CERTIFICATE TO SET FORTH DESIGNATIONS, VOTING POWERS,
PREFERENCES, LIMITATIONS, RESTRICTIONS, AND RELATIVE
RIGHTS OF SERIES A 8% CUMULATIVE CONVERTIBLE
PREFERRED STOCK, $.001 PAR VALUE PER SHARE
It is hereby certified that:
I. The name of the corporation is Endovasc Ltd., Inc. (the "Corporation"),
a Nevada corporation.
II. Set forth hereinafter is a statement of the voting powers, preferences,
limitations, restrictions, and relative rights of shares of Series A 8%
Cumulative Convertible Preferred Stock hereinafter designated as contained in a
resolution of the Board of Directors of the Corporation pursuant to a provision
of the Articles of Incorporation of the Corporation permitting the issuance of
said Series A 8% Cumulative Convertible Preferred Stock by resolution of the
Board of Directors:
Series A 8% Cumulative Convertible Preferred Stock, $.001 par value.
1. Designation: Number of Shares. The designation of said series of
Preferred Stock shall be Series A 8% Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"). The number of shares of Series A Preferred Stock
shall be ________. Each share of Series A Preferred Stock shall have a stated
value equal to $100 (as adjusted for any stock dividends, combinations or splits
with respect to such shares) (the "Stated Value"), and $.001 par value.
2. Dividends.
(a) The Holders of outstanding shares of Series A Preferred Stock
shall be entitled to receive preferential dividends in cash out of any
funds of the Corporation legally available at the time for declaration of
dividends before any dividend or other distribution will be paid or
declared and set apart for payment on any shares of any Common Stock, or
other class of stock presently authorized or to be authorized (the Common
Stock, and such other stock being hereinafter collectively the "Junior
Stock") at the rate of 8% simple interest per annum on the Stated Value per
share payable quarterly commencing with the quarter ending June 30, 2000
when as and if declared, at the Corporation's option however that dividend
payments may be made in additional fully paid and non assessable shares of
Series A Preferred Stock at a rate of one share of Series A Preferred Stock
for each $100 of such dividend not paid in cash, and the issuance of such
additional shares shall constitute full payment of such dividend. Dividends
may be paid with Series A Preferred Stock only if the Common Stock
deliverable upon conversion of such Series A Preferred Stock will have been
included for public resale in an effective registration statement filed
with the Securities and Exchange Commission on the dates such dividends are
payable and paid to the Holders, otherwise the dividend will be paid in
cash.
(b) The dividends on the Series A Preferred Stock at the rates
provided above shall be cumulative whether or not earned so that, if at any
time full cumulative dividends at the rate aforesaid on all shares of the
Series A Preferred Stock then outstanding from the date from and after
which dividends thereon are cumulative to the end of the quarterly dividend
period next preceding such time shall not have been paid or declared and
set apart for payment, or if the full dividend on all such outstanding
Series A Preferred Stock for the then current dividend period shall not
have been paid or declared and set apart for payment, the amount of the
deficiency shall be paid or declared and set apart for payment (but without
interest thereon) before any sum shall be set apart for or applied by the
Corporation or a subsidiary of the Corporation to the purchase, redemption
or other acquisition of the Series A Preferred Stock or any shares of any
other class of stock ranking on a parity with the Series A Preferred Stock
("Parity Stock") and before any dividend or other distribution shall be
paid or declared and set apart for payment on any Junior Stock and before
any sum shall be set aside for or applied to the purchase, redemption or
other acquisition of Junior Stock.
