.pedy;rec,eii~&le,upon~stich~reicapitafintiol~-reclassifica 'on or: other
change, by Holders,.of,sharesfofz,C-,eiamon~Stock-,ixitb whidli-such sh.aiesx,
oPSeri I es'A Preferred.Shares -c-QuIdAlavebOPPO~P~iV)niaat#ly-pnorlosuch4~ion~
reclassification or ___--chan e a111-sub Of, -~u =n as-
W, sprovi AM -f -Cons t time or a q&fio Lbbs 6rgq s ftom -ti, me,
recapitalization;,,sti wivision~ combination, reclass'ification:4 exdoiie of
snares provided for!e1sewbere -in4hist6fttion) -or, -wmerger,orlex'c"hange sh
ofthe ompany~M6-or into another corporation, or lhe-tAle of allor
ssubstantiio4fl ofthe Company s properties and assets to any other person, then
as a part of such reorganization, merger, consolidation,&essoe-,~ dders'oftbe' e
- -Seri s A Preferred
pr6vision4hAllbe-'mad ' Ahat4h H
Shares shaffhavwthe right thereafterlo convert sucli sto'ek- int6lthe riumbdr,of
shares of stock or-other.s6cunti6vor property to which a~Hblder ofthe number"o f
~hms of Common -,Stock -deliverable -upon conversi , on woul&rhave been entitled
on -such capital reorganization-,, merger,'- tconsolidation, or sale. -in any
such tais_e,~ appropriai adjustment shall be -made.in- th6,apolication;of the
provisions, ofrthis~Sbctio I n wit - fik-respect _ to the rights of the Holders
on~tmerger,,g- A-Preferred-~Shares after ih6,rp6 consolidation or ~sale-to the-
end tharthe provisionsoflhis~'s6cfi -on" 'fincludinjkAdl6stment of
the.Conversion Rate -,then in~ effect- and We nUinber--of-shares ~eceivable upon
conversion of the.Series A-Preferred'Shares)-shall beappliclible after that
event and be as;n'early equivalent -,as may be practicable~
(h) Sale of Common Shares Below S2.00 12er Share.
(i) After June 1, 1999, if at any. time,or -from time.to. timei.the Company
issues or sells~_or is,deemed.by,#eex .ppsp.r.ovisions-ofti~ussubsecuon(i) to
have issued or sold~ additional shares of Common Stock (as hereinafter
defined),,fbr an eff-ectiveprice;(as .hqeji~fter-defined)4hat_ is. less -than
$2.OOShare.(9ras Adjusted afterapp! ion of. adjustments provided fin sectio
(e),(f),(g)_hprtab9ve),, 0 ents ns-ep~.i4addi4ont anypthera4justm provided
herein and in eachisuch cW#~e then ~existmg Conversion Rate shall be increased
the increase.b ing, cQmp eM9pted to reflelct the. proportionate decrease in
price over all of the previously existing Common Shares su& lower pripewpuld
- -produce.
(ii) For the purpose of mal4ng any~adjustmeritreq*ed under subsection. 5(h)(i),
the considerationreceived by,tho-Com.any for any issue or sme of securities
shall (aa) to the extent it consists of cash be computed at the amount of cash
for whichAe:sewrities awm"-(bh)-_to the extent it consists of prpperW otherthan
caskbe.?computed-At the fair value of that property as determined in good,fhith~
by4he Board.,
(i) fractional b;z;issuedinefractionalredSham, amounts. Rg~rvaiqon-of Stock
Issuable 11pon C-onver.sion',~,-.,T-.he-Com0any- shall at all times -reserve,
and keep availabps,.out, iefits. authorized,~, _t;ed shares~of~Common fi -po
Stock, solely: orthe.pur se_ofefares,nof-htheoSeriesoA Shares, suchnumberof its
Ahares-ointimeoto timebe
sufficient to ef~em.thq:,converse
Shares that.shall,be convertible, at- that timqand,ifat anyfime the. number -of
authorized but unissued shares ofCommon Stock shall, not be sufficient to effbct
the,conversion of all
outstandin
g shares -of the SeriesA Preferred,Shares-tbat shall be -.convertible at that
time, the ~Company will, take such corporate . action:as ~may~-Jnjhe
opinionof.its, counseL be ~necessary to increase its,authorized but unissued
sharesof Common Stock to such number ,of shares as shall be sufficient. for such
purpose. _ Shouldthis.actionrequire. the affirmative ,vote of the.Holderslof
Series A. P.refen-ed:,-Sh~wes,.whetbe,,r,,asa,-Class~or-,voted with Common
Shares, saidHolders of Series A.-Preferred Shares Ishallbc deemed,solely for
this purpose to have consented thereto, and,, shE4, be deemed to
irrevocably,constituted management. of the_~, Company.. astheir proxy and
attorney in fact:solely for-, this:purpose to execute such documents asmay be
required -to efFect this. consent.
6. . Relostration Rights
(a) At any time after. Series A Preferred Shares- shall 1have been. converted
into Common Shares at the election of the Company as provided in Section 5(b)
- -and the Comparry shall have exercised its fight to require conversion
thereunder, or if the Holders of a majority of the Series A Preferred Shares
shalLhave given notice of election for Conversion as provided in Section 5(a),
the Holders of a majority of the Series A
Preferred Shares"may'request "piggybacV -registration of the-Common Shares in
conjunction with~ a registration -planned -by the;Cotnpany -subject to
underwriter approval. U pon such -a Tequest beifig'made-by theHolders of a
majority of the Series A Preferred Sbaresi the Company vAlFnotify~all ofthe
remaining Holders of Series A Preferred Shares as well as -all Holders, of
Common Shares who, slWl -have previously eries
convertedS ' A*Prdfl~ ~",-,-"Sh-ar6g-(bui-n6tTthe:suc6essortherecififby sale),
and they shall be deemedistration andushall beFefully subject thereto.
