CERTIFICATE OF DESIGNATION Exhibit 3.1
Charles A. Romberg and Robert D. Little certify that they are the President
and Secretary, respectively, of MPM Technologies, Inc., a Washington corporation
(hereinafter referred to as the "Corporation" or the "Company"); that, pursuant
to the Corporation's Articles of Incorporation, as amended, and Section
23B.06.020 of the Washington Business Corporation Act pursuant to the Articles
of Incorporation, as amended, the Board of Directors of the Corporation adopted
the following resolutions on September __, 1998; and that none of the Series A
Convertible Preferred Stock referred to in this Certificate of Designation has
been issued.
1. Creation of Series A Convertible Preferred Stock. There is hereby
created a series of preferred stock consisting of 600 shares and designated as
the Series A Convertible Preferred Stock, having the voting powers, preferences,
relative, participating, limitations, qualifications optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth below.
2. Dividend Provisions. The holders of shares of Series A Convertible
Preferred Stock shall be entitled to receive, a 6% annual dividend, equal in
value to $60.00 per share, payable on each July 1 commencing on July 1, 1999, or
on conversion pro rata based on a 360-day year. In the option of the
Corporation, such dividend may be paid in cash or in Common Stock valued at the
Conversion Rate in effect as of such July 1 or the Conversion Date, as the case
may be. Each share of Series A Convertible Preferred Stock shall rank on a
parity with each other share of Series A Convertible Preferred Stock with
respect to dividends.
3. Redemption Provisions. The Series A Convertible Preferred Stock
shall nor be redeemable
without the consent of the holder.
4. Liquidation Provisions. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the Series A
Convertible Preferred Stock shall be entitled to receive an amount equal to
$1,300.00 per share. After the full preferential liquidation amount has been
paid to, or determined and set apart for the Series A Convertible Preferred
Stock and all other series of Preferred Stock hereafter authorized and issued,
if any, the remaining assets of the Corporation available for distribution to
shareholders shall be distributed ratably to the holders of the common stock. In
the event the assets of the Corporation available for distribution to its
shareholders are insufficient to pay the full preferential liquidation amount
per share required to be paid the Corporation's Series A Convertible Preferred
Stock, the entire amount of assets of the Corporation available for distribution
to shareholders shall be paid up to their respective full liquidation amounts
first to the Series A Convertible Preferred Stock, then to any other series of
Preferred Stock hereafter authorized and issued, all of which amounts shall be
distributed ratably among holders of each such series of Preferred Stock, and
the common stock shall receive nothing. A reorganization or any other
consolidation or merger of the Corporation with or into any other corporation,
or any other sale of all or substantially all of the assets 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, and the Series A Convertible
Preferred Stock shall be entitled only to (i) the right provided in any
agreement or plan governing the reorganization or other consolidation, merger or
sale of assets transaction, (ii) the rights contained in the Washington Business
Corporation Act and (iii) the rights contained in other Sections hereof.
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5. Conversion Provisions. The holders of shares of Series A Convertible
Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. (1) Each share of Series A Convertible Preferred
Stock (the "Preferred Shares") shall be convertible, at the option of its
holder, at any time, into a number of shares of common stock of the Company
(the "Common Stock") at the initial conversion rate (the "Conversion Rate")
defined below. The initial Conversion Rate, subject to the adjustments
described below, shall be a number of shares of Common Stock equal to
$1,000 divided by Seventy Percent (70%) of the average Market Price of the
Common Stock for the five trading days immediately prior to the Conversion
Date (defined below). For purposes of this Section 5(a)(1), Market Price
for any date shall be the closing bid price of the Common Stock on such
date, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or the closing bid price in the
over-the-counter market if other than NASDAQ.
(2) No fractional shares of Common Stock shall be issued upon conversion of
the Preferred Shares, and in lieu thereof the number of shares of Common
Stock issuable for each Preferred Share converted shall be rounded to the
nearest whole number. Such number of whole shares of Common Stock issuable
upon the conversion of one Preferred Share shall be multiplied by the
number of Preferred Shares submitted for conversion pursuant to the Notice
of Conversion (defined below) to determine the total number of shares of
Common Stock issuable in connection with any conversion.