(c) Dividends on all shares of the Series A Preferred Stock shall
begin to accrue and be cumulative from and after the date of issuance
thereof. A dividend period shall be deemed to commence on the day following
a quarterly dividend payment date herein specified and to end on the next
succeeding quarterly dividend payment date herein specified.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, the Holders of the Series A
Preferred Stock shall be entitled to receive before any payment or
distribution shall be made on the Junior Stock, out of the assets of the
Corporation available for distribution to stockholders, the Stated Value
per share of Series A Preferred Stock and all accrued and unpaid dividends
to and including the date of payment thereof. Upon the payment in full of
all amounts due to Holders of the Series A Preferred Stock the Holders of
the Common Stock of the Corporation and any other class of Junior Stock
shall receive all remaining assets of the Corporation legally available for
distribution. If the assets of the Corporation available for distribution
to the Holders of the Series A Preferred Stock shall be insufficient to
permit payment in full of the amounts payable as aforesaid to the Holders
of Series A Preferred Stock upon such liquidation, dissolution or
winding-up, whether voluntary or involuntary, then all such assets of the
Corporation shall be distributed to the exclusion of the Holders of shares
of Junior Stock ratably among the Holders of the Series A Preferred Stock.
(b) Neither the purchase nor the redemption by the Corporation of
shares of any class of stock nor the merger or consolidation of the
Corporation with or into any other corporation or corporations nor the sale
or transfer by the Corporation of all or any part of its assets shall be
deemed to be a liquidation, dissolution or winding-up of the Corporation
for the purposes of this paragraph 3.
4. Conversion into Common Stock. Shares of Series A Preferred Stock shall
have the following conversion rights and obligations:
(a) Subject to the further provisions of this paragraph 4 each Holder
of shares of Series A Preferred Stock shall have the right at any time
commencing after the issuance to the Holder of Series A Preferred Stock, to
convert such shares into fully paid and non-assessable shares of Common
Stock of the Corporation (as defined in paragraph 4(i) below) determined in
accordance with the Conversion Price provided in paragraph 4(b) below (the
"Conversion Price"); provided, that the aggregate Stated Value to be
converted shall be at least $10,000 (unless if at the time of such
conversion the aggregate Stated Value of all shares of Series A Preferred
Stock registered to the Holder is less than $10,000, then the whole amount
may be converted). All issued or accrued but unpaid dividends may be
converted at the election of the Holder simultaneously with the conversion
of principal amount of Stated Value of Series A Preferred Stock being
converted.
(b) The number of shares of Common Stock issuable upon conversion of
each share of Series A Preferred Stock shall equal (i) the sum of (A) the
Stated Value per share and (B) at the Holder's election accrued and unpaid
dividends on such share, divided by (ii) the Conversion Price. The
Conversion Price shall be, at the election of the Holder, (x) 85% of the
average of the three lowest Closing Bid Prices for the thirty (30) trading
days immediately preceding the issue date of the Series A Preferred Stock
to the Holders who receive Series A Preferred Stock in the Corporation's
initial offering of Series A Preferred Stock ("Initial Closing Date"), or
(y) 70% of the average of the three (3) lowest Closing Bid Prices for the
thirty (30) days immediately preceding the conversion of the respective
shares of Series A Preferred Stock or such shorter period commencing on the
Initial Closing Date (Lookback Period"). The Closing Bid Price shall mean
the closing bid price of the Corporation's Common Stock as reported by the
NASD OTC Bulletin Board or the principal exchange or market where traded.
(c) The Holder of any certificate for shares of Series A Preferred
Stock desiring to convert any of such shares may give notice of its
decision to convert the shares into common stock by delivering or
telecopying an executed and completed notice of conversion to the
Corporation or the Corporation's Transfer Agent and delivering within three
business days thereafter, the original certificate for the Preferred Stock
properly endorsed for or accompanied by duly executed instruments of
transfer (and such other transfer papers as said Transfer Agent may
reasonably require) to the Corporation or the Corporation's Transfer Agent.
Each date on which a notice of conversion is delivered or telecopied to the
Corporation or the Corporation's Transfer Agent in accordance with the
provisions hereof shall be deemed a Conversion Date. A form of Notice of
Conversion that may be employed by a Holder is annexed hereto as Exhibit A.