(c) The Company will luse i&bestlifforteto- effect a single public registration
on the appropriate form available thereto of all converted shares. The Company
will be under no obligation to secure an underwriter or othersellet for thel
shares and sales of shares after the registration -will be solely
the-fespohsibility oftheHolder thereof
- -(d) To!the~extconverting-4shareholders shall My cooperate wicounsel.oFailure-tb
cooperate -will entitle the Company to exclude a Holder from the,registratiorL,
7. Efrect-4- uAuce4f-4A'herSer4es Vf TWerred'Shares
(a) Nothing contained inthis idesignation of rights shall limit the ability.of
the
Comp %authorize,,aM',--.isstie.ot,'heT,,'Siifies-I.Of
P.~rdferred,-~ShA-me,,or.other. classes WS~orVrefl 5~,ftt~are ;, - s I enior
- -',Sl A MnW t %ese ~ di Im-ut-or redbce~thd tij)xts or-prd4renWsI,6T-tbese
Series A Preferf ~vlhiht:.zvent,thgt~cither"Series or Classes
of:Prdbrr6d~Sharesare: -fiii~nldss*therwise provided -inthe-t esignationbf
fights of -said,~oth~r-Seriesior~Ctiams,,t-4itse!Senes A ~PreferredShares sbaU
- -vote -on RIF - ron ~thw-conversiori ratesiadjusted,4nto common- ghEir6sprovided
- -herein, -and -6aid.,s-neh~otherpref6rred-sham -shall -havesuch voting-tights as
is provided inAhe designationthereofthus, if there~were,1000 Series A-Preferred
"of
Shares Issued, ~they 'would have the voting-rights' -1,000,000 -Shares of,
Common Stock.,and if 1000ztherpreffifed shares,,had voting ri6ts of 1,000,000
shares of Conunon"Stock,.and,,ihere-~.w'ere---~I 0,000~OW shares ofCommorrStoe-k
- -issued and outstanding, theii-,,i.n~afl.votes.!forthe-tioard of Directors; or
any other-matters in which shareholders:may vote, all Eornmon Shareholders,
andAlPreferred Shareholders shall.-vote together, andPrefer-red.'ShareSwould
lave the weight based on their conversiominto -common. ~ There shall be n6
classvotes of these Series A Preferred Shares unless said vote is non-waivable
and is required by law. (b) Unless otherwise, provided in the designation of
rights and ~preferences of other preferred shares~ any preferences of these
Series A Preferred Shares shall be other seriesor.classes of-Preferred Shares
that may be hereafter designated. Dated this Ath day of June, 19,99 By: C5, 4't;
~ IG IWUnx Preferred-Page,,BAnvencied Series A
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09.00 AM 0611711999
991244095 - 2977468
Certificate of Designation of Rights of Series B Preferred Shares Of Milinix
Business Group, Inc.
Pursuant to Section 151 (g) of Title 8 of the'Geheral orporate Law of the State
of Deiaware and Article V of the A?1icles ofIncorporation, the Directors hereby
designate
The voting powers, designations, preferences, rights and qualifications,
limitations and restrictions of:
"Series B Preferred Shares9'
And there is-authorized to be issued 10,000,000-shares'thereof with the
following rights, terms and preferences: NiZ n- Rights of Ser iqui xatio rife
ies B rred Shares.
(a) Pr8ference."S ubJ ect tothe rights, and, p references of other cl asses, Or
series of -,d Shares in the event ofariy liquidation, dissol ution, or win
ng-upofthe
di C~_ Coany, whether voluntary or involuntary, (except when there -shall .,have
been CAW".a felec 'on for conversion by the Holders under Section 4(4),,,hereu
de lions,,AalLh - been- Ifilled fora, ave 1b conversio
n-bythe,Company.,as. provvidedtim,.
Section 4(b) hereunder, whether or not notification thereof has been made by the
Company, (unless the Company shall expressly give notice it elects -,riot to.
require such conversion)),tht Holders of the Series B Preferred Shares-then
outstanding shall be entitled to be paid,out ofthe assets of the Company
available for distribution to its shareholders, whether such assets. are
capital, surplus, or earnings, before any payment or -declaration and setting
apart for payment of any amount shall be made in respect of the Common Stock,
- -an amount equal to $ 4.00 per Series B Preferred Shareheld thereby, less
accumulated total dividends paid-thereto (but not less than zero).- If upon any
liquidation, dissolution, or winding -up of the Company, whether voluntary
orinvoluntary, the assets to be distributed to the Holders of the Series B
Preferred Shares shall be insufficient to permil the payment-to such
shareholders-of the full preferential, amount aforesaid, then all of the assets
of the Company~tob ebstributed shall be-distributed ratably to the Holders of
the Series B Preferred'ShaTes, ~ubjecfto any rights or preferences of any other
classes or series of Preferred Shares, on the basis of the number of shares of
Series B Preferred Shares so held.
(b) Payments to Common Stock. After the preferred payment of $ 4.00 per Series B
Preferred Share is made to Holders of the Series B Preferred Shares the Holders
of the Series B Preferred Shares shall be entitled to share with Common Shares,
based on the adjusted conversion ratio of Preferred Series B Shares to Common
Shares as if converted, and as to other Classes or Series of Preferred Shares
based on the conversion ratio of said Shares to Common as if converted or as
otherwise provided in the rights and designation's
thereof as may from time to time be made by the Board of Directors, all
remaining assets of the Company to be distributed.
(c) Effect of Adjustments of Shares. In the event that the number of outstan
ding
Series B Preferred Shares are a~ojuste_d by.stock split, revers . e split, or
other corporate action, the preference itatie'd herein ~hail be adjusted
accordingly.
