Unassociated Document


    Exhibit
4.12

     

     

    ELEMENT
21 GOLF COMPANY

     

    AMENDED
AND RESTATED CERTIFICATE OF THE

     

    POWERS,
DESIGNATIONS, PREFERENCES AND RIGHTS OF THE

     

    SERIES
B CONVERTIBLE PREFERRED STOCK, $.10 PAR VALUE PER SHARE

     

    Of the
5,000,000 shares of Preferred Stock authorized under the Certificate of
Incorporation of Element 21 Golf Company (the “Corporation”), 353,000 shares are
hereby designated as Series B Convertible Preferred Stock (the “Series B
Preferred Stock”) with the voting powers, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions as set forth below:

     

    Section
1.                                Definitions.

    


    For the
purposes hereof, the following definitions shall apply:

     

    “Board of Directors” shall mean
the Board of Directors of this Corporation.

     

    “Conversion Price” means the
amount set forth in Section 4(a), as adjusted pursuant to Section
5.

     

    “Junior Shares” means all
shares of Common Stock and Series A Convertible Preferred Stock of this
Corporation, or any other stock ranking junior to the Series B Preferred Stock
in dividends or liquidation rights.

     

    “Original Issue Date” means the
date on which a share of Series B Preferred Stock was first issued.

     

    “Original Issue Price”
means  $17.00

     

     

     

     

    
      
         

      

      
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    Section
2.                                Dividend
Rights.

    


    From and
after the date of the issuance of any shares of Series B Preferred Stock,
dividends at the rate per annum of 4% of the base amount per share shall accrue
on such shares of Series B Preferred Stock (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares) (the “Accruing
Dividends”).  Accruing Dividends shall be paid quarterly, on
the first day of each fiscal quarter (in respect of the prior quarter), for each
quarter ending after June 30, 2009.  Payment shall be made in the
Company’s common stock (the “Common Stock”) valued at the price that is the
average of the closing prices for Common Stock for the 20 trading days
immediately preceding the payment date for such dividends. Accruing Dividends
for the fiscal quarters ended on or prior to June 30, 2009 shall be paid in
Common Stock valued at the price that is the average of the closing prices for
Common Stock for the 20 trading days immediately preceding June 30,
2009.   The base amount per share shall initially be the Original
Issue Price and, with respect to Accruing Dividends for the fiscal quarters
ended prior to the effective date of this Amended and Restated Certificate,
shall be increased on each anniversary of the purchase of such share by the
amount of accrued dividends for the year ending on such
anniversary.  Accruing Dividends shall accrue from day to day, whether
or not declared, and shall be cumulative; provided however, that except
as set provided above in this Section 2, the
Corporation shall be under no obligation to pay such Accruing
Dividends.  The Corporation shall not declare, pay or set aside any
dividends on shares of any other class or series of capital stock of the
Corporation unless (in addition to the obtaining of any consents required
elsewhere in the Certificate of Incorporation) the holders of the Series B
Preferred Stock then outstanding shall first receive, or simultaneously receive,
a dividend on each outstanding share of Series B Preferred Stock in an
amount at least equal to the greater of (i) the amount of the aggregate Accruing
Dividends then accrued on such share of Series B Preferred Stock and not
previously paid and (ii) (A) in the case of a dividend on Common Stock, the sum
of (1) the amount of the aggregate Accruing Dividends then accrued on such share
of Series B Preferred Stock and not previously paid plus (2) the dividend
payable on each share of Series B Preferred Stock if such share had been
converted into Common Stock immediately prior to the record date for such
dividend, (B) in the case of a dividend on Series A Preferred Stock or any other
class or series that is convertible into Common Stock, that dividend per share
of Series B Preferred Stock as would equal the product of (1) the dividend
payable on each share of such class or series determined, if applicable, as if
all shares of such class or series had been converted into Common Stock and (2)
the number of shares of Common Stock issuable upon conversion of a share of
Series B Preferred Stock, in each case calculated on the record date for
determination of holders entitled to receive such dividend or (C) in the case of
a dividend on any class or series that is not convertible into Common Stock, at
a rate per share of Series B Preferred Stock determined by (1) dividing the
amount of the dividend payable on each share of such class or series of capital
stock by the original issuance price of such class or series of capital stock
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares) and
(2) multiplying such fraction by an amount equal to the Original Issue Price (as
defined below); provided that, if the Corporation declares, pays or sets aside,
on the same date, a dividend on shares of more than one class or series of
capital stock of the Corporation, the dividend payable to the holders of Series
B Preferred Stock pursuant to this Section 2 shall be calculated based upon the
dividend on the class or series of capital stock that would result in the
highest Series B Preferred Stock dividend.   

