exh4-1_certdesignation.htm


     

    
      

      

    

     

     

     

     

     

     

     

     

     

    EXHIBIT 4.1

     

    CERTIFICATE OF DESIGNATION OF RIGHTS,
PREFERENCES,

    AND PRIVILEGES FOR SERIES A PREFERRED
STOCK

     

     

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    CERTIFICATE
OF DESIGNATION of

    RIGHTS,
PREFERENCES & PRIVILEGES for

    SERIES
A PREFERRED STOCK of

    BRINX
RESOURCES LTD., A NEVADA CORPORATION

     
 

    1.             Designation.

    


    One
Million (1,000,000) shares of the Preferred Stock of this corporation are hereby
constituted as a series of Preferred Stock, $0.001 par value per share,
designated as “Series A Preferred Stock” (the “Series A Preferred
Stock”).

    


    2.           Redemptions.

    


     (a)           (i)           If
a Fundamental Change (as hereinafter defined) is to occur, this corporation will
notify each holder of Series A Preferred Stock in writing of such pending
Fundamental Change no less than twenty-five (25) days prior to the consummation
thereof.  Such notice will describe the material terms and conditions
of the Fundamental Change (including, but not limited to, the amount and nature
of the total consideration to be paid in connection therewith) and the
provisions of this Section 2(a)(i) and this corporation will thereafter give
each holder prompt notice of any material changes in such terms.  The
holder or holders of a majority of the Series A Preferred Stock then outstanding
may (a) reject the Fundamental Change or (b) require this corporation to redeem
for cash all the Series A Preferred Stock then outstanding at a price per share
of Series A Preferred Stock equal to the Series A Redemption Price (as
hereinafter defined), by giving written notice to this corporation of such
election within twenty-five (25) days after receipt of notice from this
corporation. Upon receipt of such election to redeem, this corporation will be
obligated to redeem the outstanding Series A Preferred Stock at the time of the
consummation of such Fundamental Change.  If the proposed Fundamental
Change does not occur, the request for redemption automatically will be deemed
rescinded.

    


    (ii)           The
term “Fundamental
Change” means (a) individuals who constitute the Board of Directors of
the corporation as of the date hereof shall cease to constitute a majority of
the members of the Board of Directors still in office, (b) a sale, lease or
other transfer of more than fifty percent (50%) of the assets of this
corporation on a consolidated basis (computed on the basis of book value,
determined in accordance with generally accepted accounting principles
consistently applied, or fair market value, as determined by the Board of
Directors in its reasonable good faith judgment) in any transaction or series of
related transactions (other than sales in the ordinary course of business), or
(c) any merger, consolidation or reorganization to which this corporation
is a party, except for a merger, consolidation or reorganization in which either
(x) this corporation is the surviving corporation or (y) the outstanding Series
A Preferred Stock is converted into or exchanged for shares of convertible
preferred stock of an entity succeeding to the business of this corporation,
which convertible preferred stock has powers, preferences, and relative,
participating, optional, or other rights, and qualifications, limitations, and
restrictions, substantially similar to those of the Series A Preferred Stock,
and in either case (x) or (y), after giving effect to such merger, consolidation
or reorganization, the holders of this corporation’s outstanding capital stock
(on a fully-diluted basis) immediately prior to the merger, consolidation or
reorganization will own immediately following the merger, consolidation or
reorganization outstanding capital stock of this corporation or other surviving
entity (on a fully diluted basis) having the ordinary voting power to elect a
majority of the members of the Board of Directors of this corporation or other
surviving entity.

     

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    (iii)           If
and to the extent that applicable law or any other restriction prohibits the
payment to the holders of Series A Preferred Stock of all or any portion of the
amounts required to be paid under this subsection (a), such unpaid amounts will
be paid to the holders of Series A Preferred Stock by the person (other than
this corporation) who is a party to the Fundamental Change described under
clauses (a) through (c) of the definition thereof  upon the closing
thereof or on such other date determined pursuant to Section 2(a)(ii) by
purchase of such shares of Series A Preferred Stock under an agreement which
will provide that such purchased shares will be canceled effective upon such
purchase.  In the event the full amount of any payment hereunder is
not paid to the holders of the Series A Preferred Stock upon or immediately
prior to such closing or other date in accordance herewith, then the entire
amount payable in respect of the Fundamental Change will be distributed ratably
among the holders of Series A Preferred Stock in proportion to the aggregate
Series A Redemption Price of the shares of Series A Preferred Stock held by
each holder.