2. Merger, Cons6lidafio'n.
(a) Preference. Subject to the rights and preferences of other classes or series
Preferred Shares in the event dfa~ny merger or share excb . ange of the Company,
or a sale or other disposition of all or substantially all of the assets of the
Company {except when there shall have been eithera notification of electionfor
conversion by. the Holders-under Section 4(a), hereunder, or the conditions
sh.all-hue-been-f~lf-illed-for a conver on by the Company as provided in Section
4(b) hereunder, whether or not notification -thereof has been made by
the-Company., (unless-the. Company shall expressly give notice it elects not to
require such conversion)) the Holders-bf-1he Series B Preferr~d Shares then
outstanding shall.be -e~ntitlddv- re.pei*e-r!!~ _,apyw ayment-ordeclaration.and
setting apart for payment of a-n-'y-amou'nt.'s-hall-"be~,mE6ffi~in respect of
the Common Stock-, for each share of such.Scries7'3-`Pfbferfed* Stock
sb1-he-l&,z,, in-cash or in securities (.including, without limitation, debt
securities) mceived-from the acquiring corporation, at,the closing.of any
such trans
Uifl7 tie BPreferred Share ess actim an-amount--e -6s- -total a6c U_m` dlaitcl
~di"Vid6nds-'.;thedevenCthafthe'number T~rdf~i-r ares are split, -reverse split
6f'other of outstanding'ea-sh"s;,B~- corporateladion; TheAptef
6ence'djusted*accordingly
. ~b):RerriainingTroceeds. Subject to the ri , gbts and~preferences , of other
classes or -series ofPreferred Shares,aifteuthe payrnenfor,distribution to the
Holders of the Series B Preferred Share&of the fullLpreferential. amount', the
Holdersl:of the Series -,B Preferred Shares, Holders of other Serieslor Classes
of Preferred Shares,according to the Rights and Designations thereof
and-Holders-of Common.Stock then outstandirig shall:be -entitled to receive.
ratably
xvith,all Series B Preferred Shares treated as if it had been converted into
Common Stock pursuant to Section .4 hereof, all remaining.proceeds of the
Company to be distributed.'
(c) Valuation of securities-received pursuant to a-merger, share exchange, sale
of substantially all the.assets or siinila'r"transaction. In the event thata
transaction occ hr,
pursuant to which non-cash assets are- received and towhich this Section
applies,t assets recei Ved for the purposes of this Section shall be valued as
follows:
(i) If the assets received are securities that are'listed on NASDAQ or an
exchange, the value shall.be deemed to be the 3 day high average closing price
(or average between' bid/asilif OTC) 'on such exchange or NASDAQ,over the 36 day
period prior to the closifij of the transaction by which the securities are
received.
(ii) If the assets received are of readily ascertainable market value, then that
value shall be used.
(iii) If the assets- are -unlisted securities or -other -assets that do not have
a readily ascertainable value, the.Board,of Directors in goodfaitb will value
said assets.
(iv) The fact,that assd.ts.,exist.which.may~.require~a'valuation process as
described herein shall not delay closing the,transaction by which the assets are
being received.
(d) Notice, With respect to zny~ transaction which involves a merger or exchange
of shares, or a sale of substantially all 4he assets not in the-ordinary course
of business, the Series B,shareholders shall receive not less,than ten days
notice-of the transaction and the terms and conditions thereof.
Vating'Rights.
(a) Each Hol der of Series B Preferred Shares -shallFbe- entitled to vote -on
aff
Board-of
~-matters whatever upon which shareholders may vote, includirfg--election of the
Directors and, except as otherwise expressly provided heroin, shall be entitled
to the -ibe
- -_,thun r~ ..-to wh es~- 0;,motes.xhat equal the number
of`~Common_Shidhssaid-Seri 2it, 'iT -C Shares fbr~ea_61h.L'~.:-i M6 6& Shares
could be,convertedlbutmot less th=-2 ommon I~rqforred Share(adj usted forconslo
idations zhddi'vidends -of Common- Shams)_
(b) Unless otherwise required by law,'Senes B Rreferred shareholders, others
Series Preferred shareholders (subjeatto the Designationsr,thereof), and Common
shareholders shall vote together on all matters upon which shareholders are
permitted to vote and not as separate classes..,In thos; casesrwhere Senes~ B
Preferred Shareholders are required by law to vote as a separate classthe vote
required by mid class for approval of the proposed action -shall -be. a simple
majority of the class.
(c) Voting-rights.shall be.adj.usted in the event of adjustments in the
Conversion Ratio, except that. increases or reductions that apply equally
to'Series B Preferred Shares and Common Shares shall not cause an adjustment to
be made,
4. Conversion.
The Company and the Holders of Series;B Preferred Shares: shall have the
following conversion rights:
(a) Ri-ghtto Convert. Each share of Series BrPTeferred Shares 'shall be'
.convertible, if there shall -be sufficent Common Shares authorized and issuable
therefor at the option of the-Holder as provided'i In-Section (c) at any time
aRer September 30,1999.
(b) Automatic Conversion at Election of ComPany.
(1) Each.share of Series B Preferre&Shares:shall automatically at the el ection
of the Company -be -converted into shares of Common Stock based on the then
effective Conversion Rate set forth in Section 4(c) hereunder (as adjusted) if
any one of the following shall occur: (A) The Holders of 5.1% of the
Series~B.Preferred Shares outstanding have given .notice of electim. to'convert
asp rovided herein in Section 61 (B) The Board of Directors of the Company shall
have approved a plan of reorganization, ekchange, merger or consolidation to
which the Company is a party... -,or-an acquisition of the~Cornpany;~ (C)
Immediately upon the -an eff ti
closing-,of -anecdvewritten public, uffering-pursuant-,to registration statement
under the S=udties_Aaof' -1933, asamended,:with respect to the Common Stock of
the Company (inaluding-shares rg isterC -by selling -Scries.,BPreferred
shareholders) where the amount e d ofsuch-securities sold -is-~$-.M,000,000 or
more; (D)Vhen, the Company (E)After the Common .ShaTes.shaU'bave~-been:.Ij~t~.
SDAQ for a-penod;of not less than -thTee-,mdhths' e -,ev pati -ft & pec'
ed-irrpar V.. aph-A(b)(i) i~,,U -the
- -bocurren' M" ents s Ifi ffie,.,,ele (Jfa-to the, ~Ah&t clion'.
