Exhibit 4.1
CERTIFICATE OF DESIGNATION
OF THE RIGHTS AND PREFERENCES
OF THE SERIES D CONVERTIBLE PREFERRED STOCK OF
AXIA GROUP, INC.
A NEVADA CORPORATION
The undersigned, Jody Regan and Dawnelle Patrick, hereby certify the
following:
1. We are the duly elected and acting President and Secretary,
respectively, of Axia Group, Inc., a Nevada corporation (the "Corporation").
2. Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recital and resolution ("Resolution"):
WHEREAS, the Corporation's Articles of Incorporation, as amended,
provides that the Corporation has authorized Five Billion Five Hundred Million
(5,500,000,000) shares of Capital Stock, of which Five Billion (5,000,000,000)
shares are designated as Common Stock, $0.001 par value ("Common Stock"), and
Five Hundred Million (500,0000,000) shares are designated as preferred stock,
$0.001 par value ("Preferred Stock") and, further that the designation, powers,
preferences, options and other special rights and qualifications, limitations or
restrictions of the shares of Preferred Stock may be issued from time to time
one or more series, each of such series to have such voting powers, designation,
preferences, and other special rights, qualifications, limitations or
restrictions, as expressed in a resolution or resolutions providing for the
issuance of such series, as adopted by the Board of Directors of the
Corporation; and,
WHEREAS, the Corporation desires to create a series of Preferred Stock
designated as Series D Convertible Preferred Stock (the "Series D Preferred
Stock") by filing a Certificate of Designation of the Rights and Preferences of
the Series A Preferred Stock for filing with the Nevada Secretary of State to
set forth the rights and preferences of the Series A Preferred Stock.
RESOLVED, the Board (as defined below) hereby establishes and
designates a class of Five Million (5,000,000) shares of Preferred Stock,
designated as Series D Convertible Preferred Stock (the "Series D Preferred
Stock"). The rights, preferences, and privileges of the Series D Preferred Stock
relative to those of the Common Stock and all outstanding shares of Preferred
Stock are set forth in this Resolution.
1. Dividend Rate and Rights. Holders of the Series D Preferred Stock
shall be entitled to receive dividends or other distributions with the holders
of the Common Stock on an as converted basis when, as, and if declared by the
Directors of the Corporation.
2. Conversion into Common Stock.
2.1. Right to Convert. Each share of Series D Preferred Stock
shall be convertible, at the option of the holder thereof and subject to notice
requirements of paragraph 2.2, at any time after the issuance of such share of
Series D Preferred Stock, into such number of shares of Common Stock equal to
the quotient obtained by dividing the Liquidation Price (as defined in Section
3.1) by the Conversion Price (as defined herein). For purposes of this Section
2.1, the following definitions shall apply:
A. "Conversion Price" shall be 50% of the average of the Per
Share Market Values during the three (3) Trading Days immediately preceding a
Conversion Date.
B. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
C. "Per Share Market Value" means on any particular date (a)
the closing bid price per share of Common Stock on such date on the OTC Bulletin
Board or on such Subsequent Market on which the shares of Common Stock are then
listed or quoted, or if there is no such price on such date, then the closing
bid price on the OTC Bulletin Board or on such Subsequent Market on the date
nearest preceding such date, or (b) if the shares of Common Stock are not then
listed or quoted on the OTC Bulletin Board or a Subsequent Market, the closing
bid price for a share of Common Stock in the over-the-counter market, as
reported by the National Quotation Bureau Incorporated or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (c) if the shares of Common Stock are not then
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as determined in
good faith by the Corporation.
D. "Subsequent Market" means the New York Stock Exchange,
American Stock Exchange, Nasdaq SmallCap Market or Nasdaq National Market.
