Exhibit 4.1 Certificate of Designations of Series A -
Convertible Preferred Stock
CERTIFICATE OF DESIGNATIONS
OF
SERIES A - CONVERTIBLE PREFERRED STOCK
OF
THE ENCHANTED VILLAGE, INC.
Pursuant to Section 151(g) of the
General Corporation Law of the
State of Delaware
Kevin R. Keating, Chief Executive Officer and Secretary, of The
Enchanted Village, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the provisions of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: The Certificate of Incorporation (the "Certificate of
Incorporation") of the Corporation authorizes the issuance of 5,000,000 shares
of preferred stock, $0.002 par value per share ("Preferred Stock"), in one or
more series.
SECOND: A resolution providing for and in connection with the
issuance of the Preferred Stock was duly adopted by the Board of Directors
pursuant to authority expressly conferred on the Board of Directors by the
provisions of the Certificate of Incorporation as aforesaid, which resolution
provides as follows:
RESOLVED: that the Board of Directors, pursuant to authority
expressly vested in it by Section III of the Amendment to its Certificate of
Incorporation, hereby authorizes the issuance of a series of Preferred Stock of
the Corporation and hereby establishes the voting powers, designations,
preferences and relative, participating, optional and other rights, and the
qualifications, limitations and restrictions appertaining thereto in addition to
those set forth in such Certificate of Incorporation (or otherwise provided by
law) as follows (the following, referred to hereinafter as "this resolution" or
"this Certificate of Designations", is to be filed as part of a Certificate of
Designations under Section 151(g) of the General Corporation Law of the State of
Delaware):
1. General.
(a) Designation and Number. The designations of convertible
preferred stock created by this resolution shall be Series A Convertible
Preferred Stock, par value $0.002 per share, of the Corporation (the "Series A
Preferred Stock"). The number of shares of Series A Preferred Stock which the
Corporation shall be authorized to issue shall be one million shares
(1,000,000).
(b) Priority. The Series A Preferred Stock shall, with respect to
rights on liquidation, dissolution or winding up, rank (i) on a parity with the
Common Stock (as if the Series A Preferred Stock had been converted into Common
Stock), and (ii) junior to any other class of Preferred Stock established after
the Original Issue Date by the Board of Directors of the Corporation the terms
of which expressly provide that such class will rank senior, as to liquidation
rights or otherwise, to the Series A Preferred Stock ( "Senior Securities").
2. Certain Definitions.
(a) For purposes of this Certificate of Designations, the following
terms shall have the meanings indicated below:
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of Delaware are authorized or obligated
by law or executive order to close.
"Board of Directors" means the Board of Directors of the Corporation.
"Common Stock" means the Corporation's Common Stock, as presently
authorized by the Certificate of Incorporation and as such Common Stock may
hereafter be changed or for which such Common Stock may be exchanged after
giving effect to the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise).
"Original Issue Date" shall mean the first date on which shares of Series
A Preferred Stock, as the context requires, are issued.
"Person" or "person" means an individual, corporation, partnership,
limited liability company, firm, association, joint venture, trust,
unincorporated organization, government, governmental body, agency, political
subdivision or other entity.
"Preferred Stock" means the Corporation's Preferred Stock, as presently
authorized by the Certificate of Incorporation and as such Preferred Stock may
hereafter be changed or for which such Preferred Stock may be exchanged after
giving effect to the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise).
"Senior Securities" shall have the meaning set forth in SECTION 1(B)
above.
"Subsidiary", with respect to any Person, means any corporation,
association or other entity controlled by such Person. For purposes of this
definition "control", with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
(b) The words "hereof", "herein" and "hereunder" and other words of
similar import refer to this Certificate of Designations as a whole and not to
any particular Section or other subdivision.
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(c) References herein to the Certificate of Incorporation include
such Certificate as amended by this Certificate of Designations.
3. Voting Rights.
(a) General. Except as may be required by law,
(i) the holders of Series A Preferred Stock shall have full
voting rights and powers, and they shall be entitled to vote on all matters as
to which holders of Common Stock shall be entitled to vote, voting together with
the holders of Common Stock as one class; and
(ii) each holder of shares of Series A Preferred Stock shall
be entitled to the number of votes equal to the number of shares of Common Stock
into which such shares of Series A would be converted (based on the Conversion
Rate then in effect) on the record date for the vote which is being taken.
Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares of Common
Stock into which shares of Series A Preferred Stock held by each holder would be
converted, assuming an automatic conversion under SECTION 5(A)) shall be rounded
upward to the nearest whole number.
