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EXHIBIT 3
CERTIFICATE OF AMENDMENT OF THE
ARTICLES OF INCORPORATION
OF
QUALITY CARE PHARMACEUTICALS, INC.
Pursuant to the provisions of the California General Corporation
law, the undersigned officers hereby certify that:
A. The name of the corporation is Quality Care Pharmaceuticals,
Inc., (the "Corporation").
B. The Articles of Incorporation of the Corporation are amended as
follows:
Article IV of the Corporation's Articles of Incorporation is
hereby amended in its entirety to read as follows:
"IV
The Corporation is authorized to issue two classes of shares,
designated "Common Stock" and "Preferred Stock." The total number of shares of
Common Stock that the Corporation is authorized to issue is one million two
hundred fifty thousand (1,250,000), and each such share shall have no par value.
The total number of shares of Preferred Stock that the Corporation is authorized
to issue is twelve million (12,000,000), and each such share shall have no par
value.
The Board of Directors is authorized to provide for the issuance
of the shares of Preferred Stock in series, to establish the number of shares to
be included in such series, and to fix the designation, preferences, privileges,
rights, and restrictions of the shares of each such series.
The designation, preferences, privileges, rights and restrictions
with respect to the Corporation's Series A Redeemable Convertible Preferred
Stock shall be as follows:
SERIES A PREFERRED STOCK
1. Designation. One million (1,000,000) shares of the Preferred
Stock authorized above are designated Series A Redeemable Convertible Preferred
Stock (the "Series A Preferred Stock").
2. Dividends.
The holders of shares of Series A Preferred Stock shall be
entitled to receive dividends, out of any assets legally available therefor,
prior and in preference to any declaration or payment of any dividend or other
distribution (payable other than in Common Stock of this Corporation) on the
Common Stock of this Corporation. Dividends on each share of Series A
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Preferred Stock shall be at the rate of $.06 per annum whenever funds are
legally available therefor, payable quarterly when and as declared by the Board
of Directors. Commencing on the quarter ending May 31, 1999, such dividends
shall accrue and be deemed to accrue from day to day whether or not earned or
declared, and shall be cumulative so that if at any time after May 31, 1999 such
dividends on the Series A Preferred Stock shall not have been paid or declared
and set apart for payment before any dividend shall be paid on or declared or
set apart to any holders of shares of Common Stock and before any purchase or
acquisition of any Common Stock is made by this Corporation except the
repurchase of shares of Common Stock from officers and employees of this
Corporation (or their transferees) upon termination of employment of such
employees. An accumulation of dividends on the Series A Preferred Stock shall
not bear interest.
In the event that this Corporation shall have cumulative accrued
and unpaid dividends outstanding immediately prior to, and in the event of, a
conversion of Series A Preferred Stock (as provided in Section 5 hereof), such
dividends shall, be converted into Common Stock in accordance with, and pursuant
to the terms specified in, Section 5 hereof.
3. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, the holders of the shares of the Series A Preferred Stock then
outstanding 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, before any distribution of assets shall be made to the holders of the
Common Stock or junior stock, an amount equal to one dollar ($1.00) per share
plus any accumulated unpaid dividends. If upon liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to pay the holders of the
Series A Preferred Stock the full amounts to which they respectively shall be
entitled, then the holders of the Series A Preferred Stock shall share ratably
in any such distribution of assets of the Corporation according to the
respective amounts which would be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to said shares
were paid in full.
A consolidation or merger of the Corporation with or into any
other corporation or corporations, or a sale of all or substantially all of the
assets of the Corporation, or a series of related transactions in which more
than fifty percent (50%) of the voting power of the Corporation is disposed of
(each individually referred to herein as a "Change-in-Control"), shall be deemed
to be a liquidation, dissolution or winding up within the meaning of this
Section 3(a).