E. "Trading Day" means (a) a day on which the shares of Common
Stock are traded on such Subsequent Market on which the shares of Common Stock
are then listed or quoted, or (b) if the shares of Common Stock are not listed
on a Subsequent Market, a day on which the shares of Common Stock are traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if
the shares of Common Stock are not quoted on the OTC Bulletin Board, a day on
which the shares of Common Stock are quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided,
however, that in the event that the shares of Common Stock are not listed or
quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean any
day except Saturday, Sunday and any day which shall be a legal holiday or a day
on which banking institutions in the State of New York or State of California
are authorized or required by law or other government action to close.
2.2. Notice of Conversion. Each Series D Preferred Stock stockholder
who desires to convert into the Corporation's Common Stock must provide a ten
(10) day written notice to the Corporation of its intent to convert one or more
shares of Series D Preferred Stock into Common Stock. The Corporation may, in
its sole discretion, waive the written notice requirement and allow the
immediate exercise of the right to convert.
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2.3. Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of Series D Preferred Stock and the number of
shares of Common Stock to be issued shall be determined by rounding to the
nearest whole share (a half share being treated as a full share for this
purpose). Such conversion shall be determined on the basis of the total number
of shares of Series D Preferred Stock the holder is at the time converting into
Common Stock and such rounding shall apply to the number of shares of Common
Stock issuable upon aggregate conversion. Before any holder shall be entitled to
convert, he shall surrender the certificate or certificates representing Series
D Preferred Stock to be converted, duly endorsed or accompanied by proper
instruments of transfer, at the office of the Corporation or of any transfer
agent, and shall given written notice to the Corporation at such office that he
elects to convert the same. The Corporation shall, as soon as practicable
thereafter, issue a certificate or certificates for the number of shares of
Common Stock to which the holder shall be entitled. The Corporation shall, as
soon as practicable after delivery of such certificates, or such agreement and
indemnification in the case of a lost, stolen or destroyed certificate, issue
and deliver to such holder of Series D Preferred Stock a certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional shares of
Common Stock. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Series D Preferred Stock to be converted.
2.4. Adjustments to Conversion Price - Merger or Reorganization. In
case of any consolidation or merger of the Corporation as a result of which
holders of Common Stock become entitled to receive other stock or securities or
property, or in case of any conveyance of all or substantially all of the assets
of the Corporation to another corporation, the Corporation shall mail to each
holder of Series D Preferred Stock at least thirty (30) days prior to the
consummation of such event a notice thereof, and each such holder shall have the
option to either (i) convert such holder's shares of Series D Preferred Stock
into shares of Common Stock pursuant to this Section 2 and thereafter receive
the number of shares of stock or other securities or property to which a holder
of the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Series D Preferred Stock would have been entitled upon such
consolidation, merger or conveyance, or (ii) exercise such holder's rights
pursuant to Section 3 hereof.
2.5. No Impairment. The Corporation will not, by amendment of its
Articles of Incorporation, or through any reorganization transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series D Preferred Stock against impairment.
2.6. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series D Preferred
Stock pursuant to this Section 2, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Series D Preferred Stock a certificate setting forth
such adjustment or readjustment and the calculation on which such adjustment or
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readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series D Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, and (ii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of the Series D Preferred Stock.
2.7. Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarter) or other distribution, the Corporation shall mail to each
holder of Series D Preferred Stock at least ten (10) days prior to the date
specified herein, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
2.8. Common Stock Reserved. The Corporation shall take such action as
is necessary to amend the Articles of Incorporation to authorize such number of
shares of Common Stock as shall from time to time be sufficient to effect (a)
conversion of the Series D Preferred Stock, and (b) issuance of Common Stock
pursuant to any outstanding option, warrant, or other rights to acquire Common
Stock.
3. Liquidation Preference.
3.1. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), the assets of
the Corporation available for distribution to its stockholders shall be
distributed as follows:
A. The holders of the Series D Preferred Stock shall be
entitled to receive, prior to the holders of the other series of Preferred Stock
and prior and in preference to any distribution of the assets or surplus funds
of the Corporation to the holders of any other shares of stock of the
corporation by reason of their ownership of such stock, an amount equal to $0.01
per share (the "Liquidation Price") with respect to each share of Series D
Preferred Stock, plus all declared but unpaid dividends with respect to such
share.