     

    Section
3.                                Liquidation
Preference.

     

    (a)           Preference.  In
the event of any liquidation, dissolution or winding up of the affairs of the
Corporation, voluntarily or involuntarily, the holders of each share of Series B
Preferred Stock, prior to any distribution to the holders of Junior Shares,
shall be entitled to receive pro rata a preferential amount equal to the greater
of (i) such amount per share as would have been payable had each such share been
converted to into Common Stock immediately prior to such liquidation,
dissolution or winding up , or (ii) $17.00 per share (adjusted to reflect any
stock split, stock dividend, combination, recapitalization or reorganization) of
Series B Preferred Stock held by them plus all Accruing Dividends accrued
thereon, plus all other declared but unpaid dividends (the “Series B Preferred
Stock Liquidation Preference”).  If, upon such liquidation, dissolution or
winding up, the assets of the Corporation are insufficient (after payment of the
liquidation preference of any class of preferred stock ranking senior on
liquidation to the Series B Preferred Stock) to provide for the payment of the
Series B Preferred Stock Liquidation Preference for each share of Series B
Preferred Stock outstanding, such assets as are available shall be paid out pro
rata among the shares of Series B Preferred Stock and no payment shall be made
to the holders of Junior Shares. After payment to the holders of the Series B
Preferred Stock of the Series B Preferred Stock Liquidation Preference, the
entire remaining assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of Junior Shares in
the manner described in the Certificate of the Powers, Designations, Preferences
And Rights Of The Series A Convertible Preferred Stock, $.001 Par Value Per
Share as filed with the Secretary of State of the State of Delaware on February
22, 2006.

     

     

     

    
      
         

      

      
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    (b)           Acquisition Treated as
Liquidation.  Unless otherwise decided upon a vote of the holders of
at least a majority of the then outstanding shares of Series B Preferred Stock,
a merger or consolidation of the corporation with or into another corporation or
entity (whether or not the corporation is the surviving entity if, after the
merger or consolidation, more than 50% of the voting stock of the surviving
corporation is owned by persons who were not holders of voting stock of this
corporation prior to the merger or consolidation), or the sale of all or
substantially all the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section
3.

     

    Section
4.                                Conversion
of Series B Preferred Stock.

    


    The
holders of the Series B Preferred Stock shall have conversion rights in
accordance with the following provisions:

     

    (a)           Right to Convert and
Conversion Price.  Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the Original
Issue Date, at the office of the Corporation or any transfer agent for the
Series B Preferred Stock, into such number of fully paid and non-assessable
shares of Common Stock as is determined by dividing the Original Issue Price by
the Conversion Price, determined and adjusted as hereafter provided, in effect
at the time of conversion. The “Conversion Price” shall be $3.05, and such price
shall be subject to adjustment as provided in Section 5. The Original Issue
Price is $17.00 such that on the date of this Amended and Restated Certificate,
each share of Series B Preferred Stock is convertible into 5.57 shares of Common
Stock.(b)Mechanics of
Conversion.  No fractional shares of Common Stock shall be issued
upon conversion of Series B Preferred Stock.  In lieu of any fractional
share to which a holder of Series B Preferred Stock would otherwise be entitled,
the Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.  Before any holder of Series B Preferred Stock
shall be entitled to convert the same into full shares of Common Stock, the
holder shall surrender the certificate or certificates therefor, duly endorsed
for transfer, at the office of the Corporation or of any transfer agent for the
Series B Preferred Stock, and shall give written notice to the Corporation at
such office that he elects to convert the same.  The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Series B Preferred Stock a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable in order to
avoid 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 B Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such
date.