,Iiaiblo~i~ng,somade,,byThelComt*n Y" rp aT hal tstandintshards.-,of Serioj&
0-11 -Rrp ~ioally,without-.44~1- tion4bylhe Holders of such Series B -hethe~_-
otthe certificates-representing such r Preferred,,-Sha~br'iid _W Series 8
- --Pre-fer.red,~hares..aTe~,surrendered,,to the',Company. ~or its transfer
agent;. provided -however-,that the. Company -shall not be -obligated to
cer-tificates,,e-~i.dencing.t-he~shares~of.~Common~-stock issuable upon
the-eco,oversion:unless,the,certi-ficates evidencing such Series B Preferred
Shares -are either delivered to th6'.~Company or, its-transfer agent,- or the
Holder notifies the Company or its transfer agent that such certificate have
been lost, stolemor destroyedand executes an -agreement satisfactory tothe .
Company to indernnify the i Company from any loss incurred by-Itin
connectionxwthzsuch certificates. The conversion shall be deemed to have
occurred immediately prior to the business day on which.the Series B
certificates are to be surrendered~ -and-Ithe person entitledto receive the
Common shares upon such a conversion shall be deemed.a Common Shareholder of
record as of that ~ date.,:
(c) Conversion Rate, adjustments. Except as provided elsewhere herein for
adjustment of conversion based on share-price, recapitalizationor other factors,
the Conversion Rate is Two Common ~ Shares, for One Series. B-. Preferred Share.
The .Conversion Rate shall be subjectlo adj ustment,from time to., time as
provided below; no adjustment shall apply after a Series B Preferred Share has
been converted.
- -(d) Mecbanics,of Conversion. Each.Holder ofSeries B Preferred Shareswho
,desires - to convert.1he same.into shares qUCommon Stock shall suri--ender the
certificate, duty pridorsedat-the office ofthe Company or of any -transfer
agentfior the Series B Preferred Shares or Con mon,Stock,,and shall. give
Written.notice to the Company at such office, that such Holder ele'ets to
convertthesame and shall.-state,iherein-the number of shares of
Series,BPTeferred Shares being converted.:. Thereupon the C panyshall
proMptly.is d deliver to such Holdera certificate or certificates. for the
number of shares-~pf Common-Stock towhich such Holder.i5 -entitled. .
Such-conversion shall be, deemed to have been made immediately, prior to the
close-of business on the.date,of such surrender of-the certificate representing
the Series B Preferred Shares to be converted, and the person entitled to
receive, the, shares of-Common Stock issuable upon isuch conversion shall be
treated for all purposes as the record Holder of such shares of Common Stock on
such date.
(e) Adjustment for Stock Splits and Combination . If the, Company at -anytime r
from time to time,.e ffects, a subdivision of the-, outstanding Common
Stock-,the-.::- -,onv ,effect -immediat-.rsubdivis'~shafl-_e -that, -7b
- -ersionRate then. in I on m to .Proportionately increased, and conversely, if
the Com pany at anytime or fro -time Aj, in.e.-combines.the;,outstandmg shares
of Common: Stock-iritoa-smal ler number.-of shares, the Conversio' n~ Rate I
then in.effect -immediately before the combination shall be., ption tely
- -decreased., Any.,adjustment:,under.-t.his-,s.ubsec-tion.~q)~sliall,'..6d rt a
effoctive~;At4he close, ofbusiness- on. the date the..suhdi.Vision. or.,
combinatiom, Deco m.es v6.- -S.4aivisiInY~or.com binations of Series
B;Preferred,Shares~shall be !final adiustment..to -the ~Convvrsion Rate,to.
reflect. st6ck,',,-splits--__
qomputq.the
- -and ~combinations.
(f) --Adjustments,for Reclassification, ~xchange and Substitution. In the event
that at any time.~or -from.time to -time, the Common Stock issuable. upon the
conversion of the Series B Preferred, Shares ischanged into the sam e or a
differe. anumber of shares of any class or classes of stock, whet-her by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger, exchangeof
shares, or sale of assets, provided for-els6where in-this Section), then and in
any such event each Holder of Series B Preferred Shares sball have the right
thereafter to convert such stock into the kind and the maximum amount of stock
and other securities. and,property receivable upon such-reca italization
reclassifieation or
_p
other change, by Holders- ofshares.of Common Stockinto which such sharesof
Series B Preferred Shares could, have been;converted immediately prior -to such
recapitalization, reclassification,or charige,all subjdcl to further adjustment
as provided herein.
(g) ReorgMizations, Mergers, 'Consolidations or Sales of Assets. If -at any time
or from time to time there is a capital reorganizationof the Common &Gck (other
than a recapitalization, subdivision, combination; r6classification, or exchange
of shares provided for elsewhere in this Section) or a MeTgeT orexchange of
shares of the Company with or into another corporation, or the sale of all or
substantiallyall of the
Company's properties and 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 Sen'es B 'Preferred.:Shares shal 1: have tfie-~ right
therdaftdr-to cbrivert -such stock into the number of shafts of stock-or other
securities or property towhic'h -a Hold6r,bf the number.of shares of Comm
oneStock deliverablempon conv&ss.i6n would havebeen entitled on such
capitaltdorganization, merg6r, -consolidation, ousale. In any'such case,
appropriate adjustment shall be made in the application of fhe~pi6visions_of
this'Section with respect to the rights of the HoldeMbf the Series B Preferred
Shartvafterthd-~ reorganization, merger, consolidation or sale to the end, that
the,'Provisibns of this Section (including adjustment -of the Conversion Rate
then -in -eftct'ahd the nuniberof shares receivable upon conversion -.Of the I
Series B Preferred Shares)-shall be applicable; after that event-and be as
nearly equivalent as may-be practicable.,
(h) Sale of Common Shares Below S2.00 pqr S are'
_O)After Sune 30,1 99.9,4fkany..time.or ftom.tim&-..to tirde'i-the Company
issuesor--sells,torisded dd-by-the:expr.e~spr6,~isioris6fthis~siib~ction
'sharesbfCoirfimon~Stact(as orilVe ectiv "he~r6inafter de,pr-i6e,~(se4he
then-txkiAing n. ~d :the-initrea'se bbing computed to bhversio 'Rate shifl
'e:45crease :e ect-,the pToportio q;Wepease, in viiceover:a]lof,,
ffi-&-previousIv T nat uld-prbduce; purpose of making any adjustment required
- -under subsection 4(h)(~),- the consideration received by the Company for any
issue or sale of securities shall
(aa),lo.the extent,,it.cotisists -of-,.cash be.,computed atthe amount of cash
- -for which the securities are sold, (bb) to Ahe,extent it,consists of
'propertyather-Ahan,cash, be compatedat-the fair value of that property as
determined in ~good. faith- by the BoaTd.
