Exhibit 3.1
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
REFLECT SCIENTIFIC, INC.
Pursuant to the provisions of Section 16-10a-1006 of the Utah
Revised Business Corporation Act (the "Act"), the undersigned corporation
hereby adopts the following Articles of Amendment to its Articles of
Incorporation.
FIRST: The name of the corporation is Reflect Scientific,
Inc.
SECOND: The following amendments to the Articles of
Incorporation of the corporation were duly adopted through a resolution by
consent of the Board of Directors in accordance with Section 16-10a-821 of the
Act on the 8th day of November, 2004, and Article IV of this corporation's
Articles of Incorporation, as amended, following approval thereof by the
Board of Directors in the manner prescribed by the Act and the Articles of
Incorporation, to-wit:
Article IV- Stock
The aggregate number of shares which this corporation shall have
authority to issue is 55,000,000 shares, divided into two classes, (i)
50,000,000 shares of common stock of a par value of one cent ($0.01) per
share; and (ii) 5,000,000 shares of preferred stock of a par value of one cent
($0.01) per share, 4,250,000 of which shall have such rights and preferences
as the Board of Directors shall determine; and 750,000 of which shall be
designated as the "2004 Series A Convertible Preferred Stock" with the
following powers, preferences, rights, qualifications, limitations and
restrictions:
1. Liquidation.
1.01. In the event of any voluntary or involuntary liquidation
(whether complete or partial), dissolution, or winding up of the
corporation, the holders of the 2004 Series A Convertible Preferred
Stock shall be entitled to be paid out of the assets of the corporation
available for distribution to its shareholders, whether from capital,
surplus or earnings, an amount in cash equal to the purchase price of
One Dollar ($1.00) per share plus all unpaid dividends previously
declared thereon to the date of final distribution. No distribution
shall be made on any common stock or other series of preferred stock of
the corporation by reason of any voluntary or involuntary liquidation
(whether complete or partial), dissolution or winding up of the
corporation unless each holder of any 2004 Series A Convertible
Preferred Stock shall have received all amounts to which such holder
shall be entitled under this subsection.
1.02 If on any liquidation (whether complete or partial),
dissolution or winding up of the corporation, the assets of the
corporation available for distribution to holders of 2004 Series A
Convertible Preferred Stock shall be insufficient to pay the holders of
outstanding 2004 Series A Convertible Preferred Stock the full amounts
to which they otherwise would be entitled under Section 1.01, the assets
of the corporation available for distribution to holders of the 2004
Series A Convertible Preferred Stock shall be distributed to them pro
rata on the basis of the number of shares of 2004 Series A Convertible
Preferred Stock held by each such holder.
2. Voting Rights. The 2004 Series A Convertible Preferred Stock
shall not be entitled to vote as a separate class or as a single class with
the common stock of the corporation, except to the extent that the consent of
the holders of the 2004 Series A Convertible Preferred Stock, voting as a
class, is specifically required by the provisions of the corporate law of the
State of Utah as now existing or as hereafter amended.
3. Subordination. Any payment of any dividends or any redemption
hereunder shall be subordinated to payment in full of all Senior Debt as
defined herein. "Senior Debt" shall mean the principal of and premium, if
any, and interest on all indebtedness of the corporation to any financial
institution, including, but not limited to, (i) banks whether currently
outstanding or hereinafter created and whether or not such loans are secured
or unsecured; (ii) any other indebtedness, liability, obligation, contingent
or otherwise of the corporation, to guarantee endorsement of the contingent
obligation with respect to any indebtedness, liability or obligation whether
created, assumed or occurred by the corporation and after the date of the
creation of the 2004 Series A Convertible Preferred Stock, which is, when
created, specifically designated by the corporation as Senior Debt; and (iii)
any refunding, renewals or extensions of any indebtedness or similar
obligations described as Senior Debt in subparagraphs (i) and (ii) above.
4. Dividends.
4.01 The corporation shall pay to the holders of the 2004 Series
A Convertible Preferred Stock out of the assets of the corporation at
any time for the payment of dividends at the times so declared by the
Board of Directors of the corporation and in the manner provided for in
this Section 4. The dividend shall be six percent (6%) of the
liquidation preference which is the purchase price of the shares of
Preferred Stock, or $1.00 per share, payable annually. Dividends shall
not be cumulative and the Board of Directors shall be under no
obligation to declare dividends.
