CERTIFICATE
OF DESIGNATIONS OF
SERIES B
CONVERTIBLE PREFERRED STOCK
OF
BBM
HOLDINGS, INC.
Pursuant
to Sections 16-10a-601 and 16-10a-602
of the
Utah Revised Business Corporation Act
BBM
Holdings, Inc., a corporation organized and existing under the Utah Revised
Business Corporation Act (the "Corporation"), does hereby certify:
FIRST: That
pursuant to authority conferred upon the Board of Directors of the Corporation
by the Certificate of Incorporation of the Corporation, and pursuant to the
provisions of Sections 16-10a-601 and 16-10a-602 of the Utah Revised Business
Corporation Act, said Board of Directors, at a meeting duly held on May 21
2009, adopted the following resolutions, which remain in full force and effect
as of the date hereof:
WHEREAS,
the Board of Directors of the Corporation is authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, and the
liquidation preferences of any wholly unissued classes of preferred shares, and
the number of shares constituting any such classes and the designation thereof
or any of them;
WHEREAS,
the Board of Directors desires to provide for the issue of a series of preferred
shares of the Corporation designated as "Series B Convertible Preferred Stock",
consisting of 6,000,000 shares, and to fix the rights, preferences, privileges,
restrictions and other matters relating to said Series B Convertible Preferred
Stock;
NOW,
THEREFORE, BE IT RESOLVED, that a series of Preferred Stock of BBM Holdings,
Inc., a Utah corporation (the “Corporation”), having the rights, preferences,
privileges and restrictions, and the number of shares constituting such series
and the designation of such series, set forth below be, and it hereby is,
authorized by the Board of Directors of the Corporation pursuant to authority
given by the Corporation’s Certificate of Incorporation.
1. Number and
Designation. This series shall consist of 6,000,000 shares of
Preferred Stock of the Corporation and shall be designated the Series B
Convertible Preferred Stock (“Series B Stock”). The number of
authorized shares of Series B Stock may be reduced to the extent any shares are
not issued and outstanding by further resolution duly adopted by the Board of
Directors of the Corporation and by filing amendments to the Certificate of
Designations pursuant to the provisions of the Utah Revised Business Corporation
Act stating that such reduction has been so authorized, but the number of
authorized shares of this Series shall not be increased except with the approval
of the holders of not less than a majority of such outstanding shares of Series
B Stock. None of the shares of Series B Stock has been
issued.
2. Dividends. When
and as any dividend or distribution is declared or paid by the Corporation on
Common Stock, whether payable in cash, property, securities or rights to acquire
securities, the Series B Holders will be entitled to participate with the
holders of Common Stock in such dividend or distribution as set forth in this
Section 2. At the time such dividend or distribution is payable to
the holders of Common Stock, the Corporation will pay to each Series B Holder
such holder’s share of such dividend or distribution equal to the amount of the
dividend or distribution per share of Common Stock payable at such time
multiplied by the number of shares of Common Stock then obtainable upon
conversion of such holder’s Series B Stock.
3. Voting
Rights.
A. The
Series B Holders shall be entitled to notice of any shareholders’ meeting and to
vote as a single class with the Common Stock upon any matter submitted for
approval by the holders of Common Stock on the following basis: the Series B
Holders shall have that number of votes equal to the number of shares of Common
Stock into which such Series B Stock is then convertible.
B. In
addition to any other rights provided by law, so long as any Series B Stock is
outstanding, the Corporation, without first obtaining the affirmative vote or
written consent of the Required Holders, will not:
(i) amend
or repeal any provision of, or add any provision to, the Corporation’s
Certificate of Incorporation or By-Laws if such action would alter adversely the
liquidation preferences of, or the rights or restrictions provided for the
benefit of, any Series B Stock; or
(ii) reclassify
any class or series of stock junior to the Series B Stock into stock senior to
the Series B Stock with respect to any preference or priority.
4. Preference
Upon Liquidation.
A. Upon
any liquidation, dissolution or winding up of the Corporation, each Series B
Holder will be entitled to be paid, before any distribution or payment is made
upon any Junior Securities of the Corporation, an amount in cash equal to the
aggregate Liquidation Value (as defined in Section 6C below) of all shares of
Series B Stock held by such holder, plus accrued dividends, if
any.