.(i) Fractional Shares. Series B, Preferred Shares may be,issued in fractional
amounts. Reservation~of StockIssuable Upon Conversion.. -The Company shall at
all times reserve; and -keep availableoutof its;authorized
b-ut,unisgued!shares:of~C-6iimon Stock,: solely for the purpose
of,.effecting:thetonversion of the shares of the Series B Shares, such number of
its shares of Common Stock as shall from: time to timebe sufficient to effect
the conversion of all outstanding shares of the Series B Preferred Shares that
shaltbe converti - ble at-that-time; and if at any time the -nurnber of
authorized but unissued shares of Commow Stock- shal I not be-sufficieritto
effect the conversion of all then- outstanding shares of theSeries B Preferred
Shares that s-bAll be~convertible at that time, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its. authorized but unissued sharesof Common Stock to
such number of shares as shall be sufficient for such purpose. Should this
action require the affirmative vote of the Holders of Series B Preferred Shares,
whether as a Class or voted with Common Shares, said Holders of Series B
Preferred Shares shall be deemed solely for this purpose to have consented
thereto, and shall be deemed to irrevocably constituted management of the
Company as their proxy and attorney in fact solely for this purpose to execute
such documents as may be required to effect this consent.
5. Effect of Issuance of other Series of Preferred Shares
(a)Nothing contained in this designation of rights shall limit the ability of
the Company to authorize and issue other Series of Preferred Shares or other
classes of Preferred Shares with rights or preferences that are senior to these
Series B Preferred Shares or that limit or reduce the rights or preferences of
these Series B Preferred Shares. In the event that other Series or Classes of
Preferred Shares are authorized and issued, unless otherwise provided in the
designation of rights of said other Series or Classes, these Series B Preferred
Shares shall: vote on all matters based on the conversion rates adjusted nto
common shares,-~provided. herein, and said such other preferred shares shall
have such voting-rights as is provided in the designation thereof There shall be
no class votes ofihese-Series B Preferred Shares unless said vote is
non-waivable and is required by-law Unless otherwise provided in the designation
of rights and preferenceg,~.',bfoth.er lial'! b- preferred shares, any
preferences of these Series B Preferred Sba'res,s 'ratable with other series or
classes- of Preferred Shares that may be
.7. designated.
Dated this 15th th day of June 1999
By: /s/ Mikiko Fujisawa
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 1111211999
Of MUbw Bminess Group, Inc. Pursu t6 &6tion 151 W -of 7-Itle 8 of-the GeniialCor
- - A 0 *6 he i~le aht ' po it la ~ ft S- of De Ware and A rticle Kof tho Articles
- - effi rafiom,the& ~Idiihereb~ designate ts and qudlific The voting
powepreferences, righali-ons'l6itations, and re-stricti6m o -Series C 1~i
ed.Shares". And there isauthorized.-Io be:is;sucd40r'000;000 shares;thereofwith
the following rights, tc= and-pref:rences
klQft i - -ri In -pre, -:o other 'Rif 'N ds,-.-Su*kf 6- _d^ f c. asses r series,
h 6 03 6" d, 0 ip PrcfmTed,Sha=1cxcaPt When there shall have, been either a
notificz-flonof election for con~6isiork_b .,y,UWNd'01d6r,tz-orl&-coikdon Sto.
hs 'he' Aft"ihall have 7-77" 7. -~41 co"5 -, - A; 4- -5 -f -. ~ PFPY Actioic -
X. W -or no;,~rq a qq!k. ereof has a- mpany Y v ifle'-d t07 Uie shall~.4pnjsl
1ii1M ladry., r therefor apon.,quing re p 1~7 ~- 1 "1 7 - " ce of 10
*,_*n,caihdi_viden -WYA,777~74 77 totalace Addimu'lends per ~en'I=C_Prehe Thesv~
dividends ,y - =dShW h,014,0web sh~all_be - i - . - _Y~ Y~thoiaoord ,pa 0 -
shares shall be non-curnulative, them "I be no minimum diAdends, and no rights
shall accrue
to the Holders ofthe~Series -C Pref vlenttlat. the Company shall
fail,to,declazzior.,' di "dends- the Seni-6,C-Prefin-ed -Shares, wheitheror. not
the par ; V.1 on
c=inpcof-thei~C,ompt6y-itf-dwprevious-fis6g-yw-,-wttemfficiat,lo- ',sUc-h
dividends pay in whole oTinpait In the event that the number of
ouWAhdink9e6e,4'C?rAferrcd Shares are adjusted by stock split, reverse split or
other corporate action, the prefervmce stated herein shall be adjusted
accordingly. Tbc balance of any suchdivid -so dedla' r-cd,ihall be allocated as
between Series C Preferred Shares and Common Shares, as if said Series C
PrefckredS Iiidbocn 66mirQ-6 Con- m on the Conversion Ratio (as i M- 16 y othir
'. c . lasses or .__ senes ok'Preferred Shares in a=rdance ~wifli fh~ii 6ts
2.00 ~jqi~6tio,ii"Ri0ti"61,Se' CPiefeffidS6'
(a) Prehcrenc Su~ject to the.righ and pr;f -.,.,of other classes or
series - - -p , g=cL of PTeforied Shares in the event of any
liquidation, dissolution, or winding-up of the Company, whether
voluntary or involuntary, (except when there shall have been
either a noti.ficidon of election for conversion