4.02 Any payment of dividends declared and due under this
Section 4 with respect to any shares of the 2004 Series A Convertible
Preferred Stock shall be made by means of a check drawn on funds
immediately available for the payment thereof to the order to the
holders of such shares at the address for such record holder shown on
the stock records maintained by or for the corporation, which checks
shall be mailed by United States first class mail, postage prepaid. Any
such payment shall be deemed to have been paid by the corporation on the
date that such payment is deposited in the United States mail as
provided above; provided, that in the event the check or other medium by
which any payment shall be made shall prove not to be immediately
collectible on the date of payment, such payment shall not be deemed to
have been made until cash in the amount of such payment shall actually
be received by the persons entitled to receive such payment.
4.03 Registration of transfer of any share of the 2004 Series A
Convertible Preferred Stock on the stock records maintained by or for
the corporation to a person other than the transferor shall constitute a
transfer of any right which the transferor may have had to receive any
declared but unpaid dividends as of the date of transfer, and the
corporation shall have no further obligation to the transferor with
respect to such unpaid dividends.
5. Conversion.
5.01 Each share of the 2004 Series A Convertible Preferred Stock
is convertible into common stock, par value $0.01 (the "Common Stock"),
of the corporation at the times, in the manner and subject to the
conditions provided in this Section 5.
5.02 Each share of the 2004 Series A Convertible Preferred Stock
may be converted during the twenty (20) day period beginning on the
earlier of five (5) days after the date the corporation has three market
makers publicly quoting its shares of common stock on any nationally
recognized medium or ninety (90) days after the shares of Common Stock
of the corporation are first listed for trading on any nationally
recognized stock exchange. If the holder has not notified the
corporation of such conversion during the applicable twenty (20) day
period, then the holder will have no further opportunity to elect to
convert. Conversion shall be at the election of the holder on the
presentation and surrender of the certificate representing the shares,
duly endorsed, with written instructions specifying the number of shares
of the 2004 Series A Convertible Preferred Stock to be converted and the
name and address of the person to whom certificate(s) representing the
Common Stock issuable on conversion are to be issued at the principal
office of the corporation.
5.03 Each share of 2004 Series A Convertible Preferred Stock
shall be convertible into such number of shares of fully paid and non-
assessable shares of Common Stock as is determined by dividing the
purchase price of preferred stock, plus the amount of any accrued and
unpaid dividends the corporation elects to pay on the Common Stock by
the conversion price (as defined below) in effect at the time of
conversion. The conversion price at which shares of Common Stock shall
be deliverable upon conversion of the 2004 Series A Preferred Stock
without the payment of additional consideration by the holder thereof
(the "Conversion Price") shall be fifty percent (50%) of the five (5)
day average closing bid price of the shares of Common Stock on the
earlier of five (5) days following the date the corporation has three
market makers publicly quoting its Common Stock on any nationally
recognized medium or ninety (90) days after the shares of Common Stock
are first listed on any nationally recognized stock exchange. As set
forth herein, the term "Closing Bid Price" means, for any security as of
any date, the closing bid price on the principal securities exchange or
trading market where the Common Stock is listed or traded as reported by
Bloomberg, L.P. ("Bloomberg") or, if applicable, the closing bid price
of the Common Stock in the over-the-counter market on the OTC Electronic
Bulletin Board for such security as reported by Bloomberg, or, if no
closing bid price is reported for the Common Stock by Bloomberg, then
the average of the bid prices of any market makers quoting the Common
Stock on the most nationally recognized of the mediums where the Common
Stock is quoted and/or trading. "Trading Days" shall mean any day on
which the Common Stock is traded for any period on the principal
securities exchange or other securities market on which the Common Stock
is then being traded. The conversion rate (the "Conversion Rate"),
based upon the Conversion Price, shall be subject to adjustment pursuant
to Section 5.04.
5.04 The Common Stock to be received in conversion of the 2004
Series A Convertible Preferred Stock shall be "restricted securities" as
that term is defined in Rule 144 of the United States Securities and
Exchange Commission, and the requisite holding period required by Rule
144 shall commence, for all purposes of resale under Rule 144, on the
date of conversion of the 2004 Series A Convertible Preferred Stock by
the holder or holders thereof. The holders agree that they may not
"tack" the holding period of their 2004 Series A Preferred Stock to that
of the Conversion Stock into which it is converted, regardless of
applicable laws, rules or regulations.