B. The
reorganization, consolidation or the merger of the Corporation into or with any
other corporation(s) or other entity(ies) ("Reorganization"), the sale, lease,
licensing, exchange or other transfer by the Corporation of all or any material
part of its assets or the commencement by the Corporation of a voluntary case
under the United States bankruptcy laws or any applicable bankruptcy, insolvency
or similar law of any other country, or consent to the entry of an order for
relief in an involuntary case under any such law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or the making of an assignment for the benefit of its creditors, or an admission
in writing of its inability to pay its debts generally as they become due, will
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Section 4; provided that, a
Reorganization of the Corporation shall not be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
4 if (i) the principal agreement for such Reorganization shall expressly provide
that the Series B Stock shall become preferred stock of such surviving entity
with the equivalent rights to the rights set forth herein ("Surviving Entity
Preferred Stock"), (ii) the holders of Junior Securities receive, in exchange
for such Junior Securities, common stock or preferred stock in the surviving
entity (whether or not the surviving entity is the Corporation) of such
Reorganization, or common stock or preferred stock of another entity, which is
junior as to dividends and upon liquidation, dissolution or winding up to the
Series B Stock or Surviving Entity Preferred Stock, as applicable, and (iii) the
Series B Holders shall be entitled to receive at the option of each Series B
Holder (A) either the Surviving Entity Preferred Stock or (B) the kind and
amount of shares or other securities or property which they would have been
entitled to receive had they converted their shares of Series B Stock into
shares of Common Stock of the Corporation as of the record date for the
determination of holders of Common Stock entitled to cast their votes for or
against or to express any dissent to such Reorganization. After any
such Reorganization, the rights of such holders of Surviving Entity Preferred
Stock with respect to the adjustment of the Conversion Price shall be
appropriately continued and preserved in order to afford, as nearly as possible,
protection against dilution of the conversion rights and privileges comparable
to those conferred herein.
5. Conversion
into Conversion Stock
A. Conversion.
(i) At
any time any Series B Holder may convert all or any portion of such holder’s
shares of Series B Stock into a number of shares of the Conversion Stock
computed by multiplying the number of shares to be converted by $0.18 and
dividing the result by the Conversion Price then in effect. For
purposes of this Section, “Conversion Stock” means the Common
Stock.
(ii) All
of the outstanding shares of Series B stock will be automatically converted into
Common Stock in the event the Required Holders determine to convert all shares
of Series B Stock. Any such mandatory conversion shall be effected
only at the time of and subject to the conversion of all Series B Stock held by
the Required Holders and upon written notice of such mandatory conversion
delivered to all holders of Series B Stock at least seven (7) days prior to such
date.
(iii) Each
conversion of Series B Stock will be deemed to have been effected as of the
close of business on the date on which the certificate or certificates
representing the Series B Stock to be converted have been surrendered at the
principal office of the Corporation. At such time as such conversion
has been effected, the rights of the holder of such Series B Stock as such
holder will cease and the person or persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion will be deemed to have become the holder or holders of record of
the shares of Conversion Stock represented thereby.
(iv) As
soon as possible after a conversion has been effected, the Corporation will
deliver to the converting holder:
(a) a
certificate or certificates representing the number of shares of Conversion
Stock issuable by reason of such conversion in such name or names and such
denomination or denominations as the converting holder has specified;
and
(b) a
certificate representing any shares of Series B Stock which were represented by
the certificate or certificates delivered to the Corporation in connection with
such conversion but which were not converted.
(v)
If any fractional share of Conversion Stock would be issuable upon any
conversion, the Corporation will pay the holder of the Conversion Stock the fair
market value of such fractional share.
(vi)
The issuance of certificates for shares of Conversion Stock upon conversion of
Series B Stock will be made without charge.
(vii)
The Corporation will not close its books against the transfer of Series B Stock
or of Conversion Stock issued or issuable upon conversion of Series B Stock in
any manner which interferes with the conversion of Series B Stock.
B. Conversion
Price. The initial Conversion Price for the Series B Stock
will be $0.18. In order to prevent dilution of the conversion rights
granted under this Section, the Conversion Price will be subject to adjustment
from time to time pursuant to this Section 5.
C. Subdivision
or Combination of Common Stock; Dissolution.
(i)
If the Corporation at any time subdivides (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced, and if the Corporation at any time combines (by
reverse stock split or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior to
such combination will be proportionately increased.
(ii) In
the event of a judicial or non-judicial dissolution of the Corporation, the
conversion rights and privileges of the Series B Holders shall terminate on a
date, as fixed by the Board of Directors of the Corporation, not more than 45
days and not less than 30 days before the date of such dissolution. The
reference to shares of Common Stock herein shall be deemed to include shares of
any class into which said shares of Common Stock may be changed.
D. Other
Adjustments.