Arnanded WAUrM PapfIrred Shares, Swim C V929
by,the Holders under,SecUon 4(a) herpmdor, or.:tIne cqn4idqns~shall have been
fulfilled for a conversion I~y Company as provided In Section 4(b)
hereunder, whetAcroof has been made by the
IAPtifiCatiGn Company.. (unless the Conipany shall expressly give notice it
elects not to ,rpq 4; the edes, referred ares jiqh-conversion))~ 1~*k ofthe-S CP
Sh Apz~ p~shallbcvnthl tD._bcpw4.,ouuofJhc assetii 4 the' od )ai, u~onto,iii
cr-suchassets -are cdoiw. surf4greany payrne . nt or do laration gs, 00, setting
apart for payment of any% amount shall be made in respect of the Coa=on Stock,
an amount equal, to S 1.00.Der Series C Preferred Share ess" W- "t divide dipaid
thereto (but not low held thereby, I ""a6cft , ktad than Zero). If upon ainy
liquidation, dissolution, or winding- up of the Man Yj"Wbether- -assd
lo~bbidistributedw V unfvy, ;01 j~the, ts the Holders of the Series C Pref;rr6d
Sham shall be insaifficim"o-permit -the paymcM - -Ashareholdeis~ the AM
preferential amount aforesaid, then- alLof the -assetsof, the ~C- orn~any to -be
distributed sh#1 p.,~distdbute&4- ratably tolheHoldm of the Serie's C Preferred
Sbares, M%jeCt W MY--- ow othcr,cla res-bagedowthd',co th,;WLM~ ~dnv ~ZVW`o
tild6~' 0 ~~gkrhorn-UMCA,641m 4,5o stri -ir=gdiqg-lasseiiof,,thecok4awto"t)i~ffi
buted. Effectgf A~dlq=oiftsy Zveilt --a nu~iki of standing cerefor-red-Sharld
are adjusted-?by,-stookspli~,ravasd -$Cries &here action, pref ==c state be~
3.00 Mervkr,~ PPM04 (a~ pr*
er asses
_nces pf oth A or.,sedes Shares in e eve f pt, o ;ny. mgger or share exchange,
of the Company,'ora-sWeor'o-,ther.~l.-,wA6'~4.all;6r-oubstmtiW' 7`~ assets of
the CC,pemyMi6rca pn notification of election for conversion by the-Holdersunder
Section 4(a), .q. ,U or-a 'on by the Company as provided in Section 4(b)
hereunder, whether or not notification thereof has-been mad&by the Coirnpany,
(unless the Company Amended MMnx PrPager2d shares, sarles C V9.U shall expressly
give notice it elects not to require such conversion)) the Holders of the Series
C Prelen-ed-S*qsffien outstanding shall be entitled to receive, bef6many
pAym,~ntjq T. 4eplo#eq 2~R~4g apart for payment a MM94 , ;ock, f oaq amou, f t~h
or each shimbf C W,.in zgh or. in securities
luding, without'16i on, debt securities) received from the acquiring
corporation, at the, closing of any such transaction, an amount equal to $1.00
per Series C Preferred Share, less-total accurn4gted'dividends paid thereto (but
not less than zero). In the event that the ~~ of outa=ding Series C Preferred
Sham.are adjuste#~Iy~tp* sp4 3myerse split, or other
(b) R g Proc I i~ 'and prqfarences of other cla! ise I s 1. or series of
Piefa-rred ShapBs-after-the, rnantor distribution to the i1irs of I prefe ed~'
Shares of -fill F
(C) of substartic'y ;I&Iiil assets a or transactiOn.ow, M-.,PWB =- ed. and to
'which thi S app. s , ection 't.1m.imc-b~m:eivedfor~-the.purposes of this
Section gWl'be VMued fbUOWS:
as
(i) If the assets, received are securities tMt an listed, on NASDAQ or
an exchange, the value shall be deemed to be the 3 day high &verage,qlosIngpnc
~.ouaveMqbetpme -Wd/askfif OTC) on such eicharige'Or NASDAQ over the 30 dayp od
or to the -closizig of the transaction by which the securities am received.
(ii) if the assets re , ceived - of Teadily,43certainable market value~ then
that value shallbe.used.
(iii) If the assets are unlisied securities or other assets that do not have a
readily ascertainable value, thetorsin good faith will value I S . aid assets.
(iv) ,~fwffiatas3ets-exist.wliichmay-re -a valuation process as qmm described
herein-zhall not delay-closing the transaction by which the assets are being
received, Amended Well= PPager3ed Sharm, Berim C V9.29
Witb- (d) Ngtj~ on which involVes a, merger or efth" if b Assets not in the UrMo
IM9.1 ~O's
C.A~64ers shall receive not action and the and conditions AessIban tenAii6~ ih
,th 4.00 V-~ftg Mob (a) -Each H' d r C_PrtfiirtaS~ '_SbAllU entitled to vote on
all ft Wh&c'v'tr,'V-po-n,,W 6-4 1. a' . ay I-- yotq, MOluding election of the
Board of Direct6rs and, exccpt~as otherwise'e-xpr'e'ss,l,y,-provided herein,
shall be entitled -to &e number of yotes,"that equal the number of Common 10 W
converted shi o_ d W` a- vi sp -ig kend ~~ '~ d t psi6d pxnnionS6res). 0 U
_061,6 Tequ ed,-b a es Pf~`i hirehold iffi- y S, MI&AIP ~1W- Desi'
tRm';_`s,therepp &W 1 gnaqf 'o 75 ttedA&V' 6 e-, "no asileparate claiies e,
~~I-~`;- ef 4CIp ~ W7M d are,req y, aw to vo- te as d"' ase ft Ir*fW'idd*,"iId
aofIhe_._ I-para f9k ro -of-the class. be--a simp y AM, UU; 3 Mo- n ~o pit
- -cqtwjy to Of" "R 116.6 ons 'C "P696ife S~ ~shlll not -cause an adjustment-to be
made. "Convenion'! Thp-'Compio~'thsballdhavefthei~ries- Mg followingconversion.
i 'h -1.00000 Rilaht to CQ rt. Each share of Series C Preferred Shares,shall be
Zonve~ ibld~thbui6l 4hall be-W "C authorized and issuable therefor atthe
optiou;dihi~H Idei it pn~dded in Section (c) at any time afta December 31, 1999.