     

     

    (c)           Notices of Record Date,
etc.  In the event that the Corporation shall propose at any
time:

     

    (i)           to
declare any dividend or distribution upon its Common Stock, whether in cash,
property, stock or other securities, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus;

     

    (ii)           to
offer for subscription pro rata to the holders of any class of its stock any
additional shares of stock of any class or other rights;

     

    (iii)           to
subdivide or combine its outstanding Common Stock;

     

    (iv)           to
effect any reclassification or recapitalization of its Common Stock outstanding
involving a change in the Common Stock; or

     

    (v)           to
merge or consolidate with or into any other corporation, or sell, lease or
convey all or substantially all its property or business, or to liquidate,
dissolve or wind up;

    


    then, in
connection with each such event, the Corporation shall send to the holders of
the Series B Preferred Stock:

     

    (1) 
at least 10 days' prior written notice of the date on which a record shall be
taken for such dividend, distribution, subscription rights, subdivision or
combination (and specifying the date on which the holders of Common Stock shall
be entitled thereto) or for determining rights to vote in respect of the matters
referred to in clauses (iv) and (v) above; and

     

    (2) 
in the case of the matters referred to in clauses (iv) and (v) above, at least
10 days' prior written notice of the date when the same shall take place
(specifying the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event).

     

    Each such
written notice shall be given by certified mail, postage prepaid, addressed to
the holders of Series B Preferred Stock at the address for each such holder as
shown on the books of the Corporation.

     

    (d)           Reservation of Common
Stock.  The Corporation shall, at all times when the Series B
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Series B Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Series B Preferred Stock.  Before taking any action
which would cause an adjustment reducing the Conversion Price below the then par
value of the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, the Corporation will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Conversion Price.

     

     

     

     

    
      
         

      

      
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    (e)           Cancellation of Series B
Preferred Stock.  All shares of Series B Preferred Stock which shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall forthwith cease and
terminate except only the right of the holders thereof to receive shares of
Common Stock in exchange therefor and payment of any declared but unpaid
dividends thereon.  Any shares of Series B Preferred Stock so converted
shall be retired and cancelled, and shall not be reissued, and the Corporation
may from time to time take such appropriate action as may be necessary to reduce
the authorized Series B Preferred Stock accordingly.

     

    Section
5.                                Adjustment
of Conversion Price on Series B Preferred Stock.

    


     

    (a)           Adjustment for Stock Splits
and Combinations.  If the Corporation shall at any time or from
time to time after the effective date of this Amended and Restated Certificate
effect a subdivision of the outstanding Common Stock, the Conversion Price in
effect immediately before that subdivision shall be proportionately decreased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be increased in proportion to such increase in the
aggregate number of shares of Common Stock outstanding.  If the
Corporation shall at any time or from time to time after the effective date of
this Amended and Restated Certificate combine the outstanding shares of Common
Stock, the Conversion Price in effect immediately before the combination shall
be proportionately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in the aggregate number of shares of Common Stock
outstanding.  Any adjustment under this subsection shall become
effective at the close of business on the date the subdivision or combination
becomes effective.

     

    (b)           Adjustment for Certain
Dividends and Distributions.  In the event the Corporation at
any time or from time to time after the effective date of this Amended and
Restated Certificate shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable on the Common Stock in additional shares of Common
Stock, then and in each such event the Conversion Price in effect immediately
before such event shall be decreased as of the time of such issuance or, in the
event such a record date shall have been fixed, as of the close of business on
such record date, by multiplying the Conversion Price then in effect by a
fraction: the numerator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date, and the denominator of which shall be
the total number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such record date
plus the number of shares of Common Stock issuable in payment of such dividend
or distribution. Notwithstanding the foregoing, (X) if such record date shall
have been fixed and such dividend is not fully paid or if such distribution is
not fully made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Conversion Price shall be adjusted pursuant to this subsection as
of the time of actual payment of such dividends or distributions; and (Y) that
no such adjustment shall be made if the holders of Series B Preferred Stock
simultaneously receive a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Series B Preferred Stock had
been converted into Common Stock on the date of such event.