(i) General. In
any case to which Section 5C hereof is not applicable, except as set forth
below, where the Corporation shall issue or sell shares of its Common Stock,
during the two year period commencing on the Original Issue Date for a
consideration per share less than the Conversion Price in effect pursuant to the
terms of the Series B Stock at the time of issuance or sale of such additional
shares (the “Issuance Price”), then the Conversion Price in effect hereunder
shall simultaneously with such issuance or sale be reduced to an amount equal to
the Issuance Price. This Section 5D shall not apply to the (a)
issuance of Common Stock, Convertible Securities or Options (as defined below)
that have been approved by the holders of not less than a majority of the
outstanding Common Stock, (b) issuance of Common Stock pursuant to the exercise
of Options, (I) outstanding on the date hereof or (II) issued pursuant to a plan
which has been approved by the holders of not less than a majority of the
outstanding Common Stock, (c) issuance of Options to a lender(s) pursuant to a
loan to the Corporation with a term of not less than two years in an amount of
not less than $250,000 (and the issuance of Common Stock on the exercise of such
lender Options), (d) issuance of Common Stock or Options to financial
institutions, lessors or vendors in connection with commercial credit
arrangements, equipment financings or similar transactions with a term of not
less than one year approved by the Board of Directors, (e)(i) securities issued
or deemed to have been issued as full or partial consideration in connection
with a strategic merger, acquisition, consolidation or purchase of substantially
all of the securities or assets of a corporation or other entity, (f) securities
issued or deemed to have been issued in connection with strategic license
agreements and other partnering arrangements so long as such issuances are not
for the purpose of raising capital, and (g) the shares of Common Stock issued or
deemed to be issued by the Company upon conversion of this Debenture or exercise
conversion of Options or Convertible Securities outstanding on the Original
Issue Date.
(ii) Convertible
Securities.
(a) In
case the Corporation shall issue or sell any securities convertible into Common
Stock of the Corporation (“Convertible Securities”) after the Original Issue
Date, there shall be determined the price per share for which Common Stock is
issuable upon the conversion or exchange thereof, such determination to be made
by dividing (1) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (2) the maximum number
of shares of Common Stock of the Corporation issuable upon the conversion or
exchange of all of such Convertible Securities.
(b) If
the price per share so determined shall be less than the applicable Conversion
Price, then such issue or sale shall be deemed to be an issue or sale for cash
(as of the date of issue or sale of such Convertible Securities) of such maximum
number of shares of Common Stock at the price per share so determined, provided
that, if such Convertible Securities shall by their terms provide for an
increase or increases or decrease or decreases with the passage of time, in the
amount of additional consideration, if any, to the Corporation, or in the rate
of exchange, upon the conversion or exchange thereof, the adjusted
Conversion Price shall, forthwith upon any such increase or decrease
becoming effective, be readjusted to reflect the same, and provided further,
that upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the
adjusted Conversion Price shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were issued or
sold upon the conversion or exchange of such Convertible Securities, and that
they were issued or sold for the consideration actually received by the
Corporation upon such conversion or exchange, plus the consideration, if any,
actually received by the Corporation for the issue or sale of all of such
Convertible Securities which shall have been converted or
exchanged.
(iii) Rights
and Options.
(a) In
case the Corporation shall grant any rights, warrants or options to subscribe
for, purchase or otherwise acquire Common Stock (collectively, “Options”), there
shall be determined the price per share for which Common Stock is issuable upon
the exercise of such Options, such determination to be made by dividing (1) the
total amount, if any, received or receivable by the Corporation as consideration
for the granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the exercise of such
Options, by (2) the maximum number of shares of Common Stock of the Corporation
issuable upon the exercise of such Options.
(b) If
the price per share so determined shall be less than the applicable Conversion
Price, then the granting of such Options shall be deemed to be an issue or sale
for cash (as of the date of the granting of such rights or options) of such
maximum number of shares of Common Stock at the price per share so determined,
provided that, if such Options shall by their terms provide for an increase or
increases or decrease or decreases, with the passage of time, in the amount of
additional consideration payable to the Corporation upon the exercise thereof,
the adjusted Conversion Price shall, forthwith upon any such increase
or decrease becoming effective, be readjusted to reflect the same, and provided,
further, that upon the expiration of such Options, if any thereof shall not have
been exercised, the adjusted Conversion Price shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock so issued
or sold were those issued or sold upon the exercise of such Options and that
they were issued or sold for the consideration actually received by the
Corporation received by the Corporation for the granting of all such Options,
whether or not exercised.
E. Notices.
(i) Immediately
upon any adjustment of the Conversion Price, the Corporation will send written
notice thereof to all Series B Holders.