     

    (iv)           In
the event that the requirements of this subsection (a) are not complied with
respect to a Fundamental Change, this corporation will either:

     

    (A)           cause
the closing of the Fundamental Change to be postponed until such time as the
requirements of this subsection (a) have been complied with; or

     

    (B)           cancel
such Fundamental Change, in which event the rights, preferences and privileges
of the holders of Series A Preferred Stock shall revert to and be the same as
such rights, preferences and privileges existing immediately prior to the date
of the first notice referred to in this subsection (a).

     

    (v)           For
purposes hereof, the “Series A Redemption
Price” of any Series A Preferred  Stock is an amount equal to
the Fair Market Value (as defined below) of such Series A Preferred
Stock.

     

    (vi)           “Fair Market Value”
means in the case of a transaction constituting a Fundamental Change, the value
of the consideration (determined as provided in subsection 2(a)(vii) below) that
will be paid by the purchaser in the transaction constituting the Fundamental
Change in respect of such Series A Preferred Stock.  If such parties
are unable to reach agreement within a reasonable period of time not to exceed
thirty days, such fair value will be determined by an independent appraiser
jointly selected by this corporation and the holder or holders of a majority of
the Series A Preferred Stock. If this corporation and the holder or holders of a
majority of the Series A Preferred Stock are unable to mutually agree upon an
appraiser, each of this corporation and the holder or holders of a majority of
the Series A Preferred Stock shall select an appraiser, and the two appraisers
shall select a third appraiser to determine such Fair Market Value, which
appraised value shall be binding on all parties.  The fees and
expenses of all appraisers hereunder shall be borne by this
corporation.  Fair Market Value with respect to any securities of this
corporation shall be determined without discount for lack of liquidity, or the
fact that any securities so appraised represent a minority interest in the
corporation.

     

    (vii)           In
a transaction constituting a Fundamental Change, if the consideration received
is other than cash, its value will be determined as provided below. Any
securities shall be valued as follows:

     

    (A)           Securities
not subject to investment letter or other similar restrictions on free
marketability covered by (B) below:

     

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    (1)           If
traded on a securities exchange or through the Nasdaq National Market, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange or system over the thirty (30) day period ending three (3) days
prior to the closing;

     

    (2)           If
actively traded over-the-counter, the value shall be deemed to be the average of
the closing bid or sale prices (whichever is applicable) over the thirty (30)
day period ending three (3) days prior to the closing; and

     

    (3)           If
there is no active public market, the value shall be the fair market value
thereof, as mutually determined by this corporation and the holders of at least
a majority of the voting power of all then outstanding shares of Series A
Preferred Stock or if they cannot agree, by an appraiser or appraisers selected
in the manner contemplated by the definition of "Fair Market
Value."

     

    (B)           The
method of valuation of securities subject to investment letter or other
restrictions on free marketability (other than restrictions arising solely by
virtue of a stockholder's status as an affiliate or former affiliate) shall be
to make an appropriate discount from the market value determined as above in (A)
(1), (2) or (3) to reflect the approximate fair market value thereof, as
mutually determined by this corporation and the holders of at least a majority
of the voting power of all then outstanding shares of the Series A Preferred
Stock.

     

    (C)           For
any other form of consideration other than cash or securities, the value shall
be the fair market value thereof, as mutually determined by this corporation and
the holders of at least a majority of the voting power of all then outstanding
shares of Series A Preferred Stock or if they cannot agree, by an appraiser or
appraisers selected in the manner contemplated by the definition of "Fair Market
Value."