     

    (c)           Adjustment for Merger or
Reorganization, etc.  Subject to the provisions of Section
3(b), if there shall occur any reorganization, recapitalization,
reclassification, consolidation or merger involving the Corporation in which the
Common Stock (but not the Series B Preferred Stock) is converted into or
exchanged for securities, cash or other property (other than a transaction
covered by Sections 5(a) or 5(b)), then, following any such reorganization,
recapitalization, reclassification, consolidation or merger, each share of
Series B Preferred Stock shall thereafter be convertible in lieu of the Common
Stock into which it was convertible prior to such event into the kind and amount
of securities, cash or other property which a holder of the number of shares of
Common Stock of the Corporation issuable upon conversion of one share of Series
B Preferred Stock immediately prior to such reorganization, recapitalization,
reclassification, consolidation or merger would have been entitled to receive
pursuant to such transaction; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Corporation) shall be
made in the application of the provisions in this Section 5 with respect to the
rights and interests thereafter of the holders of the Series B Preferred
Stock, to the end that the provisions set forth in this Section 5 (including
provisions with respect to changes in and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or other property thereafter deliverable upon the
conversion of the Series B Preferred Stock.

     

    (d)           Adjustments to Conversion
Price of Series B Preferred Stock for Diluting Issues.  For
purposes of this Section 5(d), the following definitions shall
apply:

    


     

    (i) “Option” shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities.

     

    (ii) “Series B Original Issue Date”
shall mean the date on which the first share of Series B Preferred Stock
was issued.

     

    (iii) “Convertible Securities” shall
mean any evidences of indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common Stock,.

     

    (iv) “Additional Shares of Common
Stock” shall mean all shares of Common Stock issued (or, pursuant to this
Section 5(d), deemed to be issued) by the Corporation after the Series B
Original Issue Date, other than the following shares of Common Stock, and shares
of Common Stock deemed issued pursuant to the following Options and Convertible
Securities (collectively “Exempted
Securities”):

     

     

     

    
      
         

      

      
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    a.           the
issuance of any shares of Common Stock as a stock dividend to holders of shares
of the Company’s capital stock or upon any subdivision or combination of shares
of the Company’s capital stock that is covered pursuant to Section 5(a), 5(b) or
5(c) above;

     

     

    b.           the
issuance of any shares of Common Stock upon conversion of shares of Series B
Preferred Stock or any other shares of convertible preferred stock outstanding
as of the date hereof;

     

     

    c.           the
issuance of up to 6,000,000 shares of Common Stock or options with respect
thereto (subject in either case to appropriate adjustment for stock splits,
stock dividends, recapitalizations and similar events occurring after the date
of this Agreement), issued or issuable to employees, directors or officers of,
or consultants to, the Company or any subsidiary of the Company pursuant to any
plan, agreement or arrangement approved by the Board of Directors of the Company
including convertible notes that are issued to employees in lieu of payment of
cash salary (it being understood that any shares subject to options that expire
or terminate unexercised or convertible notes that are repaid in cash or any
restricted stock repurchased by the Company shall not be counted towards the
maximum number set forth in this clause c. unless and until regranted or
reissued pursuant to any such plan, agreement or arrangement, and the shares
into which a convertible note may be converted don’t count unless and until
there is a conversion; provided, however, that the exception provided by this
provision is not available to the extent the 6 million share cap is exceeded by
a conversion of any such notes);

     

     

    d.           the
issuance of shares of Common Stock upon the exercise of any warrant to purchase
shares of Common Stock outstanding as of the Series B Original Issue Date or any
warrant issued to the Investor or any other purchaser of Series B Preferred
Stock in connection with the Company’s Series B Preferred Stock equity
financing;

     

     

    e.           the
issuance of securities solely in consideration for the acquisition (whether by
merger or otherwise) by the Company or any subsidiary of the Company of all or
substantially all of the stock or assets of any other entity;

     

     

    f.           the
issuance of shares of Common Stock by the Company in a firm-commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act; or

     

     

    g.           the
issuance of shares of Common Stock, or the grant of options or warrants
therefor, in connection with (i) any present or future borrowing, line of
credit, leasing or similar financing arrangement approved by the Board of
Directors of the Company, or (ii) sponsored research, collaboration, technology
license, development, OEM, marketing or other similar agreements or strategic
partnerships approved by the Board of Directors of the Company.