(ii) The
Corporation will send written notice to all Series B Holders at least 20 days
prior to the date on which the Corporation (a) closes its books or takes a
record (1) with respect to any dividend or distribution upon Common Stock, (2)
with respect to any pro rata subscription
offer to holders of Common Stock, (3) for determining rights to vote on or
approve any matter or (b) proposes to take any action on which the Series B
Holders are entitled to vote pursuant to Section 3B or Section 4B.
(iii) All
notices and other communications from the Corporation to a Series B Holder shall
be mailed by first class registered or certified mail, postage prepaid, at such
address as may have been furnished to the Corporation in writing by such holder,
or, until an address is so furnished, to and at the address of the last holder
who has so furnished an address to the Corporation.
F. Converted
Shares. Any shares of Series B Stock which are converted
pursuant to this Section 5 will be canceled and will not be reissued, sold or
transferred.
6. Miscellaneous.
A. Registration of
Transfer. The Corporation will keep at its principal office a
register for the registration of Series B Stock. Upon the surrender
of any certificate representing Series B Stock at such place, the Corporation
will, at the request of the record holder of such certificate, execute and
deliver (at the Corporation’s expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of shares represented
by the surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of shares as is requested
by the holder of the surrendered certificate and will be substantially identical
in form to the surrendered certificate.
B. Replacement. Upon
receipt of evidence reasonably satisfactory to the Corporation (an affidavit of
the registered holder will be satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any certificate evidencing one or more
shares of Series B Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation, the Corporation will (at its expense) execute and deliver in lieu
of such certificate a new certificate representing the number of shares
represented by such lost, stolen, destroyed or mutilated
certificate.
C. Definitions. For
purposes hereof:
“Common Stock” means
the Common Stock of the Corporation, no par value per share, and includes all
stock of any class or classes (however designated) of the Company, authorized
upon the Original Issue Date or thereafter, the holders of which shall have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and the
holders of which shall ordinarily, in the absence of contingencies, be entitled
to vote for the election of a majority of directors of the Company (even though
the right so to vote has been suspended by the happening of such a
contingency).
“Conversion Price” and
“Conversion
Stock” shall have the meanings set forth in Sections 5B and 5A(i),
respectively.
“Corporation” means
BBM Holdings, Inc., a Utah corporation.
“Junior Securities”
means the Common Stock and any equity securities of any kind (but not including
any debt securities convertible into equity securities) which the Corporation or
any Subsidiary at any time issues or is authorized to issue other than the
Series B Stock unless the terms of such security explicitly state that such
security shall be senior to or on a par with the Series B Stock.
“Liquidation Value” of
any share of Series B Stock as of any particular date will be
$0.18.
“Original Issue Date”
means the date the Series B Stock is first issued.
“Person” and “person” means an
individual, a partnership, a corporation, a limited liability company, a trust,
a joint venture, an unincorporated organization and a government or any
department or agency thereof.
“Required Holders”
means the record holders of a majority of the outstanding shares of Series B
Stock.
“Series B Holder”
means a registered holder of Series B Stock.
“Series B Stock” has
the meaning set forth in Section 1.
“Subsidiary” means any
corporation of which the shares of stock having a majority of the general voting
power in electing the board of directors are, at the time as of which any
determination is being made, owned by the Corporation either directly or
indirectly through Subsidiaries.
D. Amendment and
Waiver. No amendment, modification or waiver will be binding
or effective with respect to any provision hereof without the prior approval of
the Required Holders; provided that notwithstanding Section 3.B above no such
action will change or affect (a) the Conversion Price of the Series B Stock or
the number of shares or the class of stock into which the Series B Stock is
convertible, (b) the Liquidation Value of the Series B Stock, or (c) the amount
of cash, securities or other property receivable or to be received by the Series
B Holders.
E. Generally Accepted
Accounting Principles. When any accounting determination or
calculation is required to be made, such determination or calculation (unless
otherwise provided) will be made in accordance with generally accepted
accounting principles, consistently applied, except that if because of a change
in generally accepted accounting principles the Corporation would have to alter
a previously utilized accounting method or policy in order to remain in
compliance with generally accepted accounting principles, such determination or
calculation will continue to be made in accordance with the Corporation’s
previous accounting methods and policies unless the Corporation has obtained the
prior written consent of the holders of a majority of the Series B Stock then
outstanding.
SECOND: That
said determination of the designation and the relative powers, preferences,
rights, qualifications, limitations and restrictions thereof, relating to the
Series B Convertible Preferred Stock, was duly made by the Board of Directors
pursuant to the provisions of the Certificate of Incorporation, in accordance
with the provisions of Sections 16-10a-601 and 16-10a-602 of the Utah Revised
Business Corporation Act.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by
Andrew Limpert, its President, as of this 3rd day of June,
2009.
BBM
HOLDINGS, INC.
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