exhibit42.htm


    EXHIBIT 4.2

    
 

    


    CERTIFICATE
OF DESIGNATION

    OF

    SERIES
E PREFERRED STOCK

    $.001
PAR VALUE

    OF

    ABC
FUNDING, INC.

    


    --------------------

    


    (Continued
from Cover Page)

    


    


    RESOLVED, that pursuant to
authority expressly granted to and vested in the Board of Directors by the
Articles of Incorporation of the Company, the Board hereby creates a series of
10,000 shares of Series E Convertible Preferred Stock, $.001 par value per
share, of the Company and authorizes the issuance thereof, and hereby fixes the
designation thereof, and the voting powers, preferences and relative,
participating, optional and other special limitations or restrictions thereon
(in addition to the designations, preferences and relative, participating and
other special rights, and the qualifications, limitations or restrictions
thereof, set forth in the Articles of Incorporation, as amended, of the Company,
which are applicable to the preferred stock of all series) as
follows:

    


    1. Designation.  The
shares of the Series shall be designated "Series E Convertible Preferred Stock"
(hereinafter referred to as the "Series E Preferred Stock"), and the number of
shares constituting the Series shall be 10,000, $.001 par value per
share.  The number of authorized shares of the Series may be reduced
or increased by further resolution duly adopted by the Board of Directors of the
Company and, as applicable, the requisite vote of the holders of the Series E
Preferred Stock and/or holders of the Series D Preferred Stock of the Company
and stockholders of any other series of convertible preferred stock ranked on a
parity with the Series E Preferred Stock (the “Parity Preferred”) or ranked
senior to the Series E Preferred Stock, in accordance with the Nevada Revised
Statutes, by filing Certificate(s) of Amendment to the Certificate of
Designations pursuant to the provisions of the Nevada Revised Statutes stating
that such reduction or increases has been so authorized.

    


    2. Conversion
Rights.

    


    a. Mandatory Conversion;
Conversion Date.  Upon and subject to the effectiveness of the
Charter Amendment (defined in Section 3 hereof) in the State of Nevada (the
“Conversion Date”), the Series E Preferred Stock shall automatically convert at
the Conversion Date into fully paid and non-assessable shares of the Company’s
common stock, $.001 par value (the “Common Stock”) at the Conversion Rate (as
defined below).  The conversion shall be deemed effected as of the
Conversion Date.

    


    b. Conversion
Rate.  Each share of Series E Preferred Stock is convertible
into 136.3636 shares of the Company’s Common Stock.

    


    c. Mechanics of
Conversion.

    


    (1)            On
or prior to the Conversion Date, the holder shall surrender the certificate or
certificates representing the Series E Preferred Stock to be converted, duly
endorsed to the Company or in blank, to the Company at its principal office (or
at such other office as the Company may designate by written notice, postage
prepaid, to all holders) at any time during its usual business hours, together
with a statement of the name or names (with addresses) of the person or persons
in whose name the certificate or certificates for Common Stock shall be
issued.

    


    (2) Promptly after surrender of the
certificate or certificates representing the share or shares of Series E
Preferred Stock to be converted, the Company shall cause to be issued and
delivered to said holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of shares of Common Stock
issuable upon the conversion of such share or shares, provided that there are
sufficient authorized and unissued shares of Common Sock of the Company
available for issuance.

    


    (3)            Conversion Rate Adjustment
for Stock Dividends, Subdivisions, Reclassification or Combinations.  If any time prior
to the Conversion Date the Company shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, the Conversion Rate in effect at the time of the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the holder of any shares of Series E Preferred Stock surrendered for
conversion after such date shall be entitled to receive the number of shares of
Common Stock which such holder would have owned or been entitled to receive had
such Series E Preferred Stock been converted immediately prior to such
date.  Successive adjustments in the Conversion Rate shall be made
whenever any event specified above shall occur.