The Corporation will transmit the certificates representing the shares of
common stock issuable upon conversion of any Series A Preferred Stock
(together with the Series A Preferred Stock representing the shares not
converted) to the Holder via express courier, by electronic transfer or
otherwise, within five business days after receipt by the Corporation of
the original or telecopied notice of conversion and the Series A Preferred
Stock representing the shares to be converted ("Delivery Date"). The Holder
of the shares so surrendered for conversion shall be entitled to receive on
or before the Delivery Date a certificate or certificates which shall be
expressed to be fully paid and non-assessable for the number of shares of
Common Stock to which such Holder shall be entitled upon such conversion
registered in the name of such Holder. The Corporation is obligated to
deliver to the Holder simultaneously with the aforedescribed Common Stock,
at the election of the Holder, additional Common Stock representing the
conversion at the Conversion Price, of dividends accrued on the Series A
Preferred Stock being converted. In the case of any Series A Preferred
Stock which is converted in part only the Holder of shares of Series A
Preferred Stock shall upon delivery of the certificate or certificates
representing Common Stock also receive a new share certificate representing
the unconverted portion of the shares of Series A Preferred Stock. Nothing
herein shall be construed to give any Holder of shares of Series A
Preferred Stock surrendering the same for conversion the right to receive
any additional shares of Common Stock or other property which results from
an adjustment in conversion rights under the provisions of paragraph (d) or
(e) of this paragraph 4 until Holders of Common Stock are entitled to
receive the shares or other property giving rise to the adjustment.
In the case of the exercise of the conversion rights set forth in
paragraph 4(a) the conversion privilege shall be deemed to have been
exercised and the shares of Common Stock issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the
Corporation or Transfer Agent of the Notice of Conversion. The person or
entity entitled to receive Common Stock issuable upon such conversion
shall, on the date such conversion privilege is deemed to have been
exercised and thereafter, be treated for all purposes as the record Holder
of such Common Stock and shall on the same date cease to be treated for any
purpose as the record Holder of such shares of Series A Preferred Stock so
converted.
Upon the conversion of any shares of Series A Preferred Stock no
adjustment or payment shall be made with respect to such converted shares
on account of any dividend on the Common Stock, except that the Holder of
such converted shares shall be entitled to be paid any dividends declared
on shares of Common Stock after conversion thereof.
The Corporation shall not be required, in connection with any
conversion of Series A Preferred Stock, and payment of dividends on Series
A Preferred Stock to issue a fraction of a share of its Series A Preferred
Stock and shall instead deliver a stock certificate representing the next
whole number.
The Corporation and Holder may not convert that amount of the Series A
Preferred Stock on a Conversion Date in amounts inconsistent with the
limitations set forth in the Subscription Agreement in connection with that
number of shares of Common Stock which would be in excess of the sum of (i)
the number of shares of Common Stock beneficially owned by the Subscriber
and its affiliates on such Conversion Date, and (ii) the number of shares
of Common Stock issuable upon the conversion of the Series A Preferred
Stock with respect to which the determination of this proviso is being made
on such Conversion Date, which would result in beneficial ownership by the
Holder and its affiliates of more than 9.99% of the outstanding shares of
Common Stock of the Corporation. For the purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. The Holder may revoke the
conversion limitation described in this Paragraph upon 75 days prior notice
to the Corporation. The Holder may allocate which of the equity of the
Corporation deemed beneficially owned by the Holder shall be included in
the 9.9% amount described above and which shall be allocated to the excess
above 9.99%.
(d) The Conversion Price determined pursuant to 4(b)(x) shall be
subject to adjustment from time to time as follows:
(i) In case the Corporation shall at any time (A) declare any
dividend or distribution on its Common Stock or other securities of
the Corporation other than the Series A Preferred Stock, (B) split or
subdivide the outstanding Common Stock, (C) combine the outstanding
Common Stock into a smaller number of shares, or (D) issue by
reclassification of its Common Stock any shares or other securities of
the Corporation, then in each such event the Conversion Price shall be
adjusted proportionately so that the Holders of Series A Preferred
Stock shall be entitled to receive the kind and number of shares or
other securities of the Corporation which such Holders would have
owned or have been entitled to receive after the happening of any of
the events described above had such shares of Series A Preferred Stock
been converted immediately prior to the happening of such event (or
any record date with respect thereto). Such adjustment shall be made
whenever any of the events listed above shall occur. An adjustment
made to the Conversion pursuant to this paragraph 4(d)(i) shall become
effective immediately after the effective date of the event
retroactive to the record date, if any, for the event.