5.05 In order to prevent dilution of the rights granted
hereunder, the Conversion Rate and liquidated voting rights shall be
subject to adjustment from time to time in accordance with this Section
5.04.
(a) In the event the corporation shall declare a dividend
or make any other distribution on any capital stock of
the corporation payable in Common Stock, options to
purchase Common Stock, or securities convertible into
Common Stock of the corporation or shall at any time
subdivide (other than by means of a dividend payable
in Common Stock) its outstanding shares of Common
Stock into a greater number of shares or combine such
outstanding stock into a smaller number of shares,
then in each such event, the Conversion Rate in effect
immediately prior to such combination shall be
adjusted so that the holders of the 2004 Series A
Convertible Preferred Stock shall be entitled to
receive the kind and number of shares of Common Stock
or other securities of the corporation which they
would have owned or have been entitled to receive
after the happening of any of the events described
above, had such shares of the 2004 Series A
Convertible Preferred Stock been converted immediately
prior to the happening of such event or any record
date with respect thereto; an adjustment made pursuant
to this paragraph (a) shall become effective
immediately after the effective date of such event
retroactive to the record date for such event.
(b) If any capital reorganization or reclassification of
the capital stock of the corporation, consolidation or
merger of the corporation with another corporation, or
the sale of all or substantially all of its assets to
another corporation shall be effected in such a way
that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or
in exchange for Common Stock, then, as a condition of
such reorganization, reclassification, consolidation,
merger, or sale, lawful adequate provisions shall be
made whereby the holders of the 2004 Series A
Convertible Preferred Stock shall thereafter, subject
to prior redemption by the corporation, have the right
to acquire and receive on conversion of the 2004
Series A Convertible Preferred Stock such shares of
stock, securities or assets as would have been
issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with
respect to or in exchange for such number of
outstanding shares of the corporation's Common Stock
as would have been received on conversion of the 2004
Series A Convertible Preferred Stock immediately
before such reorganization, reclassification,
consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to
the rights and interests of the holders of the 2004
Series A Convertible Preferred Stock to the end that
the provisions hereof (including without limitations
provisions for adjustments of the Conversion Rate and
for the number of shares issuable on conversion of the
2004 Series A Convertible Preferred Stock) shall
thereafter be applicable in relation to any shares of
stock, securities or assets thereafter deliverable on
the conversion of the 2004 Series A Convertible
Preferred Stock. In the event of a merger or
consolidation of the corporation with or into another
corporation or the sale of all or substantially all of
its assets as a result of which a number of shares of
Common Stock of the surviving or purchasing
corporation greater or lesser than the number of
shares of Common Stock of the corporation outstanding
immediately prior to such merger, consolidation, or
purchase are issuable to holders of Common Stock of
the corporation, then the Conversion Rate in effect
immediately prior to such merger, consolidation, or
purchase shall be adjusted in the same manner as
though there was a subdivision or combination of the
outstanding shares of Common Stock of the corporation.
(c) No adjustment shall be made in the Conversion Rate of
the number of shares of Common Stock issuable on
conversion of 2004 Series A Convertible Preferred
Stock:
(i) In connection with the offer and sale of any
shares of 2004 Series A Convertible Preferred
Stock;
(ii) In connection with the issuance of any Common
Stock, securities or assets on conversion or
redemption of shares of 2004 Series A
Convertible Preferred Stock;
(iii)In connection with the issuance of any shares of
Common Stock, securities or assets on account of
the anti-dilution provisions set forth in this
Section 5.05;
(iv) In connection with the purchase or other
acquisition by the corporation of any capital
stock, evidence of its indebtedness or other
securities of the corporation; or
(v) In connection with the sale or exchange by the
corporation of any Common Stock, evidence of its
indebtedness, or other securities of the
corporation, including securities containing the
right to subscribe for or purchase Common Stock
or 2004 Series A Convertible Preferred Stock of
the corporation.
5.06 The corporation covenants and agrees that:
(a) The shares of Common Stock issuable on any conversion
of any shares of 2004 Series A Convertible Preferred
Stock shall have been deemed to have been issued to
the person on the Conversion Date, and on the
Conversion Date, such person shall be deemed for all
purposes to have become the record holder of such
Common Stock.