(b) Actions Not Requiring Holders' Consent. The Corporation in its
sole discretion may without the vote or consent of any holders of the Series A
Preferred Stock amend or supplement this Certificate of Designations:
(i) to cure any ambiguity, defect or inconsistency which does
not adversely affect the rights of the holders of Series A Preferred Stock; or
(ii) to make any change that would provide any additional
rights or benefits to all the holders of the Series A Preferred Stock.
(c) Meetings; Communications The holders of shares of Series A
Preferred Stock shall be entitled to receive in the same manner and at the same
times as the holders of the Common Stock, notice of all meetings of stockholders
of the Corporation and all communications sent by the Corporation to its
stockholders.
4. Dividend Rights.
(a) General. If any dividends or other distributions (including,
without limitation, any distribution of cash, indebtedness, assets or other
property, but excluding any dividend payable in shares of its common stock) on
Common Stock are so permitted and declared, such dividends shall be paid pro
rata to the holders of the Common Stock and the Series A Preferred Stock. The
holders of the Series A Preferred Stock shall receive such dividend or other
distributions in an amount that would be payable to such holder assuming that
such shares had been converted on the record date for determining the
stockholders of the Corporation entitled to receive payment of such dividends
into the maximum number of shares of Common Stock into which such shares of
Preferred Stock are then convertible as provided in SECTION 5; provided,
however, that if the Corporation declares and pays a dividend on the Common
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Stock consisting of Common Stock to which the anti-dilution adjustment in
subparagraph (i) of SECTION 5(E) is applicable and for which an adjustment
thereunder is made, then no such dividend will be paid to holders of Series A
Preferred Stock, and in lieu thereof the anti-dilution adjustment in
subparagraph (i) of SECTION 5(E) shall apply. No dividends shall be paid or
declared and set apart for payment on the Common Stock unless and until
dividends of at least the same per share amount (assuming the Series A Preferred
Stock had been converted into Common Stock) have been, or contemporaneously are,
paid or declared and set apart for payment on the Series A Preferred Stock.
Holders of the Series A Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the dividends as herein
described.
5. Conversion of Series A Preferred Stock into Common Stock.
(a) Automatic Conversion of Series A Preferred Stock. All shares of
Series A Preferred Stock then outstanding shall automatically convert without
any further action of the holders thereof into shares of Common Stock at the
Conversion Rate immediately upon (i) the filing of an amendment to the
Certificate of Incorporation with the Secretary of State of the State of
Delaware after the Original Issue Date to increase the authorized shares of
Common Stock to two hundred million (200,000,000) or (ii) the approval and
effectiveness of a one-for-fifteen (1:15) reverse stock split of the outstanding
shares of Common Stock of the Corporation ((i) and (ii) collectively referred to
herein as the "Series A Trigger Events").
(b) Number of shares of Common Stock Issuable upon Conversion. The
number of shares of Common Stock to be issued upon conversion of shares of any
Series A Preferred Stock shall be issued at the rate (the "Conversion Rate") of
194.3058 (the "Conversion Rate Factor") shares of Common Stock for every one
share of Series A Preferred Stock (without giving effect to the contemplated
1-for15 reverse stock split referred to in Section 5(a) above). The Conversion
Rate shall be subject to adjustment from time to time in accordance with subpart
(c) of this Section 5.
(c) Anti-dilution Adjustments. The Conversion Rate shall be adjusted
from time to time in certain cases as follows:
(i) Dividend, Subdivision, Combination or Reclassification of
Common Stock. If the Corporation shall, at any time or from time to time, (a)
declare a dividend on the Common Stock payable in shares of its capital stock
(including Common Stock), (b) subdivide the outstanding Common Stock, (c)
combine the outstanding Common Stock into a smaller number of shares, or (d)
issue any shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation), then in each
such case, the Conversion Rate in effect at the time of the record date for such
dividend or at the effective date of such subdivision, combination or
reclassification shall be adjusted to that rate which will permit the number of
shares of Common Stock into which the Preferred Stock may be converted to be
increased or reduced in the same proportion as the number of shares of Common
Stock are increased or reduced in connection with such dividend, subdivision,
combination or reclassification. Any such adjustment shall become effective
immediately after the record date of such dividend or the effective date of such
subdivision, combination or reclassification. Such adjustment shall be made
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successively whenever any event listed above shall occur. In the event, if a
dividend is declared, such dividend is not paid, the Conversion Rate shall be
adjusted to the Conversion Rate in effect immediately prior to the record date
of such dividend.
