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EXHIBIT 3.1(e)
Certificate of Designation
CERTIFICATE OF DESIGNATION OF THE RIGHTS
AND PREFERENCES OF THE SERIES A
CONVERTIBLE PREFERRED STOCK OF MEDIAX CORPORATION
The undersigned, being all of the directors of MediaX Corporation (the
"Corporation"), take the following actions by unanimous written consent without
a meeting as allowed for under Nevada law.
WHEREAS it is in the best interest of the Corporation to create a series
of preferred stock to attract investment capital pursuant to a Securities
Purchase Agreement, and the exhibits thereto, with CTI II Limited;
WHEREAS it is in the best interest of the Corporation to prepare a
Certificate of Designation of the Rights and Preferences of the Series A
Convertible Preferred Stock for filing with the Nevada Secretary of State to set
forth the rights and preferences of the Series A Convertible Preferred Stock;
WHEREAS no shares of preferred stock of the Corporation have been issued
and this Certificate of Designation of the Rights and Preferences of the Series
A Convertible Preferred Stock supercedes and replaces any other Certificate of
Designation of the Rights and Preferences of the Series A Convertible Preferred
Stock on file with the Secretary of State;
WHEREAS, the Corporation's Articles of Incorporation, as amended,
provides that the Corporation has authorized Ten Million (10,000,000) shares of
$.0001 par value preferred stock and, further, that the designation, powers,
preferences and relative participating, option or other special rights and
qualification, limitations or restrictions of the shares of such preferred stock
may be issued from time to time in one or more series, each of such series to
have such voting powers, designation, preferences, and relative participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof, as expressed herein or in a resolution or resolutions,
providing for the issuance of such series, adopted by the directors;
WHEREAS, THE CORPORATION DOES HEREBY CERTIFY that pursuant to the
authority contained in its Articles of Incorporation, and in accordance with the
provisions of the applicable law of Nevada, the Corporation's directors have
duly adopted the following resolutions determining the Designations, Rights and
Preferences of a special class of its authorized Preferred Stock, herein
designated as Series A Convertible Preferred Stock; and
WHEREAS, to accommodate the Corporation's desire to offer shares of its
preferred stock to increase its equity capital, the Corporation has designated a
special class of its preferred stock, as follows:
NOW, THEREFORE, BE IT:
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RESOLVED, that pursuant to the authority vested in the directors of this
Corporation by its Articles of Incorporation, a special class of preferred stock
of the Corporation be and are hereby created out of the 10,000,000 shares of
preferred stock available for issuance, such series to be designed as Series A
Convertible Preferred Stock, consisting of one million fifty-nine thousand three
hundred twenty-two (1,059,322) shares, of which the preferences and relative
rights and qualifications, limitations or restrictions thereof (in addition to
those set forth in the Corporation's Articles of Incorporation), shall be as
stated below:
The powers, preferences and rights granted to the Series A Preferred (as
defined below) or the holders thereof are as follows:
1. Designation and Rank. The series of Preferred Stock shall be
designated the "Series A Convertible Preferred Stock" ("Series A Preferred") and
shall consist of 1,059,322 shares. The Series A Preferred and any other series
of Preferred Stock authorized by the Board of Directors of this Corporation are
hereinafter referred to as "Preferred Stock" or "Preferred." The Series A
Preferred shall be senior to the common stock and all other shares of Preferred
Stock that may be later authorized.
2. Dividend Rate and Rights. Holders of the Series A Preferred shall
be entitled to receive, in preference to any other holders of Preferred Stock or
common stock, out of any assets at the time legally available therefor,
cumulative and accruing dividends at the rate of $0.0472 per share of Series A
Preferred per annum (appropriately adjusted for any recapitalization, stock
dividend, stock split or similar event (a "Recapitalization")) paid annually in
arrears. At the holder's election, dividends shall annually (i) be paid in cash,
subject to applicable law or (ii) accrue as an unpaid dividend. In addition to
the foregoing, the holders of the Series A Preferred shall be entitled to
receive Common Stock dividends or other distributions when, as, and if declared
by the directors of the Corporation, with the holders of the Common Stock on an
as converted basis. No dividends shall be paid or other distribution made (other
than those payable solely in Common Stock) with respect to the Common Stock
during any fiscal year of the Corporation until dividends in the aforesaid
amount on the outstanding shares of Preferred shall have been paid in such
fiscal year.