(b) In the event the Corporation shall propose to take any action
of the type described in subparagraph (a) of this Section 3, the Corporation
shall, within ten (10) days after the date the Board of Directors approves such
action, or twenty (20) days prior to any shareholders' meeting called to approve
such action, whichever is earlier, give each holder of shares of the Series A
Preferred Stock initial written notice of the proposed action. Such initial
written notice shall describe the material terms and conditions of such proposed
action, including a description of the stock, cash and property to be received
by the holders of shares of the Series A Preferred Stock upon consummation of
the proposed action and the date of delivery thereof. If any material change in
the facts set forth in the initial notice shall occur,
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the Corporation shall promptly give written notice to each holder of shares of
the Series A Preferred Stock of such material change.
(c) The Corporation shall not consummate any proposed action of
the type described in subparagraph (a) of this Section 3 before the expiration
of thirty (30) days after the mailing of the initial notice or ten (10) days
after the mailing of any subsequent written notice, whichever is later; provided
that any such 30-day or 10-day period may be shortened upon the written consent
of the holders of all of the outstanding shares of the Series A Preferred Stock.
(d) In the event the Corporation shall propose to take any action
of the type described in subparagraph (a) of this Section 3 which will involve
the distribution of assets other than cash to the holders of shares of the
Series A Preferred Stock, the Corporation shall promptly engage an independent
competent appraiser to determine the value of the assets to be distributed to
the holders of shares of the Series A Preferred Stock. The Corporation shall,
upon receipt of such appraiser's valuation, give prompt written notice of the
appraiser's valuation to each holder of shares of the Series A Preferred Stock.
4. Redemption.
(a) At any time after January 14, 2004, the Corporation
may, at the option of the Board
of Directors upon satisfaction of the terms and conditions as stated herein,
from any source of funds legally available therefor, redeem in whole or in part
the Series A Preferred Stock by paying in cash therefor a sum equal to the
amounts set forth in Section 3(a) in the same manner as if there had occurred a
liquidation of this Corporation on the date of the redemption under this Section
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(b) In the event of any redemption of only a part of the
then outstanding Series A
Preferred Stock, this Corporation shall effect such redemption pro rata
according to the number of shares held by each holder thereof.
(c) At least fifteen (15) but not more than thirty (30)
days prior to the date fixed for any redemption of Series A Preferred Stock (the
"Redemption Date"), written notice shall be mailed, postage prepaid, to each
holder of record (at the close of business on the business day next preceding
the day on which notice is given) of Series A Preferred Stock to be redeemed, at
the address last shown on the records of this Corporation for such holder or
given by the holder to this Corporation for the purpose of notice or if no such
address appears or is given at the place where the principal executive office of
this Corporation is located, notifying such holder of the election of this
Corporation to redeem such shares, specifying the Redemption Date, the
Redemption Price, the place at which payment may be obtained and the date on
which such holder's Conversion Rights (as hereinafter defined) as to such shares
terminate and calling upon such holder to surrender to this Corporation, in the
manner and at the place designated, his or her certificate or certificates
representing the shares to be redeemed (the "Redemption Notice"). On or after
the Redemption Date, each holder of Series A Preferred Stock to be redeemed
shall surrender to this Corporation the certificate or certificates representing
such shares, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price of such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be cancelled. In the event
less than all the shares represented by
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any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(d) From and after the Redemption Date, unless there shall
have been a default in payment of the Redemption Price, all dividends on the
Series A Preferred Stock designated for redemption in the Redemption Notice
shall cease to accrue, all rights of the holders of such shares as holders of
Series A Preferred Stock (except the right to receive the Redemption Price
without interest upon surrender of their certificate or certificates) shall
cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of this Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series A Preferred Stock on any Redemption Date are
insufficient to redeem all shares of Series A Preferred Stock designated to be
redeemed on such date, those funds which are legally available will be used to
redeem the maximum possible number of such shares ratably among the holders of
such shares to be redeemed. The shares of Series A Preferred Stock not redeemed
shall remain outstanding and entitled to all the rights and preferences provided
herein. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of shares of Series A Preferred Stock, such
funds will immediately be used to redeem the balance of the shares which the
Corporation has become obligated to redeem on any Redemption Date but which it
has not redeemed.