    


    d. Fractional
Shares.  No fractional shares of Common Stock shall be issued
upon conversion of the Series E Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Company shall round
the fraction to the nearest whole number of shares such that the Company will
round up if the fraction is one-half or more, and round down if the fraction is
less than one-half.

    


    e. Costs.  The
Company shall pay all documentary, stamp, transfer or other transactional taxes
attributable to the issuance or delivery of shares of Common Stock upon
conversion of any shares of Series E Preferred Stock; provided, however that the
Company shall not be required to pay any taxes which may be payable in respect
of any transfer involved in the issuance or delivery of any certificate for such
shares in a name other than that of the holder of the shares of Series E
Preferred Stock in respect of which such shares are being issued.

    


    f. Valid
Issuance.  All shares of Common Stock which may be issued upon
conversion of shares of Series E Preferred Stock into shares of Common Stock
will, upon issuance by the Company in accordance with this Certificate of
Designation, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance
thereof.

    


    3. Rank.  The
Series E Preferred Stock and the Parity Preferred shall be ranked senior to the
Common Stock and any other equity securities ranking junior to the Series E
Preferred Stock and the Parity Preferred.  Other than the issuance of
the Company’s Series D Preferred Stock pursuant to that Certificate of
Designation filed with the State of Nevada on August 20, 2008, the Company shall
not be permitted to issue any stock or other equity securities ranking on a
parity with, or senior to, the Series E Preferred Stock and the Parity Preferred
until all shares of Series E Preferred Stock have been converted to Common
Stock.

    


    4. Liquidation
Value; Events Deemed a Liquidation. In the event of any
liquidation, dissolution or winding up of the Company, either voluntary or
involuntary (an "Event"), the holders of the Series E Preferred Stock shall be
entitled to receive from the assets of the Company, after payment of all debts
and liabilities of the Company, on a parity with all other holders of Parity
Preferred but prior to and in preference of any distribution of any of the
assets of the Company to the holders of any other equity securities of the
Company by reason of their ownership thereof an amount (the "Series E
Liquidation Value") equal to the sum of the aggregate consideration paid for the
Series E Preferred Stock.   After the Series E Liquidation Value
has been paid in full to the holders of Series E Preferred Stock (and the
aggregate consideration paid for the Parity Preferred (the “Parity
Consideration,” and together with the Series E Liquidation Value the
“Liquidation Value”) has been paid in full to the holders of any Parity
Preferred), the remaining assets of the Company shall be distributed to the
holders of Common Stock and any other equity securities entitled thereto, and to
the holders of the Series E Preferred Stock and Parity Preferred, ratably on an
as-converted basis.  However, if upon the occurrence of an Event, the
total amount of assets of the Company, after the payment of all debts and
liabilities of the Company, available to be distributed among the stockholders
of the Company is insufficient to permit the payment in full of the Liquidation
Value to holders of Series E Preferred Stock and the Parity Preferred, then the
total amount of assets and funds of the Company legally available for
distribution to the holders of the Series E Preferred Stock and the Parity
Preferred shall be distributed among the holders of the Series E Preferred Stock
and the Parity Preferred in proportion to the full amount of the respective
Liquidation Value each holder of Series E Preferred Stock and Parity Preferred
is entitled to receive. For purposes of the payment of the Liquidation Value
described in this Section 4, a merger, acquisition, or sale of more than fifty
percent (50%) of the voting securities of the Company or a sale of all or
substantially all of the assets of the Company with, by or to an entity of which
stockholders of the Company do not own a majority of the outstanding shares
subsequent to such sale shall be deemed an Event within the meaning of this
Section 4.