(b) ll shares of Common Stock issued on any conversion of
the 2004 Series A Convertible Preferred Stock will, on
issuance, be fully paid and non-assessable and free
from all taxes, liens and charges with respect to the
issue thereof. Without limiting the generality of the
foregoing, the corporation will from time to time take
all such action as may be requisite to assure that the
par value of the unissued Common Stock on any
conversion of the 2004 Series A Convertible Preferred
Stock is at all times equal to or less than the amount
determined by dividing the par value of a share of
2004 Series A Convertible Preferred Stock by the
number shares of Common Stock on conversion of such
shares.
(c) The issuance of certificates for Common Stock on
conversion of the 2004 Series A Convertible Preferred
Stock shall be made without charge to the registered
holder thereof for any issuance tax in respect thereof
or other costs incurred by the corporation in
connection with the conversion of the 2004 Series A
Convertible Preferred Stock and the related issuance
of Common Stock.
6. Redemption
6.01 Subject to the requirements and limitations of the corporate
law of the State of Utah, the corporation shall have the right to redeem
shares of the 2004 Series A Convertible Preferred Stock on the following
terms and conditions.
6.02 The shares of the 2004 Series A Convertible Preferred Stock
are subject to redemption by the corporation at any time after the
corporation has three market makers offering a quote on shares of Common
Stock on any nationally recognized medium or ninety (90) days after the
shares of Common Stock are first listed for trading on any nationally
recognized stock exchange. Redemption shall be pursuant to written
notice of redemption given to the holders thereof on not less than
thirty (30) days, specifying the date on which the 2004 Series A
Convertible Preferred Stock shall be redeemed (the "Redemption Date").
6.03 The redemption price for each share of 2004 Series A
convertible Preferred Stock shall be one hundred ten (110%) percent of
the stated value of the shares where stated value is the purchase price
for the shares plus any unpaid dividends, if applicable, on such share
as of the Redemption Date (the "Redemption Price"). The Redemption
Price shall be paid in part, or in full, with shares of Common Stock of
the corporation that are "restricted securities" as that term is defined
in Rule 144 of the United States Securities and Exchange Commission.
The number of shares of Common Stock issuable for each share of the 2004
Series A Convertible Preferred Stock redeemed for accrued but unpaid
dividends shall be equal to fifty percent (50%) of the dollar value of
the average of the closing bid price for the Common Stock for the five
(5) consecutive Trading Days immediately prior to the redemption date
divided by the dollar amount of accrued but unpaid dividends.
6.04 Redemption of the 2004 Series A Convertible Preferred Stock
shall be made in the following manner:
(a) The corporation shall notify the transfer agent of the
corporation's Common Stock (the "Transfer Agent"), of
its intention to redeem the 2004 Series A Convertible
Preferred Stock. Such notice shall include a list of
all holders of the 2004 Series A Convertible Preferred
Stock outstanding as of the most recent practicable
date and a statement of the number of shares of 2004
Series A Convertible Stock to be redeemed and the
manner in which the Redemption Price is to be paid.
At least ten (10) days prior to the date that written
notice of redemption is given to the holders of the
2004 Series A Convertible Preferred Stock, the
corporation shall make appropriate arrangements with
the Transfer Agent for the delivery of funds and/or
Common Stock necessary to make payment of the
Redemption Price for all shares of the 2004 Series A
Convertible Preferred Stock redeemed by the
corporation.
(b) The holder of any shares of 2004 Series A Convertible
Preferred Stock so redeemed shall be required to
tender the certificates representing such shares, duly
endorsed, to the Transfer Agent in exchange for
payment of the Redemption Price and re-issuance of the
balance of the 2004 Series A Convertible Preferred
Stock not otherwise converted or redeemed. On such
surrender, the Transfer Agent shall cause to be issued
and delivered a check or Common Stock, with all
reasonable dispatch to the holder and such name or
names as the holder may designate. Subsequent to
notice of redemption and prior to the redemption date,
shares of the 2004 Series A Convertible Preferred
Stock may still be converted to Common Stock pursuant
to Section 5 hereof.