3. Conversion into Common Stock.
(a) Right to Convert. Each share of Series A Preferred shall be
convertible, at the option of the holder thereof, at any
time after the date of issuance of such share into such
number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $0.472 by the then
applicable Series A Conversion Price, determined as
hereinafter provided, in effect at the time of conversion.
The Series A Conversion Price shall be $0.472 and shall be
subject to the adjustments described below.
The Series A Conversion Price and the conversion price of any
other series of Preferred Stock hereafter created are sometimes
hereinafter collectively referred to as the "Conversion Price."
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(b) [Reserved]
(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of Series A Preferred. In lieu
of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay an amount in cash equal to
such fraction multiplied by the then effective Conversion Price.
Before any holder shall be entitled to convert, he shall
surrender the certificate or certificates representing Series A
Preferred 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 A Preferred 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 A
Preferred to be converted.
(d) Adjustments to Conversion Price.
(1) Stock Dividend or Stock Subdivision. If the Corporation
at any time or from time to time shall declare or pay
any dividend on the Common Stock payable in Common Stock
or effect a subdivision (stock split) of the Common
Stock into a greater number of shares of Common Stock,
then and in any such event, the Conversion Price then in
effect for the Series A Preferred shall be
proportionately reduced by multiplying such Conversion
Price by a fraction, the numerator of which shall be the
number of shares of Common Stock actually outstanding
immediately before, and the denominator of which shall
be the number of shares of Common Stock actually
outstanding immediately after, such dividend or
subdivision. The reduction shall become effective:
(A) in the case of any such dividend, immediately
after the close of business on the record date
for the determination of holders of any class of
securities entitled to receive such dividend, or
(B) in the case of any such subdivision, at the
close of business on the date immediately prior
to the date upon which such corporate action
becomes effective.
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(2) Stock Combination or Consolidation. In the event at any
time or from time to time the outstanding shares of
Common Stock shall be combined (reverse stock split) or
consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, the Conversion
Price then in effect for the Series A Preferred
immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately
increased.
(3) 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 A Preferred 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 A Preferred into shares of Common Stock pursuant
to this Section 3 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 A
Preferred would have been entitled upon such
consolidation, merger or conveyance, or (ii) exercise
such holder's rights pursuant to Section 4(a).
(4) Adjustments to Conversion Price for Diluting Issues.
(A) Special Definitions. For purposes of this
Section 3(d), the following definitions shall
apply:
(i) "Options" shall mean rights, options or
warrants to subscribe for, purchase or
otherwise acquire either Common Stock or
Convertible Securities.
(ii) "Original Issue Date" shall mean the
date on which the first share of Series
A Preferred was issued.
(iii) "Convertible Securities" shall mean any
evidence of indebtedness, shares (other
than the Common Stock) or other
securities convertible into or
exchangeable for Common Stock.
(iv) "Additional Shares of Common Stock"
shall mean all shares of Common Stock
issued (or, pursuant to Section
3(d)(4)(C), deemed to be issued) by the
Corporation after the Original Issue
Date, other than
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shares of Common Stock issued or
issuable at any time:
(AA) upon conversion of any shares of the
Series A Preferred issued by the
Corporation;
(BB) as a dividend or distribution on any
series of Preferred Stock or any event
for which adjustment is made pursuant to
Section 3(d) (1) (2) or (3) hereof;
(CC) by way of dividend or other distribution
on shares of Common Stock excluded from
the definition of Additional Shares of
Common Stock by the foregoing clauses
(AA), (BB), or this clause (CC) or on
shares of Common Stock so excluded.
(v) "Original Issue Price" shall mean $0.472.