(e) (i) In case of any merger of the Corporation with or into any
other corporation (other than a merger in which the Corporation is the
surviving or continuing corporation and which does not result in any
reclassification, conversion, or change of the outstanding shares of Common
Stock) then unless the right to convert shares of Series A Preferred Stock
shall have terminated, as part of such merger lawful provision shall be
made so that Holders of Series A Preferred Stock shall thereafter have the
right to convert each share of Series A Preferred Stock into the kind and
amount of shares of stock and/or other securities or property receivable
upon such merger by a Holder of the number of shares of Common Stock into
which such shares of Series A Preferred Stock might have been converted
immediately prior to such consolidation or merger. Such provision shall
also provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in paragraph (d) of this
paragraph 4. The foregoing provisions of this paragraph 4(e) shall
similarly apply to successive mergers.
(ii) In case of any sale or conveyance to another person or
entity of the property of the Corporation as an entirety, or
substantially as an entirety, in connection with which shares or other
securities or cash or other property shall be issuable, distributable,
payable, or deliverable for outstanding shares of Common Stock, then,
unless the right to convert such shares shall have terminated, lawful
provision shall be made so that the Holders of Series A Preferred
Stock shall thereafter have the right to convert each share of the
Series A Preferred Stock into the kind and amount of shares of stock
or other securities or property that shall be issuable, distributable,
payable, or deliverable upon such sale or conveyance with respect to
each share of Common Stock immediately prior to such conveyance.
(f) Whenever the number of shares to be issued upon conversion of the
Series A Preferred Stock is required to be adjusted as provided in this
paragraph 4, the Corporation shall forthwith compute the adjusted number of
shares to be so issued and prepare a certificate setting forth such
adjusted conversion amount and the facts upon which such adjustment is
based, and such certificate shall forthwith be filed with the Transfer
Agent for the Series A Preferred Stock and the Common Stock; and the
Corporation shall mail to each Holder of record of Series A Preferred Stock
notice of such adjusted conversion price.
(g) In case at any time the Corporation shall propose:
(i) to pay any dividend or distribution payable in shares upon
its Common Stock or make any distribution (other than cash dividends)
to the Holders of its Common Stock; or
(ii) to offer for subscription to the Holders of its Common Stock
any additional shares of any class or any other rights; or
(iii) any capital reorganization or reclassification of its
shares or the merger of the Corporation with another corporation
(other than a merger in which the Corporation is the surviving or
continuing corporation and which does not result in any
reclassification, conversion, or change of the outstanding shares of
Common Stock); or
(iv) the voluntary dissolution, liquidation or winding-up of the
Corporation;
then, and in any one or more of said cases, the Corporation shall cause at least
fifteen (15) days prior notice of the date on which (A) the books of the
Corporation shall close or a record be taken for such stock dividend,
distribution, or subscription rights, or (B) such capital reorganization,
reclassification, merger, dissolution, liquidation or winding-up shall take
place, as the case may be, to be mailed to the Transfer Agent for the Series A
Preferred Stock and for the Common Stock and to the Holders of record of the
Series A Preferred Stock.
(h) So long as any shares of Series A Preferred Stock shall remain
outstanding and the Holders thereof shall have the right to convert the
same in accordance with provisions of this paragraph 4 the Corporation
shall at all times reserve from the authorized and unissued shares of its
Common Stock a sufficient number of shares to provide for such conversions.
(i) The term Common Stock as used in this paragraph 4 shall mean the
$.001 par value Common Stock of the Corporation as such stock is
constituted at the date of issuance thereof or as it may from time to time
be changed or shares of stock of any class of other securities and/or
property into which the shares of Series A Preferred Stock shall at any
time become convertible pursuant to the provisions of this paragraph 4.