B. If upon occurrence of a Liquidation the assets and funds
thus distributed among the holders of the Series D Preferred Stock shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed among the holders of the Series D
Preferred Stock ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
C. After payment of the full amounts to the holders of Series
D Preferred Stock as set forth above in paragraph (1), any remaining assets of
the Corporation shall be distributed pro rata to the holders of the Preferred
Stock and Common Stock (in the case of the Preferred Stock, on an "as converted"
basis into Common Stock).
3.2. For purposes of this Section 3, a Liquidation shall not be deemed
to include (i) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) and (ii) a sale of all
or substantially all of the assets of the Corporation, unless the Corporation's
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stockholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration for the Corporation's acquisition or sale or otherwise)
hold at least fifty percent (50%) of the voting power of the surviving or
acquiring entity.
3.3. If any of the assets of the Corporation are to be distributed
other than in cash under this Section 3, then the board of directors of the
Corporation shall promptly engage independent competent appraisers to determine
the value of the assets to be distributed to the holders of Preferred Stock or
Common Stock. The Corporation shall, upon receipt of such appraiser's valuation,
give prompt written notice to each holder of shares of Preferred Stock or Common
Stock of the appraiser's valuation.
4. Voting Rights. Except as otherwise required by law, the holders of
Series D Preferred Stock and the holders of Common Stock shall be entitled to
notice of any stockholders' meeting and to vote as a single class upon any
matter submitted to the stockholders for a vote as follows: (i) the holders of
Series D Preferred Stock shall have such number of votes as is determined by
multiplying (a) the number of shares of Series D Preferred Stock held by such
holder, (b) 0.0000004, and (c) the number of issued and outstanding shares of
the Corporation's Common Stock on a Fully-Diluted Basis (as hereinafter
defined), as of the record date for the vote, or, if no such record date is
established, as of the date such vote is taken or any written consent of
stockholders is solicited; and (ii) the holders of Common Stock shall have one
vote per share of Common Stock held as of such date. "Fully-Diluted Basis" shall
mean that the total number of issued and outstanding shares of the Corporation's
Common Stock shall be calculated to include (a) the shares of Common Stock
issuable upon exercise and/or conversion of all of the following securities
(collectively, "Common Stock Equivalents"): all outstanding (a) securities
convertible into or exchangeable for Common Stock, whether or not then
convertible or exchangeable (collectively, "Convertible Securities"), (b)
subscriptions, rights, options and warrants to purchase shares of Common Stock,
whether or not then exercisable (collectively, "Options"), and (c) securities
convertible into or exchangeable or exercisable for Options or Convertible
Securities and any such underlying Options and/or Convertible Securities.
5. Reissuance. No share or shares of Series D Preferred Stock acquired
by the Corporation by reason of conversion or otherwise shall be reissued as
Series D Preferred Stock, and all such shares thereafter shall be returned to
the status of undesignated and unissued shares of Preferred Stock of the
Corporation.
6. Notices. Unless otherwise specified in the Corporation's Articles of
Incorporation or Bylaws, all notices or communications given hereunder shall be
in writing and, if to the Corporation, shall be delivered to it as its principal
executive offices, and if to any holder of Series D Preferred Stock, shall be
delivered to it at its address as it appears on the stock books of the
Corporation.
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The undersigned, being the President and Secretary of Axia Group, Inc.
hereby certify and declare under penalty of perjury that that the foregoing
Resolution is the act and deed of the Corporation and that the facts herein
stated are true, authorized by the unanimous written consent of the Board of
Directors on January 12, 2005.
AXIA GROUP, INC.
By: /s/ Jody Regan
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Jody Regan
President
By: /s/ Dawnelle Patrick
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Dawnelle Patrick
Secretary
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