(c) The corporation may redeem a portion or all of the
issued and outstanding shares of the 2004 Series A
Convertible Preferred Stock; provided, that in the
event that less than all of the outstanding shares of
the 2004 Series A Convertible Preferred Stock are
redeemed, such redemption shall be pro rata determined
on the basis of the number of shares of the 2004
Series A Convertible Preferred Stock held by each
holder reflected on the stock records and the total
number of shares of 2004 Series A Convertible
Preferred Stock outstanding.
(d) Following the expiration of a period of thirty (30)
days following the Redemption Date, the Transfer Agent
shall provide to the corporation a complete accounting
of the 2004 Series A Convertible Preferred Stock
redeemed and a list of all shares of 2004 Series A
Convertible Preferred Stock remaining unconverted and
not returned to the corporation for redemption. Any
certificates representing the 2004 Series A
Convertible Preferred Stock received by the Transfer
Agent subsequent to the accounting by the Transfer
Agent to the corporation will be promptly delivered to
the corporation. The corporation shall pay all costs
associated with establishing and maintaining any bank
accounts for funds deposited with the Transfer Agent,
including the costs of issuing any checks or shares of
Common Stock.
(e) The corporation may not deliver notice of redemption
to any holder of the 2004 Series A Convertible
Preferred Stock which would cause the holder's
election to convert the 2004 Series A Convertible
Preferred Stock to Common Stock or cash to be in
violation of any federal or state securities laws,
including but not limited to, Section 16 of the
Securities Exchange Act of 1934, as amended.
7. Return of Capital. If the corporation does not have its
securities listed for trading on any nationally recognized stock exchange
within two years of the date of issuance of the 2004 Series A Preferred Stock
and provided that the 2004 Series A Preferred Stock has not been converted or
redeemed, the corporation covenants and agrees to repurchase the shares of
2004 Series A Preferred Stock at a price equal to the purchase price plus
interest at the rate of eight (8%) percent from the date of purchase. The
corporation shall repay the purchase price and interest starting twenty four
(24) months from the purchase date and make equal monthly payments over three
years at eight (8%) percent interest.
8. Additional Provisions
8.01 No change in the provisions of the 2004 Series A Convertible
Preferred Stock set forth in this Designation affecting any interests of
the holders of any shares of 2004 Series A Convertible Preferred Stock
shall be binding or effective unless such change shall have been
approved or consented to by the holders of 2004 Series A Convertible
Preferred Stock in the manner provided in the corporation laws of the
State of Utah, as the same may be amended from time to time.
8.02 The shares of 2004 Series A Convertible Preferred Stock
shall be transferable only on the books of the corporation maintained at
its principal office, on delivery thereof duly endorsed by the holder or
by his/her/its duly authorized attorney or representative or accompanied
by proper evidence of succession, assignment, or authority to transfer.
In all cases of transfer by an attorney, the original letter of
attorney, duly approved, or an official copy thereof, duly certified,
shall be deposited and remain with the corporation. In case of transfer
by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced and may
be required to be deposited and remain with the new certificate
representing the share of 2004 Series A Convertible Preferred Stock so
transferred to the person entitled thereto.
8.03 The corporation shall not be required to issue any
fractional shares of Common Stock on the conversion or redemption of any
share of 2004 Series A Convertible Preferred Stock.
8.04 Any notice required or permitted to be given to the
holders of the 2004 Series A Convertible Preferred Stock under this
Designation shall be deemed to have been duly given if mailed by first
class mail, postage prepared to such holders at their respective
addresses appearing on the stock records maintained by or for the
corporation and shall be deemed to have been given as of the date
deposited in the United States mail.
Fully paid stock of this corporation shall not be liable to any
further call or assessment.
THIRD: These amendments do not provide for any exchange,
reclassification or cancellation of issued shares.
FOURTH: The effective date of these amendments shall be the
date of the filing of these Articles of Amendment.
FIFTH: These amendments were adopted by the Board of
Directors without stockholder action, pursuant to Section 16-10a-602 of the
Act.
IN WITNESS WHEREOF, the undersigned President and Secretary,
having been thereunto duly authorized, have executed the foregoing Articles of
Amendment for the corporation under the penalty of perjury this 8th day of
November, 2004.
REFLECT SCIENTIFIC, INC.
By/s/Kim Boyce
Kim Boyce, President
Attest:
/s/Pamela Boyce
Pamela Boyce, Secretary