(j) The Corporation shall pay the amount of any and all issue taxes
(but not income taxes) which may be imposed in respect of any issue or
delivery of stock upon the conversion of any shares of Series A Preferred
Stock, but all transfer taxes and income taxes that may be payable in
respect of any change of ownership of Series A Preferred Stock or any
rights represented thereby or of stock receivable upon conversion thereof
shall be paid by the person or persons surrendering such stock for
conversion.
(k) In the event a Holder shall elect to convert any shares of Series
A Preferred Stock as provided herein, the Corporation may not refuse
conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, or
for any other reason unless, an injunction from a court, on notice,
restraining and or enjoining conversion of all or part of said shares of
Series A Preferred Stock shall have been issued and the Corporation posts a
surety bond for the benefit of such Holder in the amount of 150% of the
Stated Value of the Series A Preferred Stock and dividends sought to be
converted, which is subject to the injunction, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and
the proceeds of which shall be payable to such Holder in the event it
obtains judgment.
(l) In addition to any other rights available to the Holder, if the
Corporation fails to deliver to the Holder such certificate or certificates
pursuant to Section 4(c) by the Delivery Date and if after the Delivery
Date the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Holder
of the Common Stock which the Holder anticipated receiving upon such
conversion (a "Buy-In"), then the Corporation shall pay in cash to the
Holder (in addition to any remedies available to or elected by the Holder)
the amount by which (A) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (B) the aggregate Stated Value of the shares of Series A Preferred
Stock for which such conversion was not timely honored, together with
interest thereon at a rate of 15% per annum, accruing until such amount and
any accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if the Holder
purchases shares of Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted conversion of $10,000 of
Stated Value of Series A Preferred Stock, the Corporation shall be required
to pay the Holder $1,000, plus interest. The Holder shall provide the
Corporation written notice indicating the amounts payable to the Holder in
respect of the Buy-In.
5. Mandatory Conversion. The shares of Series A Preferred Stock and
dividends may not be converted without the consent of the Holder.
6. Voting Rights. The shares of Series A Preferred Stock shall not have
voting rights.
7. Redemption. From and after the Effective Date of the Registration
Statement as defined in Section 10.1(iv) of the Subscription Agreement entered
into by the Corporation and Holder (or Holder's predecessor) relating to the
Series A Preferred Stock ("Subscription Agreement"), the Corporation will have
the option, provided notice is given to the Holder within five (5) days of
delivery of a Notice of Conversion ("Notice of Redemption") of redeeming the
Series A Preferred Stock ("Optional Redemption") which is the subject of the
Notice of Conversion, by paying to the Holder a sum of money equal 130% of the
Stated Value of the aggregate of the Series A Preferred Stock being redeemed
plus the dollar amount of accrued dividends on the Series A Preferred Stock
being redeemed ("Redemption Amount"). A Notice of Redemption may be given by the
Company only if the Conversion Price elected by the Holder is calculated
pursuant to Section 4(b)(y) of this Certificate of Designation. The date Notice
of Redemption is given by the Corporation is the "Redemption Date." A Notice of
Redemption must be accompanied by a certificate signed by the chief executive
officer or chief financial officer of the Corporation stating that the
Corporation has on deposit and segregated ready funds equal to the Redemption
Amount. The Redemption Amount must be paid in good funds to the Holder on the
Delivery Date. In the event the Corporation fails to pay the Redemption Amount
by such Delivery Date, then the Redemption Notice will be null and void with
respect to the Series A Preferred Stock for which the Redemption Amount had not
been timely paid and the Corporation will thereafter have no further right to
effect an Optional Redemption. Any Notice of Redemption must be given to all
Holders of Series A Preferred Stock in proportion to their holdings of Series A
Preferred Stock on a Redemption Date.