(b) Automatic- C-onvefti& idEli6ti~pf Corn
(i) Each share of Series C Pref=cd Shares shall.automatically at the
eJectkm-of.thwCJin - ;J a 15adve Cbh*crsi6n Rate fo in
- -Stockbased-,Olsetfrthhefi -111A , Section 4(c) herezmddr (ass.Awed) if a I ny
oxic of the followin Afnendvid MIUnxPagef4nvd Sham, Swries C V9M AJ 4 ~%, le es-
Shal!1-60=`~(A)r The, HdIi-dersbf 5j%bfthe-Siri CPreferred -Shaics ou
havitilvev"I'loti6c oftlictio-a to convert as pided. in Sb66ah;6;-(B)
TT-h6-Boka--of-Vh= tors of the '~P "0 -CM6 dia Miie:Oprov, tf too gdon,
exchange, C erdr ompany is a pam, or an '~Rcq PC, -me Y- , ~ tim clos ing of
registration with shams .......... (D) When -the
Co;npai~Y.slialfta;4 &P06i&6f$'10--,000A00 or more;
(E)After th*;~Ctim~ Sbart~hi4b^6'`ezi -listed on NASDAQ for a period if not
less,than flizve, months. graph the Shares diall the cilcvi es~ or not the
'Shares are x, id ;p vi to d' Ue c X-OPPYI, issuabIe upon v s a Series C or Its
transfer wefflapk~ ffi6 d- ageM or the Bolder notifies the Com or *tq,tr -%fi t
that or, stfo d,,.and executes an ye agreernent iidiew y C' '0 to -I 6;ih~ the
Company :roin. "--'dby-it'in6 on i4th any SSr'Ifidu I rie certificates. -7
ber~'converslotfth& de~lohavi6cc immediately pnor W tk-b are to be' e owentid "'
to'Tective e on=on e~d -.-A C ~t upon si IckikWiv - em . owobIff-be
deeifiMl~omrnon Shie,661d6f" -of r6664 ii or, th, t 'dij (c)-, 'Con-y6ftiokRaty,
f4witrnerits.", lt~ept as '. pmviijilledr e JjS~ere herein for an or other "on,
'adju dftaii ion,
SerieS C factorsi'llhe C0nUeneionAAe'-'- ~ fidcorninon on te_' I bt b" dt
toadjustment from ?refbr-rdd 'Share. T-IeC6n time tottim'-e'"I!~-,PrOdddd
be-AlC`iAi-P-`n&" .p a Strip py cr a Prefenvd Share has been convi~rt6d. (d)
Mechanics of Coriversiom- Ea~h J4oldleri (if Series C Prefened Shares who
desirUs to convert the'same kto shares of Common Stock shall sun-ender Amenftd
Milinx Prwhrmd ww", sems c vs.29 pap 5 th ~F~, uly-endors gftjo 4~pfftConq=y or
of any YTI~sftF-agep Series C.P~Mfexed SharewCommon Stock, and shall that such
Holder W*qi notic,,;-V,*-Qqm_panjM Office pgv, ~",~#Aglmwp .00 the number of
sham of RM* ~7 -
shall for ad. 4 !h,,po. or to -Ahe, of the =tif icate nverteA d son .th d i~co
an the per entitl #iq.!s -.,$WWw upon such M uable "the, purpo 4*cord Holder of
such sharcs,-6tcomm Stock-on on,__ (c) AdLugMg_qt,fbr ss.ta & Solits and
Combiggtons.an _Wth CovWoy~ f-~tbe outstian ding
j ..qff'ptiMMe40t0Y_ ore k9n om ~Ate :bef MY P03,MRSOM and conversely, if tbo
- -M. 60 -the OUt3tand-ing Ines --shaiis~Urt-ammo :8to k4pto.. -Conversion
6m~i~ybpfprqlthp, 0 -subsection, (a) shall -~Xl 7W=_ T f bw -thesubdivision -or
s C -'ons. zvj R nix Inthe event J0 ailol~ to& po Ihe 4-yMeAq~A eX,,qM "~,"S
issuable u n in 0 enei JRrt - to the same or a -of gq)~cjas qp stocl~, whether
by ree on, -t.qr.P*r0*IqI*,than a subdivision or ;com, 0 Om, Paz ex shares, or
s4l"f rovidek, cts,,,p ~, j-* el qi saw here in this da,;nrmch-event.each, AD
Series C Preferred Shares.shall hi ri&,~to.c'onvertsuch stock into the kind and
- -of stock,andic?#k unties-andprope J, #y bl, DA~4 K#p0itall" pqni~*
_,k;#LcMA3p-Jpther chtmge, by COMMOU, :R0*4raS Of SCriC3 C as; could
haynp,beqnpq~l W,!F0 #ptglyrprior to such _MpqInI* iifl ~o -chap ~;q
0.0-1Wfirther idj!"o;`4--~ -i-l-, -bj wanentas prov Min.