(e) If on or prior to the Redemption Date, this Corporation
deposits the Redemption Price of all outstanding shares of Series A Preferred
Stock designated for redemption in the Redemption Notice, and not yet redeemed
or converted, with a bank or trust company in California as a trust fund for the
benefit of the respective holders of the shares designated for redemption and
not yet redeemed with irrevocable instructions and authority to such bank or
trust company to pay, on and after the date fixed for redemption or prior
thereto, the Redemption Price of the Series A Preferred Stock to their
respective holders upon surrender of their certificates, then from and after the
date of the deposit (although prior to the Redemption Date), the shares so
called shall be redeemed and dividends on those shares shall cease to accrue
after the Redemption Date. The deposit shall constitute full payment of the
shares to their holders, and from and after the date of deposit the shares shall
no longer be outstanding and the holders thereof shall cease to be shareholders
with respect to such shares, and shall have no rights with respect thereto
except the right to receive from the bank or trust company payment of the
Redemption Price of the shares without interest upon the surrender of their
certificates therefor. The balance of any moneys deposited by this Corporation
pursuant to this paragraph remaining unclaimed at the expiration of one (1) year
following the Redemption Date shall thereafter be returned to this Corporation
upon its request expressed in a resolution of its Board of Directors, after
which the holders of shares called for redemption shall be entitled to receive
payment of the Redemption Price only from the Corporation.
(f) Except as provided in this Section 4, the Series A
Preferred Stock shall not be subject to any other right of redemption.
5. Conversion.
The holders of the Series A Preferred Stock shall have the
conversion rights as follows (the "Conversion Rights"):
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(a) Each share of the Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such shares, at the principal office of this Corporation or the
office of any transfer agent for the Series A Preferred Stock, into validly
issued, fully paid and nonassessable shares (calculated to the nearest share,
fractions being satisfied by cash payment as provided below) of Common Stock
(the "GPI Common Stock") of Golden Pharmaceuticals, Inc. ("GPI") the parent
company of the Corporation. Each share of Series A Preferred Stock shall be
convertible into such number of fully paid and nonassessable shares of GPI
Common Stock as is determined by dividing $1.00 plus the amount of all accrued
but unpaid dividends on each share, by the applicable Conversion Price as
hereinafter provided in effect at the time of conversion. The initial conversion
price shall be $.20 per share, subject to adjustment as hereinafter provided in
effect at the time of conversion.
(b) In case GPI shall: (i) pay a dividend or make any other
distribution upon any stock of GPI payable in GPI Common Stock or securities of
GPI convertible into GPI Common Stock; (ii) subdivide its outstanding shares of
GPI Common Stock into a greater number of shares; or (iii) issue additional
shares of GPI Common Stock or securities of GPI convertible into GPI Common
Stock, the Conversion Price shall, concurrently with the effectiveness of such
subdivision, be proportionately decreased in accordance with the following
formula: the Conversion Price multiplied by the quotient obtained by dividing
the aggregate number of shares of GPI Common Stock outstanding immediately prior
to such subdivision by the aggregate number of shares of GPI Common Stock
outstanding immediately after such subdivision.
(c) In case GPI shall declare a reverse stock split, the
Conversion Price shall, concurrently with the effectiveness of such reverse
stock split, be proportionately increased in accordance with the following
formula: the Conversion Price multiplied by the quotient obtained by dividing
the aggregate number of shares of GPI Common Stock outstanding immediately after
such reverse stock split by the aggregate number of shares of GPI Common Stock
outstanding immediately prior to such reverse stock split.
(d) In case after the date hereof GPI shall take any action
affecting the GPI Common Stock, other than an action described in any of the
foregoing subparagraphs (a) through (c) hereof, inclusive, which in the opinion
of this Corporation's Board of Directors would have a material adverse effect
upon these Conversion Rights, the Conversion Price shall be adjusted in such
manner and at such time as such Board may in good faith determine to be
equitable in the circumstances.
(e) Notwithstanding the above, no adjustment of the
Conversion Price, shall be made if such adjustment would be equal to less than
one (1%) percent, but such lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to one (1%)
percent or more.
