8
SERIES D 8% CONVERTIBLE PREFERRED STOCK
CERTIFICATE OF DESIGNATION
FOR
AFGL INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES D 8% CONVERTIBLE PREFERRED STOCK
OF
AFGL INTERNATIONAL, INC.
Pursuant to Section 78.195 of the
Nevada Revised Statues
AFGL INTERNATIONAL, INC. a corporation organized and
existing under the laws of the State of Nevada (the
"Corporation"), in accordance with Section 78.195 of the Nevada
Revised Statutes, DOES HEREBY CERTIFY:
1. The Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), fixes the total
number of shares of all classes of capital stock which the
Corporation shall have the authority to issue at Twenty-Five
Million (25,000,000) shares, of which Five Million (5,000,000)
shares shall be shares of Preferred Stock, par value $.001 per
share (herein referred to as "Preferred Stock"), and Twenty
Million (20,000,000) shares shall be shares of Common Stock, par
value $.01 per share (herein referred to as "Common Stock").
2. The Certificate of Incorporation expressly grants to
the Board of Directors of the Corporation authority to provide
for the issuance of said Preferred Stock in one or more series,
with such voting powers, full or limited but not to exceed one
vote per share, or without voting powers, and with such
designations, preferences and relative, participating, optional
or other special rights and qualifications limitations or
restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof
adopted by the Board of Directors and as are not stated and
expressed in the Certificate of Incorporation.
3. Pursuant to authority conferred upon the Board of
Directors by the Certificate of Incorporation, the Board of
Directors, on May 24, 1996, (by unanimous written consent), duly
authorized and adopted the following resolutions providing for an
issue of a series of its Preferred Stock to be designated "Series
D Convertible Preferred Stock."
"RESOLVED, that an issue of a series of Preferred Stock,
$.001 par value per share, of the Corporation (the Preferred
Stock of the Corporation being herein referred to as
"Preferred Stock", which term shall include any additional
shares of Preferred Stock of the same class hereafter
authorized to be issued by the Corporation), consisting of
Eighty (80) shares is hereby provided for, and the voting
power, designation, preferences and relative participating,
optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such series shall be
as set forth below:
Designation: Number of Shares.
(a) The designation of such series of Preferred Stock shall
be "Series D Convertible Preferred Stock" (hereinafter referred
to as the "Series D Stock") and the number of authorized shares
constituting the Series D Stock is Eighty (80). The Series D
Stock shall be deemed a separate class of Preferred Stock, and
shall be apart from any other series of Preferred Stock.
Part 1. Liquidation.
Upon any liquidation, dissolution, or winding up of the
Corporation, the holders of Series D Stock will be entitled to be
paid, after any distribution or payment is made upon any Senior
Securities and before any distribution or payment is made upon
Junior Securities, an amount in cash equal to the aggregate
Liquidation Value of all shares of Series D Stock outstanding,
and the holders of Series D Stock will not be entitled to any
further payment. If upon any such liquidation, dissolution, or
winding up of the Corporation, the Corporation's assets to be
distributed among the holders of Series D Stock are insufficient
to permit payment to such holders of the aggregate amount which
they are entitled to be paid, then the entire assets to be
distributed will be distributed ratably among such holders based
upon the aggregate Liquidation Value of the Series D Stock held
by each such holder. The Corporation will mail written notice of
such liquidation, dissolution, or winding up not less then 30
days prior to the payment date stated therein, to each record
holder of Series D Stock. Neither the consolidation or merger of
the Corporation into or with any other corporation or
corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock
of the Corporation, will be deemed to be liquidation,
dissolution, or winding up of the Corporation within the meaning
of this Part 1.
Part 2. Dividends.
2A. Entitlement. The holders of Series D Stock, shall
be entitled to receive cumulative dividends. Such dividends
shall be paid to the holders in cash or in-kind through the
issuance of Common Stock, as determined at the election of the
Corporation, on conversion of the Series D Stock in accordance
with Part 3, below, except as provided in Part 5, below.
2B. Accrual Rate. Dividends on each share of Series D
Stock shall accrue on a daily basis at the rate of 8.000% per
annum of the Face Value (as defined below), from and including
the Date of Issuance of such share to and including the date on
which the Redemption Price (as defined below) of such share is
paid or the date on which such share is converted into Common
Stock. Such dividends shall accrue whether or not they have been
declared and whether or not there are profits, surplus or other
funds of the Corporation legally available for the payment of
dividends. The date on which the Corporation initially issues
any share of the Series D Stock will be deemed to be its "Date of
Issuance" as that term is used herein, regardless of the number
of times transfer of any such share is made on the stock records
maintained by or for the Corporation and regardless of the number
of certificates which may be issued to evidence any such share.