     

    


     

    (v) No
adjustment in the Conversion Price of Series B Preferred Stock shall be made
as the result of the issuance or deemed issuance of Additional Shares of Common
Stock if the Corporation receives written notice from the holders of at least a
majority of the then outstanding shares of Series B Preferred Stock
agreeing that no such adjustment shall be made as the result of the issuance or
deemed issuance of such Additional Shares of Common Stock.

     

    (vi) If the
Corporation at any time or from time to time after the Series B Original Issue
Date shall issue any Options or Convertible Securities (excluding Options or
Convertible Securities which are themselves Exempted 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 of Common Stock (as set forth in the instrument relating thereto,
assuming the satisfaction of any conditions to exercisability, convertibility or
exchangeability but without regard to any provision contained therein for a
subsequent adjustment of such number) 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.

     

     

    
      
         

      

      
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    (vii) If the
terms of any Option or Convertible Security, the issuance of which resulted in
an adjustment to the Conversion Price of Series B Preferred Stock pursuant to
the terms of this Section 5(d), are revised as a result of an amendment to such
terms or any other adjustment pursuant to the provisions of such Option or
Convertible Security (but excluding automatic adjustments to such terms pursuant
to anti-dilution or similar provisions of such Option or Convertible Security)
to provide for either (1) any increase or decrease in the number of shares of
Common Stock issuable upon the exercise, conversion and/or exchange of any such
Option or Convertible Security or (2) any increase or decrease in the
consideration payable to the Corporation upon such exercise, conversion and/or
exchange, then, effective upon such increase or decrease becoming effective,
the  Conversion Price computed upon the original issue of such Option
or Convertible Security (or upon the occurrence of a record date with respect
thereto) shall be readjusted to such Conversion Price as would have obtained had
such revised terms been in effect upon the original date of issuance of such
Option or Convertible Security.  Notwithstanding the foregoing, no
readjustment pursuant to this clause (b) shall have the effect of
increasing the Conversion Price to an amount which exceeds the lower of
(i) the Conversion Price in effect immediately prior to the original
adjustment made as a result of the issuance of such Option or Convertible
Security, or (ii) the Conversion Price that would have resulted from any
issuances of Additional Shares of Common Stock (other than deemed issuances of
Additional Shares of Common Stock as a result of the issuance of such Option or
Convertible Security) between the original adjustment date and such readjustment
date.

     

    (viii) If the
terms of any Option or Convertible Security (excluding Options or Convertible
Securities which are themselves Exempted Securities), the issuance of which did
not result in an adjustment to the Conversion Price pursuant to the terms of
this Section 5(d) (either because the consideration per share of the Additional
Shares of Common Stock subject thereto was equal to or greater than the
Conversion Price then in effect, or because such Option or Convertible Security
was issued before the Series B Original Issue Date), are revised after the
Series B Original Issue Date as a result of an amendment to such terms or any
other adjustment pursuant to the provisions of such Option or Convertible
Security (but excluding automatic adjustments to such terms pursuant to
anti-dilution or similar provisions of such Option or Convertible Security) to
provide for either (1) any increase or decrease in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any such
Option or Convertible Security or (2) any increase or decrease in the
consideration payable to the Corporation upon such exercise, conversion or
exchange, then such Option or Convertible Security, as so amended or adjusted,
and the Additional Shares of Common Stock subject thereto shall be deemed to
have been issued effective upon such increase or decrease becoming
effective.

     

    (ix) Upon the
expiration or termination of any unexercised Option or unconverted or
unexchanged Convertible Security (or portion thereof) which resulted (either
upon its original issuance or upon a revision of its terms) in an adjustment to
the Conversion Price pursuant to the terms of this Section 5(d), the Conversion
Price shall be readjusted to such Conversion Price as would have obtained had
such Option or Convertible Security (or portion thereof) never been
issued.