    


    5.            Charter
Amendment.

    


    a. Information
Statement.  The Company presently
does not have sufficient shares of Common Stock available for issuance of the shares of Common
Stock upon conversion of the Series E Preferred Stock and covenants that it will seek to amend its Articles of
Incorporation in the State of Nevada (the “Charter Amendment”) to increase
the number of authorized shares of
Common Stock to 149,000,000 and will make its best
efforts to file an Information Statement on Schedule 14C that is fully-compliant
with applicable requirements including those pertaining to seeking the Charter
Amendment (the “Information Statement”) with the Securities and Exchange
Commission (the “Commission”) as soon as practicable after the date
hereof.  If the Commission reviews the Information Statement,
the Company will promptly respond to all comments and diligently pursue
resolution of any comments to the satisfaction of the Commission.  The
conversion rights set forth in Section 2 hereof are subject to the effectiveness
of the Charter Amendment and shall not be available unless and until, and only
to the extent that, there are sufficient authorized and unissued shares of
Common Sock of the Company available for issuance.

    


    b. Breach.  If
the Company is unable to effect the Charter Amendment in compliance with the
securities laws and rules and regulations thereunder by January 29, 2009, then
for as long as there is any Series E Preferred Stock outstanding, the Company
shall be required to obtain the consent of the holders of the Series E Preferred
Stock and the Parity Preferred, as set forth below (which consent may be
provided via approval of a detailed budget, provided such budget is not exceeded
or otherwise deviated from without separate express consent) for any payment to
(and otherwise the use any of funds for general and administrative expenses for
the benefit of) any officer or director of the Company.  Consent shall
mean written consent or by vote of the then outstanding shares of holders of a
majority of the Series E Preferred Stock and each series of Parity Preferred,
holders of each such series voting separately as a class.

    


    6. Dividends.  Holders
of the Series E Preferred Stock shall be entitled to participate in any
dividends paid to (i) the holders of Parity Preferred, and (ii) the holders of
Common Stock, with the amount of any such dividends to all recipients being
determined by calculating the number of shares of Common Stock owned and that
the holders would have received if their shares of Preferred Stock had been
converted into Common Stock (with any fractional shares determined on an
aggregate conversion basis for each holder of Preferred Stock being rounded on
the basis set forth in Section 2(e)), on the record date of any such declaration
of dividends.

    


    7. Voting
Rights.  Except as otherwise required by law, the holders of
Series E Preferred and the Parity Preferred shall have no voting rights as a
stockholder of the Company prior to the conversion hereof as set forth in
Section 2 hereof.  Notwithstanding the foregoing, if the Company is
unable to effect the Charter Amendment in compliance with the securities laws
and rules and regulations thereunder by January 29, 2008, holders of the Series
E Preferred and the Parity Preferred shall be entitled to the same voting rights
and vote with (and in the same class as) the holders of Common Stock with
respect to every matter voted on by the holders of Common Stock; provided,
however, that the holders of Series E Preferred Stock and  Parity
Preferred shall be entitled to the number of votes to which they would have been
entitled if their shares of Series E Preferred Stock and Parity Preferred,
respectively, had been converted into Common Stock (with any fractional shares
determined on the basis set forth in Section 2(e)), on the record date of any
such stockholder action.

    


    8.            Exclusion
of Other Rights.  Except as may otherwise be required by law,
the shares of Series E Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in this resolution (as such resolution may be amended
from time to time) and in the Company's Articles of
Incorporation.  The shares of Series E Preferred Stock shall have no
preemptive right whatsoever to purchase, subscribe for or otherwise acquire,
stock of any class of the Company nor of any security convertible into, nor of
any warrant, option or right to purchase, subscribe for or otherwise acquire,
stock of any class of the Company, whether now or hereafter
authorized.

    


    9.            Severability
of Provisions.  If any right, preference or limitation of the
Preferred Stock set forth in this Certificate (as such Certificate may be
amended from time to time) is invalid, unlawful or incapable of being enforced
by reason of any rule of law or public policy, all other rights, preferences and
limitations set forth in this Certificate (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed
herein.

    


    10.            Status of
Reacquired Shares.  Shares of Series E Preferred Stock which
have been issued and reacquired in any manner shall (upon compliance with any
applicable provisions of the laws of the State of Nevada) have the status of
authorized and unissued shares of preferred stock issuable in series
undesignated as to Series and may be redesignated and reissued.