(3) In order to convert the Preferred Shares into shares of Common Stock,
the holder of the Preferred Shares shall: (i) complete, execute and deliver
to the Corporation the conversion certificate attached hereto as Exhibit A
(the "Notice of Conversion"); and (ii) surrender the certificate or
certificates representing the Preferred Shares being converted (the
"Converted Certificate") to the Corporation. The Notice of Conversion shall
be effective and in full force and effect if delivered to the Corporation
by facsimile transmission at (509) 326-3228. Provided that a copy of the
Notice of Conversion is delivered to the Corporation on such date by
facsimile transmission or otherwise, and provided that the original Notice
of Conversion and the Converted Certificate are delivered to the
Corporation within three (3) business days thereafter at 222 W. Mission
Avenue, Suite 30, Spokane, Washington 99201, the date on which notice of
conversion is given (the "Conversion Date") shall be deemed to be the date
set forth therefor in the Notice of Conversion; and the person or persons
entitled to receive the shares of Common stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock as of the Conversion Date. If the original Notice of
Conversion and the Converted Certificate are not delivered to the
Corporation within three (3) business days following the Conversion Date,
the Notice of Conversion shall become null and void as if it were never
given and the Corporation shall, within two (2) business days thereafter,
return to the holder by overnight courier any Converted Certificate that
may have been submitted in connection with any such conversion. In the
event that any Converted Certificate submitted represents a number of
Preferred Shares that is greater than the number of such shares that is
being converted pursuant to the Notice of Conversion delivered in
connection therewith, the Corporation shall deliver, together with the
certificates for the shares of Common Stock issuable upon such conversion
as provided herein, a certificate representing the remaining number of
Preferred Shares not converted.
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(4) Upon receipt of a Notice of Conversion, the Corporation shall
absolutely and unconditionally be obligated to cause a certificate of
certificates representing the number of shares of Common Stock to which a
converting holder of Preferred Shares shall be entitled as provided herein,
which shares shall constitute fully paid and nonassessable shares of Common
Stock that are freely transferable on the books and records of the
Corporation and its transfer agents, to be issued to, delivered by
overnight courier to, and received by such holder by the fifth (5th)
calendar day following the Conversion Date. Such delivery shall be made at
such address as such holder may designate therefor in its Notice of
Conversion or in its written instructions submitted together therewith.
(5) No less than 25 shares of Series A Convertible Preferred Stock may be
converted at any one time, unless the holder then holds less than 25 shares
and converts all shares at that time.
(b) Adjustments to Conversion Rate. (1) Reclassification, Exchange and
Substitution. If the Common Stock issuable on conversion of the Series A
Convertible Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification, reverse stock split or forward stock
split or stock dividend or otherwise (other than a subdivision or
combination of shares provided for above), the holders of the Series A
Convertible Preferred Stock shall, upon its conversion, be entitled to
receive, in lieu of the Common Stock which the holders would have become
entitled to receive but for such change, a number of shares of such other
class or classes of stock that would have been subject to receipt by the
holders if they had exercised their rights of conversion of the Series A
Convertible Preferred Stock immediately before that change.
(2) Reorganizations, Mergers, Consolidations or Sale of Assets. If at any
time there shall be a capital reorganization of the Corporation's common
stock (other than a subdivision, combination, reclassification or exchange
of shares provided for elsewhere in this Section (5) or merger of the
Corporation into another corporation, or the sale of the Corporation's
properties and assets as, or substantially as, an entirety to any other
person, then, as a part of such reorganization, merger or sale, lawful
provision shall be made so that the holders of the Series A Convertible
Preferred Stock shall thereafter be entitled to receive upon conversion of
the Series A Convertible Preferred Stock, the number of shares of stock or
other securities or property of the Corporation, or of the successor
corporation resulting from such merger, to which holders of the Common
Stock deliverable upon conversion of the Series A Convertible Preferred
Stock would have been entitled on such capital reorganization, merger or
sale if the Series A Convertible Preferred Stock had been converted
immediately before that capital reorganization, merger or sale to the end
that the provisions of this paragraph (b)(2) (including adjustment of the
Conversion Rate then in effect and number of shares purchasable upon
conversion of the Series A Convertible Preferred Stock) shall be applicable
after that event as nearly equivalently as may be practicable.