     

     (b)             For
each share of Series A Preferred Stock that is to be redeemed, this corporation
shall be obligated to pay to the holder thereof (upon surrender by such holder
at this corporation’s principal office of the certificate representing such
Series A Preferred Stock) an amount in immediately available funds equal to the
Series A Redemption Price.  If the funds of this corporation legally
available for redemption of Series A Preferred Stock on any redemption date are
insufficient to redeem the total number of shares of Series A Preferred Stock to
be redeemed on such date, those funds that are legally available shall be used
to redeem the Series A Preferred Stock to be redeemed on such redemption date,
paid to the holders of the Series A Preferred Stock ratably in proportion to the
number of shares of Series A Preferred Stock held by each such holder on such
redemption date.  At any time thereafter when additional funds of this
corporation are legally available for the redemption of Series A Preferred
Stock, such funds shall immediately be used to redeem the balance of the Series
A Preferred Stock that this corporation had become obligated to redeem but had
not redeemed, paid to the holders of the Series A Preferred Stock ratably in
proportion to the number of shares of Series A Preferred Stock held by each such
holder on the date such funds become legally available.  In case fewer
than the total number of shares of Series A Preferred Stock represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed shares of Series A Preferred Stock shall be issued to the holder
thereof without cost to such holder within three (3) business days after
surrender of the certificate representing the redeemed shares of Series A
Preferred Stock.

    


    (c)           
Any shares of Series A Preferred Stock that are redeemed or otherwise acquired
by this corporation shall be cancelled, shall no longer be deemed to be
outstanding and shall not be issuable by this corporation. The Articles of
Incorporation of this corporation shall be appropriately amended to


     

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    effect
the corresponding reduction in this corporation's authorized capital
stock.

    


    3.           Voting
Rights.

    


    (a)           General.  The
holders of the Series A Preferred Stock shall be entitled to elect one director
of this corporation in connection with each annual election of directors who
shall be the designated “Series A Director”.    With respect
to any other matter submitted for a vote (or a written consent in lieu thereof)
by the stockholders of this corporation (except those contained in Section 4, as
to which the Series A Preferred Stock will be entitled to vote separately as a
class), the holders of Series A Preferred Stock and the holders of the common
stock, $0.001 par value of this corporation (“Common Stock”) shall vote together
as a single class and not as separate series.

    


    (b)           Director
Vacancies.  In the case of any vacancy (other than a vacancy
caused by removal) in the office of the Series A Director, the affirmative vote
of the holders of a majority of the shares of the Series A Preferred Stock shall
elect a successor to hold office for the unexpired term of the Series A
Director.  The Series A Director may be removed during the aforesaid
term of office, either with or without cause, by, and only by, the affirmative
vote of the holders of the shares of the Series A Preferred Stock entitled to
elect such director, given either at a special meeting of such stockholders duly
called for that purpose or pursuant to a written consent of such stockholders,
and any vacancy thereby created may be filled by the holders of the Series A
Preferred Stock represented at the meeting or pursuant to written
consent.

    


    (c)           Events of
Noncompliance.  If an Event of Noncompliance (as hereinafter
defined) shall have occurred, then the holders of Series A Preferred Stock,
voting as a separate class, will have the special right (in addition to any
other voting rights such holders may have) to elect that number of directors to
the Board of Directors that would constitute a majority of the Board of
Directors at such time.  Whenever such special right has vested, it
may be exercised at any special meeting of this corporation’s stockholders as
provided below or by written consent of the holders of a majority of the Series
A Preferred Stock then outstanding.  If an Event of Noncompliance
shall have occurred, then upon the written request of the holders of a majority
of the Series A Preferred Stock, a proper officer of this corporation will call
as promptly as possible a special meeting of this corporation’s stockholders for
the purpose of electing directors.  If such meeting has not been
called by a proper officer of this corporation within five (5) days after
personal service of said written request upon the secretary of this corporation
or within ten (10) days after mailing the same by registered mail addressed to
the secretary of this corporation at its principal office, then the holders of
record of a majority of the Series A Preferred Stock at the time outstanding may
designate in writing one of their number to call such meeting at the expense of
this corporation, and such meeting may be called by such person so designated
upon the notice required for annual meetings of stockholders and will be held at
such place designated by such holders.  Any holder of Series A
Preferred Stock so designated will be given access to the stock record books of
this corporation for the purpose of causing meetings of stockholders to be
called pursuant to these provisions.  Upon the convening of such
meeting, the office of all persons who were theretofore directors of this
corporation shall terminate and the entire Board of Directors shall consist of
those members elected at the meeting, the majority of which shall be elected by
the holders of a majority of the Series A Preferred Stock, voting as a separate
class, and the remainder of which shall be elected by the holders of the
Corporation’s other classes of voting stock then outstanding.  The
special right of the holders of the Series A Preferred Stock provided for in
this subsection 3(c) shall continue until the Event of Noncompliance giving rise
to such right ceases to exist, but may be invoked again if an additional Event
of Noncompliance occurs.  Any director elected pursuant to these
special rights may be removed, and any vacancy in the board existing at such
time when this special voting power is vested can be filled, by 

     

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    written
consent or at another special meeting in accordance with these
provisions.