(ii) Mergers, Consolidations and Other Reorganizations. In the
event of any capital reorganization of the Corporation, any reclassification of
the stock of the Corporation (other than a change in par value or from no par
value to par value or from par value to no par value or as a result of a stock
dividend or subdivision, split-up or combination of shares), any consolidation
or merger of the Corporation, or any sale, lease, conveyance to another person
of the property of the Corporation pursuant to which the Corporation's Common
Stock is converted into other securities, cash or assets, each share of Series A
Preferred Stock shall after such reorganization, reclassification,
consolidation, merger or conveyance be convertible into the kind and number of
shares of stock or other securities or property of the Corporation or of the
corporation resulting from such consolidation or surviving such merger to which
the holder of the number of shares of Common Stock deliverable (immediately
prior to the time of such reorganization, reclassification, consolidation or
merger) upon conversion of such share of Series A Preferred Stock would have
been entitled upon such reorganization, reclassification, consolidation, merger
or conveyance. The provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers or conveyances.
(iii) Fractional Shares. Notwithstanding any other provision
of this Certificate of Designations, the Corporation shall not be required to
issue fractions of shares upon conversion of any shares of Preferred Stock or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares of Common Stock, the Corporation shall round upward any fractional shares
of Common Stock to the nearest whole number.
6. Liquidation, Dissolution or Winding Up.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, either voluntary or involuntary, the holders of the Series A
Preferred Stock shall participate with the holders of the Common Stock on
distributions or payments in proportion to their holdings, assuming that such
shares of Preferred Stock had been converted, on the record date for determining
the stockholders entitled to receive distributions or payments, into the maximum
number of shares of Common Stock into which such shares of Preferred Stock are
then convertible as provided in SECTION 5.
7. Notices. Except as otherwise expressly provided herein, all notices,
requests, demands, consents and other communications hereunder shall be in
writing and shall be delivered personally, sent by reputable express courier
services (charges prepaid) or sent by registered or certified mail, return
receipt requested, postage prepaid and shall be deemed to have been given when
so delivered, sent or deposited in the U.S. mail (i) to the holder of a share of
Series A Preferred Stock, at the holder's address as it appears in the records
of the Corporation or at such other address as any such holder may otherwise
indicate in a written notice delivered to the Corporation; or (ii) to the
Corporation, at its principal executive offices or at such other address as the
Corporation may otherwise indicate in a written notice delivered to each holder
of shares of Series A Preferred Stock. All such notices, requests, demands,
consents and other communications shall be deemed to have been received two (2)
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days after so delivered, sent or deposited. Whenever any notice is required to
be given hereunder, such notice shall be deemed given and such requirement
satisfied only when such notice is delivered or, if sent by facsimile, when
received, unless otherwise expressly specified or permitted by the terms hereof.
8. Payment. All amounts payable in cash with respect to the Series A
Preferred Stock shall be payable in United States dollars at the principal
executive office of the Corporation or, at the option of the Corporation, by
check mailed to such holder of the Series A Preferred Stock at its address set
forth in the register of holders of Series A Preferred Stock maintained by the
Corporation. Any payment on the Series A Preferred Stock due on any day that is
not a Business Day need not be made on such day, but may be made on the next
succeeding Business Day with the same force and effect as if made on such due
date.
9. Exclusion of Other Rights. Except as may otherwise be required by law,
the shares of Series A Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this Certificate of Designations (as such
Certificate of Designations may be amended as permitted herein from time to
time) and in the Corporation's Certificate of Incorporation. The shares of
Series A Preferred Stock shall have no preemptive or subscription rights.
10. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
11. Severability of Provisions. If any voting powers, preferences and
relative, participating, optional and other special rights of the Series A
Preferred Stock and qualifications, limitations and restrictions thereof set
forth in this Certificate of Designations (as it may be amended from time to
time as permitted herein) is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other voting powers, preferences
and relative, participating, optional and other special rights of Series A
Preferred Stock and qualifications, limitations and restrictions thereof set
forth in this Certificate of Designations (as so amended) which can be given
effect without the invalid, unlawful or unenforceable voting powers, preferences
and relative, participating, optional and other special rights of Series A
Preferred Stock and qualifications, limitations and restrictions thereof shall,
nevertheless, remain in full force and effect, and no voting powers, preferences
and relative, participating, optional or other special rights of Series A
Preferred Stock and qualifications, limitations and restrictions thereof herein
set forth shall be deemed dependent upon any other such voting powers,
preferences and relative, participating, optional or other special rights of
Series A Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by its duly authorized Chief Executive Officer and its
Secretary this 1st day of April, 2004.
THE ENCHANTED VILLAGE, INC.
By: /s/ Kevin R. Keating
-----------------------------------------
Kevin R. Keating,
Chief Executive Officer and Secretary
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