(f) Before any holder of Series A Preferred Stock shall be
entitled to convert the same into shares of GPI Common Stock, he shall surrender
the certificate or certificates therefor, duly endorsed, at the office of GPI or
of any transfer agent for the Series A Preferred Stock and shall give written
notice to the Corporation and GPI at their respective offices that he elects to
convert the same and shall state in writing therein the name or names in
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which he wishes a certificate or certificates for shares of GPI Common Stock to
be issued. GPI shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series A Preferred Stock or to his nominee or
nominees a certificate or certificates for the number of full shares of GPI
Common Stock to which he shall be entitled as aforesaid, together with cash in
lieu of any fraction of a share as hereinafter provided. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred Stock to be converted
(such time being herein called the "Conversion Date"), and the person or persons
entitled to receive the shares of GPI Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of GPI Common Stock on the Conversion Date.
(g) No fractional shares of GPI Common Stock shall be
issued upon conversion, and GPI
shall, in lieu of issuing such fractional shares, make payment in cash based
upon the then current market price of the fraction of a share. The number of
full shares issuable upon conversion shall be computed on the basis of the
aggregate number of shares of the Series A Preferred Stock evidenced by
certificates surrendered for conversion at one time by the same holder.
(h) GPI shall at all times reserve and keep available, out
of its authorized but unissued
shares of GPI Common Stock, solely for the purpose of effecting the conversion
of the shares of the Series A Preferred Stock such number of its shares of GPI
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series A Preferred Stock; and if at any time
the number of authorized but unissued shares of GPI Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
A Preferred Stock, GPI will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized by unissued shares of GPI
Common Stock to such number of shares as shall be sufficient for such purpose.
6. Voting Rights. Except as otherwise provided in Section 8 hereof
or by law, the shares of the Series A Preferred Stock shall have no voting
rights.
7. Notices. Any notice required by the provisions hereof to be
given to the holders of shares of the Series A Preferred Stock shall be deemed
given when deposited in the United States mail, postage prepaid, and addressed
to each holder of record at his address appearing on the books of the
Corporation.
8. Protective Provisions. So long as any shares of Series A
Preferred Stock are outstanding, this Corporation shall not, without first
obtaining the approval (by vote or written consent of the holders of at least a
majority of the total number of shares of Series A Preferred Stock outstanding:
(a) alter or change the rights, preferences or privileges
of the Series A Preferred Stock; or
(b) liquidate, dissolve or wind-up the Corporation (as such
terms are defined in Section
3(a) hereof); or
(c) consummate a transaction that would result in a
Change-in-Control; or
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(d) increase the authorized number of shares of Series A
Preferred Stock; or
(e) create any new class of shares having preferences over
the Series A Preferred Stock as to dividends or assets, unless the purpose of
the creation of such class is, and the proceeds to be deemed from the sale and
issuance thereof are to be used for, the retirement of all Series A Preferred
Stock then outstanding.
C. The foregoing amendment of the Articles of Incorporation was
duly approved by the Corporation's Board of Directors.
D. The foregoing amendment of the Articles of Incorporation was
duly approved by the required written consent of the Corporation's shareholders
in accordance with the provisions of Section 902 of the California General
Corporation Law.
The Corporation's total number of shares which were
outstanding and entitled to vote or to furnish written consent with respect to
the foregoing amendment at the time of the approval thereof was 1,062,500, all
of which are of one class.
The percentage vote of the number of the aforesaid
outstanding shares which is required to vote or furnish written consent in favor
of the foregoing amendment is 51%.
The number of the aforesaid outstanding shares which voted
or furnished a written consent in favor of the foregoing amendment is 1,062,500,
and said number exceeded the percentage of the vote or written consent required
to approve the foregoing amendment.
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Signed on January 12, 1999 /s/ Charles R. Drummond
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Charles R. Drummond, CEO and Chairman
Signed on January 12, 1999 /s/ John H. Grant
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John H. Grant, Secretary and COO
On this 12th day of January, 1999, in the City of Santa Ana, in the State
of California, each of the undersigned does hereby declare under the penalty of
perjury that he signed the foregoing Certificate of Amendment to the Articles of
Incorporation in the official capacity set forth beneath his signature, and that
the statements set forth in said Certificate are true of his own knowledge.
/s/ Charles R. Drummond
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Charles R. Drummond, CEO and Chairman
/s/ John H. Grant
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John H. Grant, Secretary and COO