Part 3. Conversion Rights.
3A. Conversion Procedure. Subject to the provisions
set forth below, each share of Series D Stock shall be
convertible at the option of the holder thereof, in the manner
hereinafter set forth, into that number of fully paid and
nonassessable shares of Common Stock determined as set forth
below. Any holder of Series D Stock desiring to convert such
shares into shares of Common Stock shall surrender the
certificate or certificates for the shares being converted, duly
endorsed or assigned to the Corporation or in blank, at the
principal office of the Corporation or at the bank or trust
company appointed by the Corporation for that purpose,
accompanied by a written notice of conversion specifying the
number of shares of Series D Stock to be converted (provided that
the number of shares tendered for conversion at any one time
shall not be less than $100,000 in Face Value) and the name or
names in which such holder wishes the certificate or certificates
for shares of Common Stock to be issued. The date of execution
of the notice of conversion and delivery thereof to the
Corporation by facsimile transmission at (212) 508-3540 shall be
the "Conversion Date"; provided, that if the certificate
representing the shares of Series D Stock to be converted as
stated in the notice of conversion is not received by the
Corporation or its designated agent within three business days of
receiving said facsimile transmission, the Conversion Date shall
be the date on which the Series D Stock certificates are actually
received by the Corporation or agent. After the receipt of such
notice of conversion and the certificates for the Series D Stock
converted, the Corporation shall promptly issue and deliver or
cause to be issued and delivered to such holder a certificate or
certificates for shares of Common Stock resulting from such
conversion. In case less than all of the shares of Series D
Stock represented by a certificate are to be converted by a
holder, upon such conversion the Corporation shall also deliver
or cause to be delivered to such holder a certificate or
certificates for the shares of Series D Stock not so converted.
The Corporation shall pay all transfer agent fees and expenses
payable upon the conversion of Series D Stock.
3B. Conversion Rate. The number of shares issuable on
conversion of the Series D Stock shall be determined by dividing
the Face Value of the Series D Stock being converted plus (if the
Corporation elects to paid accrued dividends in-kind with Common
Stock) the amount of accrued dividends on such Face Amount as of
the Conversion Date, by the lesser of (i) 105% of the average
closing bid prices for the Common Stock during the month of June
1996, as reported by the National Association of Securities
Dealers Automated Quotation System or such other inter-dealer
quotation system as may report quotations on the Common Stock, or
(ii) 80% of the market price on the Conversion Date. For
purposes of this Part 3B, "market price" on a given date shall be
the average closing bid prices of the Common Stock for the five
NASDAQ trading days immediately preceding the applicable date as
reported by the National Association of Securities Dealers
Automated Quotation System or such other inter-dealer quotation
system as may report quotations on the Common Stock. In the
event any fractional share of Common Stock would become issuable
under the calculation contained in this Part 3B, the number of
shares issuable shall be rounded up to the nearest whole number.
3C. Conversion Dates The right to convert the Series
D Stock into shares of Common Stock shall vest over a 100-day
period following the Date of Issuance as set forth below:
(i) With respect to 50% of the shares of Series D
Stock held, shall commence 70 days following the Date
of Issuance; and
(ii) With respect to any remaining shares of
Series D Stock held, shall commence 100 days following
the Date of Issuance.
Any shares of Series D Stock that remain outstanding at 12:01
a.m., New York City time on June 1, 1998, shall there upon be
automatically converted to Common Stock without any action on the
part of the holder thereof, and all certificates that theretofore
represented shares of Series D Stock shall represent only the
right to receive shares of Common Stock on surrender of the
certificates to the Corporation as provided in this Part 3
3D. Fundamental Changes. In case the Corporation
shall effect any stock split, reverse stock split, or capital
reorganization of the Common Stock, or shall consolidate, merge,
or engage in a statutory share exchange with or into any other
corporation (other than a consolidation, merger, or share
exchange in which the Corporation is the surviving corporation
and each share of Common Stock outstanding immediately prior to
such consolidation or merger is to remain outstanding immediately
after such consolidation or merger) or shall sell or transfer all
or substantially all its assets to any other corporation, lawful
provision shall be made as a part of the terms of such
transaction whereby the holders of shares of the Series D Stock
shall receive upon conversion thereof, in lieu of each share of
Common Stock which would have been issuable upon conversion of
such stock if converted immediately prior to the consummation of
such transaction, the same kind and amount of stock (or other
securities, cash, or property, if any) as may be issuable or
distributable in connection with such transaction with respect to
each share of Common Stock outstanding at the effective time of
such transaction.