     

    (x) If the
number of shares of Common Stock issuable upon the exercise, conversion and/or
exchange of any Option or Convertible Security, or the consideration payable to
the Corporation upon such exercise, conversion and/or exchange, is calculable at
the time such Option or Convertible Security is issued or amended but is subject
to adjustment based upon subsequent events, any adjustment to the Conversion
Price provided for in this Section 5(d) shall be effected at the time of such
issuance or amendment based on such number of shares or amount of consideration
without regard to any provisions for subsequent adjustments (and any subsequent
adjustments shall be treated as provided in clauses (vii) and (viii) of this
Section 5(d)).  If the number of shares of Common Stock issuable upon
the exercise, conversion and/or exchange of any Option or Convertible Security,
or the consideration payable to the Corporation upon such exercise, conversion
and/or exchange, cannot be calculated at all at the time such Option or
Convertible Security is issued or amended, any adjustment to the Conversion
Price that would result under the terms of this Section 5(d) at the time of such
issuance or amendment shall instead be effected at the time such number of
shares and/or amount of consideration is first calculable (even if subject to
subsequent adjustments), assuming for purposes of calculating such adjustment to
the Conversion Price that such issuance or amendment took place at the time such
calculation can first be made.

     

    (xi) In the
event the Corporation shall at any time after the Series B Original Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to this Section 5(d)), without consideration
or for a consideration per share less than the  Conversion Price in
effect immediately prior to such issue, then the Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
one-hundredth of a cent) determined in accordance with the following
formula:

     

    CP2 = CP1
*  (A + B)  ̧
(A + C).

     

    For
purposes of the foregoing formula, the following definitions shall
apply:

     

     

     

     

    
      
         

      

      
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    “CP2” shall
mean the Conversion Price in effect immediately after such issue of Additional
Shares of Common Stock

     

    “CP1” shall
mean the Conversion Price in effect immediately prior to such issue of
Additional Shares of Common Stock;

     

    “A” shall
mean the number of shares of Common Stock outstanding immediately prior to such
issue of Additional Shares of Common Stock (including for this purpose as
outstanding all shares of Common Stock issuable upon exercise or conversion of
Options or Convertible Securities outstanding immediately prior to such
issue);

     

    “B” shall
mean the number of shares of Common Stock that would have been issued if such
Additional Shares of Common Stock had been issued at a price per share equal to
CP1
(determined by dividing the aggregate consideration received by the Corporation
in respect of such issue by CP1);
and

     

    “C” shall
mean the number of such Additional Shares of Common Stock issued in such
transaction.

     

    For
purposes of this Section 5(d)(xi), the consideration received by the Corporation
for the issue of any Additional Shares of Common Stock shall be computed as
follows:

     

    a. Cash and
Property:  Such consideration shall insofar as it consists of cash,
(X) be computed at the aggregate amount of cash received by the Corporation,
excluding amounts paid or payable for accrued interest; and insofar as it
consists of property other than cash, (Y) be computed at the fair market value
thereof at the time of such issue, as determined in good faith by the Board of
Directors of the Corporation; and in the event 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 (X) and (Y)
above, as determined in good faith by the Board of Directors of the
Corporation.

     

    b. 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 this Section 5(d), relating to Options and Convertible Securities,
shall be determined by dividing (X) 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 Securities, by (Y)
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, 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
Securities.

     

    (xii) Multiple
Closing Dates.  In the event the Corporation shall issue on more than
one date Additional Shares of Common Stock that are a part of one transaction or
a series of related transactions and that would result in an adjustment to the
Conversion Price pursuant to the terms of Section4(d)(xi) above then, upon the
final such issuance, the Conversion Price shall be readjusted to give effect to
all such issuances as if they occurred on the date of the first such issuance
(and without giving effect to any additional adjustments as a result of any such
subsequent issuances within such period).

     

    (e)           Certificate as to
Adjustments.  Upon the occurrence of each adjustment or readjustment
of the Conversion Price pursuant to this Section 5, the Corporation at its
expense shall, as promptly as reasonably practicable but in any event not later
than 10 days thereafter, compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of Series B Preferred
Stock a certificate setting forth such adjustment or readjustment (including the
kind and amount of securities, cash or other property into which the Series B
Preferred Stock is convertible) and showing in detail the facts upon which such
adjustment or readjustment is based.  The Corporation shall, as
promptly as reasonably practicable after the written request at any time of any
holder of Series B Preferred Stock (but in any event not later than 10 days
thereafter), furnish or cause to be furnished to such holder a certificate
setting forth (i) the Conversion Price then in effect, and (ii) the
number of shares of Common Stock and the amount, if any, of other securities,
cash or property which then would be received upon the conversion of
Series B Preferred Stock.