(c) No Impairment. The Corporation will not, by amendment of its Articles
of Incorporation or through any reorganization, recapitalization, transfer
of assets, merger, dissolution, or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of all the provision of this
Section 5 and in the taking of all such action
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as may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Series A Convertible Preferred Stock against
impairment.
(d) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Rate for any shares of Series A
Convertible Preferred Stock, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof
and prepare and furnish to each holder of Series A Convertible Preferred
Stock effected thereby a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at
any time of any holder of Series A Convertible Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Conversion Rate at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of such holder's shares of Series A Convertible Preferred Stock.
(e) Notices of Record Date. In the event of the establishment by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, the
Corporation shall mail to each holder of Series A Preferred Stock at least
twenty (20) days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend or distribution and the amount and character of such dividend or
distribution.
(f) Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion
of the shares of the Series A Convertible Preferred Stock such number of
its shares of Common Stock as shall from time to time be sufficient, based
on the Conversion Rate then in effect, to effect the conversion of all then
outstanding shares of the Series A Preferred Stock. If at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, then, in addition to all rights, claims and damages to
which the holders of the Series A Convertible Preferred Stock shall be
entitled to receive at law or in equity as a result of such failure by the
Corporation to fulfill its obligations to the holders hereunder, the
Corporation will take any and all corporate or other action as may, in the
opinion of its counsel, be helpful, appropriate or necessary to increase
its authorized but unissued shares of Common Stock to such number of shares
as shall be sufficient for such purpose.
(g) Notices. Any notices required by the provisions hereof to be given to
the holders of shares of Series A Convertible Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid and
return receipt requested, and addressed to each holder of record at its
address appearing on the books of the Corporation or to such other address
of such holder or its representative as such holder may direct.
6. Voting Provisions. Except as otherwise expressly provided or
required by law, the Series
A Convertible Preferred Stock shall have no voting rights.
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Series A Convertible Preferred Stock to be duly executed by its President and
attested to by its Secretary this _____ day of September, 1998 who, by signing
their names hereto, acknowledge that this Certificate of Designation is the act
of the Company and state to the best of their knowledge, information and belief,
under the penalties of perjury, that the above matters and facts are true in all
material respects.
MPM TECHNOLOGIES, INC.
Charles A. Romberg, President
Robert D. Little, Secretary
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EXHIBIT A
CONVERSION CERTIFICATE
MPM TECHNOLOGIES, INC.
Series A Convertible Preferred Stock
The undersigned holder ( the "Holder") is surrendering to MPM
Technologies, Inc., a Washington corporation (the "Company"), one or more
certificates representing shares of Series A Convertible Preferred Stock of the
Company (the "Preferred Stock") in connection with the conversion of all or a
portion of the Preferred Stock into shares of Common Stock, $.001 par value per
share, of the Company (the "Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock were issued by the
Company pursuant to the exemption from registration under the United States
Securities Act of 1933, as amended (the "Securities Act"), provided by
Regulation D promulgated thereunder.
2. The Holder represents and warrants that all offers and sales of the
Common Stock issued to the Holder upon such conversion of the Preferred Stock
shall be made (a) pursuant to an effective registration statement under the
Securities Act, (in which case the Holder represents that a prospectus has been
delivered) (b) in compliance with Rule 144, or (c) pursuant to some other
exemption from registration.
Number of Shares of Preferred Stock being converted:
Applicable Conversion Price:
Number of Shares of Common Stock Issuable:
Number of Dividend Shares:
Conversion Date:
Delivery Instructions for certificates of Common Stock and for new
certificates representing any remaining shares of Preferred Stock:
NAME OF HOLDER:
(Signature of Holder)
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