3E. Converted Shares and Common Stock Held for
Conversion. Any shares of Series D Stock which at any time have
been converted shall be canceled and may not be reissued. The
Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, for the
purpose of issuance upon conversion of shares of Series D Stock
then outstanding and shall take all action necessary so that
shares of Common Stock so issued will be validly issued, fully
paid and nonassessable.
Part 4. Voting Rights.
The Series D Stock shall have no voting rights, except
as required in the specific instance by the Nevada Revise
Statutes and except the right to approve by majority vote of the
holders of the Series D Stock: the authorization and issuance of
any class or series of Preferred Stock senior to the Series D
Stock which is not authorized as of June 1, 1996; any amendment,
modification, or repeal of the articles of incorporation of the
Corporation if the powers, preferences, or special rights of the
Series D Stock would be adversely affected; and, the imposition
of any restriction on the Series D Stock, other than restrictions
arising under the Nevada Revised Statutes or existing under the
articles of incorporation as in effect at June 1, 1996.
Part 5. Redemption.
5A. Redemption Price. For each share of Series D
Stock which is to be redeemed, the Corporation will be obligated
on the Redemption Date (as defined below) to pay to the holder
thereof (upon surrender by such holder at the Corporation's
principal office or to the Corporation's transfer agent of the
certificates representing such shares of Series D Stock) an
amount in immediately available funds equal to 120% of the
Liquidation Value thereof plus all accrued dividends as of the
Redemption Date.
5B. Redemption upon Specific Event. In the event any
shares of the Series D Stock are submitted for conversion under
Part 3 and the market price for the Common Stock on the
Conversion Date as determined under Part 3B is less than $2.00
per share, the Corporation may, at its option, elect to redeem
the Series D Stock tendered for conversion rather than convert
the shares.
5C. Notice of Redemption. The Corporation will mail
written notice of redemption of Series D Stock to the record
holder submitting the Series D Stock to the Corporation for
conversion not later than the close of the next Business Day
following the date on which the shares of Series D Stock are
tendered to the Corporation for conversion. The date specified
in such notice for redemption is herein referred to as the
"Redemption Date."
5D. Termination of Rights. On the Redemption Date all
rights pertaining to the Series D Stock, including, but not
limited to, any right of conversion, will cease, and such Series
D Stock will not be deemed to be outstanding.
5E. Redeemed or Otherwise Acquire Shares. Any shares
of Series D Stock which are redeemed or otherwise acquired by the
Corporation shall be canceled and may not be reissued.
Part 6. Definitions.
"Business Day" shall mean a day other than a Saturday,
Sunday or other day on which commercial banks in New York, New
York are authorized by law to close.
"Common Stock" means the Common Stock, $0.01 par value
per share, of the Corporation and any capital stock of any class
of the Corporation hereafter authorized which is not limited to a
fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in
the distribution or assets upon any liquidation, dissolution, or
winding up of the Corporation.
"Junior Securities" means any of the Corporation's
equity securities other than the Senior Securities.
"Liquidation Value" of any Series D Stock as of any
particular date will be equal to $50,000 per share.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision
thereof.
"Senior Securities" means the Corporation's Series A
Stock, Series B Stock, and Series C Stock.
* * *
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be executed by Gary S. Goldstein, its President,
and attested to by Barry S. Roseman, its Secretary, this ______
day of May, 1996.
AFGL INTERNATIONAL, INC.
By: /s/
Gary S. Goldstein, President
ATTEST
By: /s/
Barry S. Roseman, Secretary
ACKNOWLEDGMENT
STATE OF NEW YORK )
)ss
COUNTY OF NEW YORK )
I, Gary S. Goldstein, hereby certify that I am the duly
elected and qualified President of AFGL INTERNATIONAL, INC., that
the foregoing instrument is the act and deed of the Corporation
and the facts stated therein are true.
/S/
Gary S. Goldstein, President
Subscribed and sworn to before me the undersigned, a Notary
Public in and for said county and state this 29th day of May,
1996.
/s/
Notary Public