8. Event of Default. The occurrence of any of the following events of
default ("Event of Default") shall, after the applicable period to cure the
Event of Default, cause the dividend rate of 8% described in paragraph 2 hereof
to become 15% from and after the occurrence of such event, and the Holder shall
have the option to require the Corporation to redeem the Series A Preferred
Stock held by such Holder by the immediate payment to the Holder by the
Corporation of a sum of money equal to the number of shares that would be
issuable upon conversion of an amount of Stated Value and accrued dividends
designated by the Holder at the Conversion Price in effect as of the trading day
prior to the date notice is given to the Corporation by the Holder multiplied by
the average of the closing ask prices of the Corporation's Common Stock for the
same days employed when determining such Conversion Price:
(a) The Corporation fails to pay any dividend payment required to be
paid pursuant to the terms of paragraph 2 hereof or the failure to timely
pay any other sum of money due to the Holder from the Corporation and such
failure continues for a period of ten (10) days after written notice to the
Corporation from the Holder.
(b) The Corporation breaches any material covenant, term or condition
of the Subscription Agreement entered into between the Corporation and
Holder relating to Series A Preferred Stock ("Subscription Agreement") or
in this Certificate of Designation, and such breach continues for a period
of seven (7) days after written notice to the Corporation from the Holder.
(c) Any material representation or warranty of the Corporation made in
the Subscription Agreement, or in any agreement, statement or certificate
given in writing pursuant thereto shall be false or misleading.
(d) The Corporation or any of its subsidiaries shall make an
assignment of a substantial part of its property or business for the
benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business, or such a receiver or trustee shall otherwise be appointed.
(e) Any money judgment, confession of judgment, writ or similar
process shall be entered against the Corporation, a subsidiary of the
Corporation, or their property or other assets for more than $50,000, and
is not vacated, satisfied, bonded or stayed within 45 days.
(f) Bankruptcy, insolvency, reorganization or liquidation proceedings
or other proceedings or relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Corporation or any
of its subsidiaries.
(g) An order entered by a court of competent jurisdiction, or by the
Securities and Exchange Commission, or by the National Association of
Securities Dealers, preventing purchase and sale transactions in the
Corporation's Common Stock.
(h) The Corporation's failure to timely deliver Common Stock to the
Holder pursuant to paragraph 4 hereof or the Subscription Agreement.
(i) The occurrence of a Non-Registration Event as described in Section
10.4 of the Subscription Agreement.
(j) The occurrence of an Approval Default as defined in Section 7.1(e)
of the Subscription Agreement.
(k) Delisting of the Common Stock from the NASD OTC Bulletin Board or
such other principal exchange on which the Common Stock is listed for
trading, failure to satisfy the requirements for continued listing on such
market or exchange, or notification that the Corporation is not in
compliance with the conditions for such continued listing.
9. Status of Converted or Redeemed Stock. In case any shares of Series A
Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the
shares so redeemed, converted, or reacquired shall resume the status of
authorized but unissued shares of Preferred Stock and shall no longer be
designated as Series A Preferred Stock.
Dated: April _____, 2000
ENDOVASC LTD., INC.
By:_________________________________
EXHIBIT A
NOTICE OF CONVERSION
(To Be Executed By the Registered Holder in Order to Convert the Series A
Convertible Preferred Stock of Endovasc Ltd., Inc.)
The undersigned hereby irrevocably elects to convert $______________ of the
Stated Value of the above Series A Convertible Preferred Stock into shares of
Common Stock of Endovasc Ltd., Inc. (the "Corporation") according to the
conditions hereof, as of the date written below.
Date of Conversion:_____________________________________________________________
Applicable Conversion Price Per Share:__________________________________________
Conversion Price Calculated Pursuant to:
Section 4(b)(x):__________________________ or 4(b)(y):_________________________
The three dates and closing prices employed are:
(1)_______________/$_______________ (2)_______________/$_____________
(3)_______________/$_______________
Number of Common Shares Issuable Upon This Conversion:_____________
Signature:____________________________________________________________________
Print Name:___________________________________________________________________
Address:______________________________________________________________________
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Deliveries Pursuant to this Notice of Conversion Should Be Made to:
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