    


    (d)           An
“Event of
Noncompliance” shall be deemed to have occurred if this corporation fails
to make any redemption payment with respect to the Series A Preferred Stock that
it is obligated to make hereunder (regardless of whether funds are legally
available therefor).

    


    4.           Protective Provisions.


    


    This
corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of a majority of the Series A
Preferred Stock do any of the following:

    


    (a)           amend,
alter, or repeal any provision of the Articles of Incorporation or the Bylaws of
this corporation (including any filing of a Certificate of Designation) that
alters or changes the voting powers, preferences, or other special rights or
privileges, or restrictions of the Series A Preferred Stock;

     

    (b)           increase
or decrease the total number of authorized shares of Series A Preferred
Stock;

     

    (c)           authorize
or issue, or obligate itself to issue, any other equity security, including any
other security convertible into or exercisable for any other equity security,
which has a preference over the Series A Preferred Stock with respect to voting,
or authorize any increase in the authorized or designated number of any such
security;

     

    (d)           purchase
or otherwise acquire any share or shares of Preferred Stock or Common Stock (or
pay into or set aside for a sinking fund for such purpose); provided, however,
that this restriction shall not apply to the repurchase of shares of Common
Stock from employees, officers, directors, consultants or other persons
performing services for this corporation or any subsidiary pursuant to
agreements under which this corporation has the option to repurchase such shares
at cost or at cost upon the occurrence of certain events, such as the
termination of employment;

     

    (e)           authorize
the voluntary or involuntary dissolution, liquidation or winding-up of this
corporation;

     

    (f)           pay
any dividend or other distribution other than (i) in the case of the Common
Stock, a dividend or distribution payable solely in Common Stock and (ii) any
dividend or distribution the fair market value of which does not exceed 10% of
this corporation's aggregate net profits for the fiscal year of this corporation
in which such dividend is declared and the immediately preceding fiscal
year;

     

    (g)           cause
this corporation to enter into or engage, directly or indirectly, in any
material respect any line of business other than the other than the business
anticipated to be conducted by this corporation as of the date of the first
issuance of the Series A Preferred Stock; or

     

    (h)           enter
into any transaction with any officer, director or stockholder of this
corporation or any "affiliate" or "associate" (as such
terms are defined in the regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1940) of any such person or
entity, other than normal employment arrangements and benefit programs on
reasonable terms and other than any transaction (or series of related
transactions) involving not more than $100,000 in the aggregate that has been
approved by a majority of the Board of Directors (excluding any director who is
interested in such transaction, either directly or through one of his affiliates
or associates) after full disclosure of the terms thereof to the Board of
Directors and after the determination by such majority of the Board of Directors


     

     

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    that the
terms of such transaction are at least as favorable to this corporation as those
which could be obtained from an unaffiliated third
party).   

     

    5.           Miscellaneous.

     

    (a)           Registration of
Transfer.  This corporation will keep at its principal office a
register for the registration of Series A Preferr­ed Stock.  Upon
the surrender of any certificate representing Series A Preferred Stock at such
place, this corporation will, at the request of the record holder of such
certificate, execute and deliver (at this corporation’s expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Series A Preferred Stock represented by the surrendered
certi­ficate.  Each such new certificate will be registered in
such name and will represent such number of Series A Preferred Stock 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 this corporation (an affidavit of
the registered holder will be satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any certificate evidencing Series A
Preferred Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to this corporation (provided that
if the holder is an institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, this corporation will (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of Series A Preferred Stock represented by such lost, stolen, destroyed
or mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.

    


    (c)           Notices.  Except
as otherwise expressly provided, all notices referred to herein will be in
writing and will be delivered by registered or certified mail, return receipt
requested, postage prepaid and will be deemed to have been given when so mailed
(a) to this corporation, at its principal executive offices and (b) to any
shareholder, at such holder’s address as it appears in the stock records of this
corporation (unless otherwise indicated in writing by such holder).

     

     

     

     

     

     

     

     

     

     

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