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EXHIBIT 4.1
SMART SMS CORP.,
A FLORIDA CORPORATION
SERIES A CONVERTIBLE PREFERRED STOCK
RIGHTS, POWERS, DESIGNATIONS, AND
PREFERENCES
The Series A
Convertible Preferred Stock shall have the voting powers,
preferences and
relative, participating, optional and other special rights,
qualifications,
limitations and restrictions as follows:
A. DESIGNATION AND AMOUNT. Out
of the Twenty Five Million (25,000,000)
shares of the Company's $.001 par value authorized Preferred
Stock,
Ten Million (10,000,000) shares shall be designated as shares
of
Series A Convertible Preferred Stock (the "Series A
Preferred").
B. RANK. The Series A Preferred
shall be senior to the Common Stock and
any other series or class of the Company's Preferred Stock.
C. LIQUIDATION RIGHTS.
(i) In the event of
any liquidation, dissolution, or winding up of
the Company, whether voluntary or involuntary, the holders of
the
Series A Preferred then outstanding shall be entitled to be
paid
out of the assets of the Company available for distribution to
its shareholders, before any payment or declaration and setting
apart for payment of any amount shall be made in respect of any
outstanding capital stock of the Company, an amount equal to
Two
Dollars ($2.00) per share, plus the Redemption provision (as
defined below). Then all of the assets of the Company available
to be distributed shall be distributed ratably to the holders
of
the Series A Preferred and then to the holders of other
outstanding shares of capital stock of the Company. If upon any
liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary, the assets to be distributed to the
holders of the Series A Preferred shall be insufficient to
permit
the payment to the holders thereof the full preferential amount
as provided herein, then such available assets shall be
distributed ratably to the holders of the Series A Preferred.
(ii) None of the following events shall be treated as or deemed to
be
a liquidation hereunder:
(a) A merger,
consolidation or reorganization of the Company;
(b) A sale or other
transfer of all or substantially all of the
Company's assets;
(c) A sale of 50% or
more of the Company's capital stock then issued
and outstanding;
(d) A purchase or
redemption by the Company of stock of any class; or
(e) Payment of a
dividend or distribution from funds legally
available therefor.
D. VOTING RIGHTS. In all
matters the Series A Preferred shall have the
same voting rights as the Common Stock, but on an one
hundred-to-one
basis (100:1). If the Company effects a stock split which
either
increases or decreases the number of shares of Common Stock
outstanding and entitled to vote, the voting rights of the Series
A
Preferred shall not be subject to adjustment unless
specifically
authorized.
DIVIDENDS
The holders of
the Series A Preferred shall be entitled to receive Common
Stock dividends
when, as, and if declared by the directors of the Company,
at the rate of
$.20 per share to be paid in cash or in Market Value of the
Company's common
stock, whichever is greater.
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Without prior
written consent of the majority of the holders of Series A
Preferred, so
long as any shares of Series A Preferred shall be
outstanding, the
Company shall not declare or pay on any Junior Stock any
dividend
whatsoever, whether in cash, property or otherwise, nor shall
the
Company make any
distribution on any Junior Stock, nor shall any Junior
Stock be
purchased or redeemed by the Company or any of its subsidiaries
of
which it owns
not less than 51% of the outstanding voting stock, nor shall
any monies be paid or
made available for a sinking fund for the purchase or
redemption of
any Junior Stock, unless all dividends to which the holders
of Series A
Preferred shall have been entitled for all previous dividend
periods shall
have been paid or declared and a sum of money sufficient for
the payment
thereof and the Redemption Price (as hereinafter defined) is
set apart.
CONVERSION
The Series A
Preferred shall have the following conversion rights (the
"Conversion
Rights"):
A. Holder's Optional Right to
Convert. Each share of Series A Preferred
shall be convertible, at the option of the holder(s), on the
Conversion Basis (as set forth below) in effect at the time of
conversion. Such right to convert shall commence as of the Issue
Date
and shall continue thereafter for a period of ten (10) years,
such
period ending on the tenth anniversary of the Issue Date. In the
event
that the holder(s) of the Series A Preferred elect to convert
such
shares into Common Stock, the holder(s) shall have sixty (60)
days
from the date of such notice in which to tender their shares of
Series
A Preferred to the Company.
B. Conversion Basis. Each share
of Series A Preferred shall be
convertible into one hundred (100) shares of the Company's
Common
Stock.
C. Mechanics of Conversion.
Before any holder of Series A Preferred shall
be entitled to convert the same into shares of Common Stock,
such
holder shall (i) give written notice to the Company, at the office
of
the Company or of its transfer agent for the Common Stock or
the
Preferred Stock, that he elects to convert the same and shall
state
therein the number of shares of Series A Preferred being
converted;
and (ii) surrender the certificate or certificates therefore,
duly
endorsed. Thereupon the Company shall promptly issue and deliver
to
such holder of Series A Preferred a certificate or certificates
for
the number of shares of Common Stock to which such holder shall
be
entitled. The conversion shall be deemed to have been made and
the
resulting shares of Common Stock shall be deemed to have been
issued
immediately prior to the close of business on the date of such
notice
and surrender of the shares of Series A Preferred.
D. Adjustments to the
Conversion Basis.
(i) Stock Splits and Combinations. If
at any time after the Company
first issues the Series A Preferred and while any of the shares
of Series A Preferred remain outstanding, if the Company shall
effect a consolidation of its Common Stock or a reverse split
of
the Common Stock, the Conversion Basis then in effect
immediately
before that consolidation or reverse split shall not be
adjusted.
However, if at any time after the Company first issues the
Series
A Preferred and while any of the shares of Series A Preferred
remain outstanding, if the Company shall effect a forward stock
split of the Common Stock, the Conversion Basis then in effect
immediately before that split shall be proportionately
adjusted.
Any adjustment shall become effective at the close of business
on
the date the forward split becomes effective.
(ii) Reclassification, Exchange or Substitution. At any time after
the
Company first issues the Series A Preferred and while any of
the
shares of Series A Preferred remain outstanding, if the Common
Stock issuable upon the conversion of the Series A Preferred
shall be changed into the same or a different number of shares
of
any class or classes of stock, whether by capital
reorganization,
reclassification, or otherwise (other than a subdivision or
combination of sh