(B) No Adjustment of Conversion Price. No adjustment in the
Conversion Price of the Series A Preferred shall be made
in respect of the issuance of Additional Shares of
Common Stock unless the consideration per share for an
Additional Share of Common Stock issued or deemed to be
issued by the Corporation is less than Original Issue
Price.
(C) Deemed Issue of Additional Shares of Common Stock.
Options and Convertible Securities. Except as otherwise
provided in Section 3(d)(4)(A)(iv), in the event the
Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or
Convertible Securities or shall fix a record date for
the determination of holders of any class of securities
entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon
the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of
business on such record date, provided, that in any such
case in which Additional Shares of Common Stock are
deemed to be issued:
(i) no further adjustment in the Conversion Price of
the Series A Preferred shall be made upon the
subsequent issue of Convertible Securities or
shares of Common Stock upon the
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exercise of such Options or conversion or
exchange of such Convertible Securities;
(ii) if such Options or Convertible Securities by
their terms provide, with the passage of time or
otherwise, for any increase in the consideration
payable to the Corporation, or any decrease in
the number of shares of Common Stock issuable
upon the exercise, conversion or exchange
thereof, the Conversion Price of the Series A
Preferred computed upon the original issue
thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be
recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights
of conversion or exchange under such Convertible
Securities;
(iii) upon the expiration of any such Options or any
rights of conversion or exchange under such
Convertible Securities which shall not have been
exercised, the Conversion Price of the Series A
Preferred computed upon the original issue
thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent
adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(AA) in the case of Convertible Securities or Options
for Common Stock, the only Additional Shares of
Common Stock issued were shares of Common Stock,
if any, actually issued upon the exercise of
such Options or the conversion or exchange of
such Convertible Securities and the
consideration received therefor was the
consideration actually received by the
Corporation for the issue of all such Options,
whether or not exercised, plus the consideration
actually received by the Corporation upon such
exercise, or for the issue of all such
Convertible Securities, whether or not actually
converted or exchanged, plus the additional
consideration, if any, actually received by the
Corporation upon such conversion or exchange,
and
(BB) in the case of Options for Convertible
Securities, only the Convertible Securities, if
any, actually issued upon the exercise thereof
were issued at the time of issue of such
Options, and the consideration received by the
Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the
consideration actually received by the
Corporation for the issue of all such Options,
whether or not exercised, plus the consideration
actually received by the
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Corporation upon the issue of the Convertible
Securities with respect to which such Options
were actually exercised.
(D) Adjustment of Conversion Price upon Issuance of
Additional Shares of Common Stock. In the event this
Corporation shall issue Additional Shares of Common
Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 3(d)(4)(C))
without consideration or for a consideration per share
less than the Original Issue Price then and in such
event, the Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to
the nearest cent) equal to the price paid for such
Additional Shares of Common.
(E) Determination of Consideration. For purposes of this
Section 3(d), the consideration received by the
Corporation for the issue of any Additional Shares of
Common Stock shall be computed as follows:
(i) Cash and Property: Such consideration shall:
(AA) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest
or accrued dividends;
(BB) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board; and
(CC) if Additional Shares of Common Stock are issued together
with other shares or securities or other assets of the
Corporation for consideration which covers both, be the
proportion of such consideration so received, computed
as provided in clauses (AA) and (BB) above, as
determined in good faith by the Board.
(ii) Options and Convertible Securities. The consideration
per share received by the Corporation for Additional
Shares of Common Stock deemed to have been issued
pursuant to Section 3(d)(4)(C) relating to Options and
Convertible Securities shall be determined by dividing:
(AA) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without
regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible
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Securities by (BB) the maximum number of shares of
Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained
therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(e) No Impairment. The Corporation will not, by amendment of its
Articles of Incorporation, this Certificate of Designation 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 3 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 A Preferred against
impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series
A Preferred pursuant to this Section 3, 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 A Preferred a certificate setting forth such
adjustment or readjustment and the calculation on which such
adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A
Preferred, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price for the Series A
Preferred at the time in effect and (iii) 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
A Preferred.