- -9.00000 RepEMizations- MIMers. Consolidations.or Sales atAssets. If at any time
ortram time UAI.Wi _peoM on of the Common AMD.ndad MQInx rW*rred 3hans, W06 C
V9.2g I Stock (other th= A rmapitalizatiQ.116, sFb-4iAss.ion, combination,
reclassification or qoang; of,~_ yT,' ~*,for-,;1semhere in this Vtthq,q()fnpany
with or into anothe;.coqqropr~ so substai~ Lof the Company's propotes.gpd,assets
tq-,2ny.q ,Okep 1-14,parvof -such reorpp~p%p c-9 psal; r si 4WI be made so
w,44p~ piq 'Fr-qA-m -that t be-Rolders of~the-Seriea Aares,shatthave tha sight
thereafter to. such- of J#tqfiWp~of- Shares- stock or other -WL, ~JoIO.q~ of
=Niowwoul& -been entitled on 'P 4 hm w Q~I~Stoc v V _'P _91~ConV n. MMpri conpli
r"I R=Zabp ~~or sale Ih my such 'cM of the prov*j*--of-Abi-rca~p -the Holders of
the #on,with _pqcvtcJbeiriSbxs.of.. goriiib P- t md9a, consolidation e 4-_ ha
pro, IS ,.,orsal i9psof thi's ~j4qcfl= ~Cmcluding adjustment of t-hcCozrvczm
~*qin t-and ithe~nusnber-of-,shares receivable 0 upon,
convmion~ofthe-:SeTics.,(~Pi-i~.f_,w,,ed- -ba,, al -,bd applicable after that
event and W~n'culy equivalent as may-In practicable. (h) 'Sale of Common Shares
]aglow SLQO-pz Share, 7~71 After.~e 9 -ia ~,tEmetor,~,from-.timt,,to~time, the
at _W, *~3 CO si 's-of 3,qr WAy-express provi on thissub I hav 4 diti6rdlzharis
of r 600) fbr. tflectivc ~ price (as Commonsi;&' hq--inafta ded 'hereinafta
dqf(ordastatustod -idediii,sectiohs (c),(J~,(g) pwi _)Ahm
- -~dd~anyAotheradjustmezsts provided Jn herein ai4i'.~eachsuchwo--Ihe
thewcxistinwConversion Rate shall be increwed, increase being computed to
reflect the ppo 'c6mmon-SharesaWk cewould preduce,(U) For the .-.,pur ~q
ust=trequired znder.,subsecdon Pos~ f;4~My ;dj *W~tbeZGnsidqation redeived-
by1he, CotrIfAny., -Ior any issue or 'Oalc~of se=-'U;& shall ~.(aq).
toAhe.extentitconsists',,of cash be 'ties ar id, _,pd at-theamoupt, cash.,$
compffi of -which'the.-,own eso -to, zxtentit OonsJstsof,.pvpe'rty 'the
- -othert'anfeashbe rompsted at:"rvalue of-that property-as determinadmi good
faith by the Board. W EMqtjznal-Shares. Series. CPrefcrmd Shares maybe issuedin
fractional amounts.
(J) Reservation of Stock Issuabic Lbmn Conversion. 'Me Company shall at all
times reserve and keep avOable out of its authorized but unissued sham
Amended hMIInz Pan*e7red Shams, series c v9= c Aodryffir-i6"Fifir 6ieof e
conversion of the sha'r'es-of the-fiar6i"! i6&i of"Its, gh~df Common Stock
tmthall-frorn firai-164ki'a - - ciii1tto-6541 - a conversion of all Ou&Ii&"M*Ii
wtw 2 shiii~-'"l be ized but to 6-k ~66tbi~ cfrza the ft`iiii~67dielS~
t"Prefen-ed Shares tvi -6= C 66 ~--oh b lb&-, such corporate 'n ss Ilie ew
increase its io M "p, bt~ 'CounseL, arY lhon2i, 'ut, ber of ft num i~laction
require sharesm'; or su -'Pi#'Po ~,thezaffiirrn whether Asf , , ass a- C nsented
of the _ICWMPM~ e to Wcecu Isuc. 77- y. 'h RegistiestionRig ts e Z_ Thcc 6 Will,
Ri'hts Agreement %%rithHolders of enter into A R-04,~ C wy-O~W~sc 3t wt
Preferre& G.'sh6W,sv I il -~ pwswar. va. 4P-dhi olft H 1,6r the benefit of P
6h-4 W`M&,~I !'0, "Me the. It -cornmis ;514xCM=r,,cUV.dnhx;, tv t ommon
Stockacquired upono Serl~, V =ayi A, req =mber of Holders Y, Wing deft Milinx is
Ab Adt. ~b) Anmjont~-WS'efled'S-PM elijible must request the to ow'. ~
14tauce-': 9, 'Pem 111 Pstre-ti ,to I - -IMYof multiple 'y 4ii h QAh t~hibiv
VrI` ffflik*'Is"reporting under P2 of 'anes 10 ;Ve:ritW ~~4aV ' of `con
Company), the 410 I mm.6hShAr6s4n4Y demand a giSUatio , ~Wjiich.,djj; -aft"-- _C
Te TIP pany Wffl**Otbr undertake~ subject to the toks listedbel
excapflons-'andoW.,i ti (c) There will be only one demand registration, so
holders of Prcf=ed Shares ty to convert and particip4tt in the registration.
Amended Milinx PrafBerad Shares, Seri" C V9.29
(d)Those not so electing will lose their regisuvdon rights. This does not
preclude sales under Rule 144 or other available exemptions to such a holder.
(e) Registration rights terminate Dn November 15, 20DO.
(f) Registration may be delayed or suspended ifthe CompW is engaged in an
offering or is about to engage in an oftning whae the placement agent or
underwriter requests such a suspension, in which cue registration may be further
delayed if a lockup is required thereby.
(g) In addition, in the event of certain Company events, such as a merger or
other significant event, an existing registration may be suspended or a pending
registratiori-delayed so that adequate disclosure of the event. in the opinion
of the Company, may be~ eflected.
In all cases, the shareholders who are selling - pursisant to the registration
will be considered "selling shareholde&'and i~ill be required to dcliver
prospectuses and other requirements underthe Securities Act of 1933.
7.00 Effect of Issuance of other Series of Preferred Shares
Nothing contained in this designation of rights shall limit the,abiliry of the
~Conipany to authorize and issue other -Series of Preferred Sham or other
classes o0referasdii~h61a.sII ses ofent that Prefen-ed Shares are, authorized,
and Issuediunless; otherwise provided in the designation of rights of said other
Series or -Classes, these Series C Prefen-ed Sharesshall vote on all matters
based on .,the Oonvmion rates adjusted into common sham provided herein, and
sold such other preferred shares shall have such voting rights as is provided in
the designation thereof There shall be no cIass votes of these Series C
Preferred Shares unless said vote is non-waivable and is required by law.
(b) Unless other-wise provided in the designation of rights and preferences of
other preferred shares, any, preferences of these Series C.Preferred Shares
shall be ratable with other series or classes of Preferred Shares that may be
hereafta designated.
Dated this 11 "day ofNovember, 1999.
By:
Barry Philips, Designated Officer