     

    Section
6.                                Voting
Rights of Series B Preferred Stock.

     

    (a)           General.  Except
as expressly set forth in this Section and except as otherwise required by law,
each share of Series B Preferred Stock issued and outstanding shall entitle the
holder thereof to cast that number of votes as is equal to the number of votes
that such holder would be entitled to cast had such holder converted its shares
of Series B Preferred Stock into shares of Common Stock pursuant to Section 4
below on the record date for determining the stockholder of the Corporation
eligible to vote on any such matters.  The holders of the Series B
Preferred Stock shall vote with the Common Stock as a single class unless
otherwise set forth herein.

    


    (b)           Series B Preferred Stock
Protective Provisions.  At any time when at
least  25,000 shares of Series B Preferred Stock (subject to
appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares) are
outstanding, the Corporation shall not, either directly or indirectly by
amendment, merger, consolidation or otherwise, do any of the following without
(in addition to any other vote required by law or the Certificate of
Incorporation) the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series B Preferred
Stock, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class:

     

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

     

    (i)           effect
any merger or consolidation of the Corporation with or into another corporation
or entity (whether or not the Corporation is the surviving entity if, after the
merger or consolidation, more than 50% of the voting stock of the surviving
corporation is owned by persons who were not holders of voting stock of this
Corporation prior to the merger or consolidation), or sell all or substantially
all the assets of the Corporation, or consent to any of the
foregoing;

     

    (ii)           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 or change the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, such Series B Preferred Stock.

     

    (iii)           authorize
the issuance of more than 15,000,000 shares of Common Stock (adjusted to reflect
any stock split, stock dividend, combination, recapitalization or
reorganization) exclusive of shares issued as dividends on any series of
preferred stock, or create,
or authorize the creation of, or issue or obligate itself to issue shares of,
any additional class or series of capital stock unless the same ranks junior to
the Series B Preferred Stock with respect to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, the payment of
dividends and redemption rights, or increase the authorized number of shares of
Series B Preferred Stock or increase the authorized number of shares of any
additional class or series of capital stock unless the same ranks junior to the
Series B Preferred Stock with respect to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, the payment of
dividends and redemption rights.

     

    (iv)           acquire
another entity by means of a purchase of all or a portion of the capital stock
or assets of such entity for consideration in excess of $2,000,000;

     

    (v)           liquidate,
wind up, or dissolve the Corporation or adopt any plan for the
same;

     

    (vi)           effect
any sale, lease, transfer, pledge or other disposition of assets of the
Corporation or its subsidiaries, not in the ordinary course of business, unless
the value of such assets; singly or in connection with any related series of
transactions does not in the aggregate exceed $5,000,000;

     

    (vii)                      enter
into any transaction with any officer, director or beneficial owner of five
percent (5%) or more of the Common Stock or any affiliate of any of the
foregoing, unless such transaction is in the ordinary course of business and
approved by the Corporation’s Board of Directors;

     

    (viii)                      authorize
or effect the issuance by the Corporation of any shares of capital stock or
rights to acquire capital stock pursuant to stock option, stock bonus or other
employee stock plans for the benefit of the employees of the Corporation or its
subsidiaries in existence as of such date, other than issuances referred to in
Section 5(d)(iv)(c);

     

    (ix)           incur
any Indebtedness for borrowed money in excess of $1,000,000 outstanding at any
time;

     

    (x)           acquire
any material assets of another person for consideration in excess of $2,000,000
other than acquisitions of inventory and raw material made in the ordinary
course of business; or

     

    (xi)           permit
any subsidiary to do any of the foregoing (except for payment of dividends to
the Corporation or another wholly-owned subsidiary of the
Corporation).

     

    IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Designations
as of July 10, 2009.

    


    
      
        	 	ELEMENT
      21 GOLF COMPANY	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Nataliya
      Hearn	 
	 	 	Name:
      Nataliya Hearn	 
	 	 	Title:   President	 
	 	 	 	 


      

    

     

     

     

     

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