(g) 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 A Preferred 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.
(h) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be
sufficient to effect conversion of the Series A Preferred.
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4. Liquidation Preference.
(a) 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:
(1) The holders of the Series A Preferred 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 $0.472 per share
with respect to each share of Series A Preferred, plus all
declared but unpaid dividends with respect to such share.
(2) If upon occurrence of a Liquidation the assets and funds
thus distributed among the holders of the Series A Preferred
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 A Preferred ratably
in proportion to the full amounts to which they would otherwise
be respectively entitled.
(3) After payment of the full amounts to the holders of Series A
Preferred 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).
(b) For purposes of this Section 4, and unless a majority of the
holders of the Series A Preferred affirmatively vote or agree by
written consent to the contrary, a Liquidation shall 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
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.
(c) If any of the assets of the Corporation are to be distributed
other than in cash under this Section 4, 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.
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5. Voting Rights. Except as otherwise required by law, the holders of
Series A Preferred 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 each
series of Preferred Stock shall have one vote for each full share of Common
Stock into which a share of such series would be convertible on the record date
for the vote, or, if no such record date is established, at 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.
6. Covenants.
(a) In addition to any other rights provided by law, the Corporation
shall not, without first obtaining the affirmative vote or
written consent of the holders of a majority of the outstanding
shares of Series A Preferred, do any of the following:
(1) take any action which would either alter, change or
affect the rights, preferences, privileges or
restrictions of the Series A Preferred or increase the
number of shares of such series authorized hereby or
designate any other series of Preferred Stock;
(b) increase the size of any equity incentive plan(s) or
arrangements;
(c) make fundamental changes to the business of the Corporation;
(d) make any changes to the terms of the Series A Preferred or to
the Corporation's Articles of Incorporation or Bylaws, including
by designation of any stock;
(e) create any new class of shares having preferences over or being
on a parity with the Series A Preferred as to dividends or
assets, unless the purpose of creation of such class is, and the
proceeds to be derived from the sale and issuance thereof are to
be used for, the retirement of all Series A Preferred then
outstanding;
(f) accrue any indebtedness in excess of $800,000;
(g) make any change in the size or number of authorized directors;
(h) repurchase any of the Corporation's Common Stock;
(i) sell, convey or otherwise dispose of, or create or incur any
mortgage, lien, charge or encumbrance on or security interest in
or pledge of, or sell and leaseback, all or substantially all of
the property or business of the Corporation or more than 50% of
the stock of the Corporation;
(j) make any payment of dividends or other distributions or any
redemption or repurchase of stock or options or warrants to
purchase stock of the Corporation; or
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(k) make any sale of additional Preferred Stock.
7. Reissuance. No share or shares of Series A Preferred acquired by the
Corporation by reason of conversion or otherwise shall be reissued as Series A
Preferred, and all such shares thereafter shall be returned to the status of
undesignated and unissued shares of Preferred Stock of the Corporation.
8. Directors. The holders of Series A Preferred and Common Stock voting
together as a class shall be entitled to elect the directors comprising the
Board of Directors (and to fill any vacancies with respect thereto).
[SIGNATURE PAGE FOLLOWS]
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The undersigned being the President and Secretary of the Company hereby
declares under penalty of perjury that the foregoing is a true and correct copy
of the Certificate of Designation of the Rights and Preferences of the Series A
Convertible Preferred Stock of MediaX Corporation duly adopted by the Board of
Directors of the Company on November 22, 2000.
Dated: November 22, 2000
By: /s/Nancy Poertner
--------------------------------
Name: Nancy Poertner
Title: President & Secretary
State of California
County of Los Angeles
On November 22, 2000 personally appeared before me, a Notary Public, Nancy
Poertner who acknowledged that she executed the above document.
/s/Stephen H. Lawhorn
-------------------------------------
Notary Public
[Seal] Stephen H. Lawhorn
Commission 1188460
Notary Public-California
Los Angeles County
Commission Expires July 16, 2002
