CERTIFICATE OF DESIGNATION OF
RIGHTS AND PREFERENCES OF SERIES A
CONVERTIBLE PREFERRED STOCK
OF CELL ROBOTICS INTERNATIONAL, INC.
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Pursuant to Section 7-106-102 of the
Colorado Business Corporation Act
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CELL ROBOTICS INTERNATIONAL, INC., a corporation organized and existing
under the laws of the State of Colorado (the "Company"), DOES HEREBY CERTIFY
that pursuant to the authority contained in its Articles of Incorporation, as
amended, and in accordance with the provisions of the Colorado Business
Corporation Act, the Company's Board of Directors has duly adopted the following
resolution creating a series of the class of its authorized Preferred Stock,
designated as Series A Convertible Preferred Stock:
RESOLVED THAT:
Whereas, by virtue of the authority contained in its Articles of
Incorporation, as amended, the Company has the authority to issue Two
Million Five Hundred Thousand (2,500,000) shares of $.04 par value
Preferred Stock, the designation and amount thereof and series, together
with the powers, preferences, rights, qualifications, limitations or
restrictions thereof, to be determined by the Board of Directors pursuant
to the applicable law of the State of Colorado;
Now therefore, the Company's Board of Directors hereby establishes a
series of the class of Preferred Stock authorized to be issued by the
Company as above stated, with the designations and amounts thereof,
together with the voting powers, preferences and relative, participating,
optional and other special rights of the shares of each such series, and
the qualifications, limitations or restrictions thereof, to be as follows:
1. DESIGNATIONS AND AMOUNTS. Five Hundred Thousand (500,000) shares of
the Company's authorized Preferred Stock are designated as Series A
Convertible Preferred Stock.
2. DEFINITIONS.
For the purposes of this Resolution the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Cell Robotics International, Inc., a
Colorado corporation.
(c) "Original Issue Date" for a series of Preferred Stock shall mean
the date on which the first share of such series of Preferred Stock
was originally issued.
(d) "Preferred Stock" shall refer to Series A Convertible Preferred
Stock.
(e) "Common Stock" shall refer to the Company's $.004 par value
common stock.
(f) "Unit" shall refer to units consisting of one share of Preferred
Stock and two Common Stock Purchase Warrants sold by the Company in a
secondary public offering in 1998.
(g) "Subsidiary" shall mean any corporation at least 50% of whose
outstanding voting stock shall at the time be owned directly or
indirectly by the Company or by one or more Subsidiaries.
3. DIVIDENDS.
(a) The holders of outstanding Preferred Stock shall be entitled to
receive a Common Stock dividend equal to 4/10ths of one share of
Common Stock semi-annually. Such Common Stock dividend, rounded down
to the nearest whole share of Common Stock, shall accrue every six
months and be distributable within 30 days following such accrual.
(b) In addition to the Common Stock dividend, the holders of
outstanding Preferred Stock shall be entitled to participate, PRO
RATA, in dividends paid on outstanding shares of Common Stock, if,
when and as the Board of Directors shall in their sole discretion deem
advisable, and only from the net profits or surplus of the Company as
such shall be fixed and determined by the Board of Directors. The
determination of the Board of Directors at any time of the amount of
net profits or surplus available for dividend shall be binding and
conclusive on the holders of all the stock of the Company at the time
outstanding.
4. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution, or winding up of
the Company, whether voluntary or involuntary, the holders of each
share of Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the Company available for distribution to its
shareholders, before any payment or declaration and setting apart for
payment of any amount shall be made in respect to any outstanding
preferred stock ranking junior to the Preferred Stock or the Common
Stock, an amount equal to __________ Dollars ($______) per share. If
upon any liquidation, dissolution, or winding up of the Company,
whether voluntary or involuntary, the assets to be distributed to the
holders of the Preferred Stock shall be insufficient to permit the
payment to such shareholders of the full preferential amount
aforesaid, then all of the assets of the Company available to be
distributed shall be distributed ratably to the holders of the
Preferred Stock.
(b) After the payment or distribution to the holders of the Preferred
Stock of the full preferential amounts aforesaid, the holders of any
preferred stock rank junior to the Preferred Stock and the Common
Stock then outstanding shall be entitled to receive all of the
remaining assets of the Company.
(c) Neither a consolidation, merger or reorganization of the Company,
a sale or other transfer of all or substantially all of its assets,
nor a sale of fifty percent (50%) or
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more of the Company's capital stock then issued and outstanding nor
the purchase or redemption by the Company of stock of any class, nor
the payment of a dividend or distribution from net profits or surplus
of the Company shall be treated as or deemed to be a liquidation
hereunder.
5. REDEMPTION.
The Company shall have neither the right nor the obligation to redeem
any of the outstanding Preferred Stock, and holders of the Preferred Stock
shall not have the right to demand the redemption of any of the outstanding
Preferred Stock.
6. VOTING RIGHTS.
(a) Holders of Preferred Stock shall have no right to vote on any
matter voted upon by the holders of outstanding shares of Common Stock
at any regular or special meeting of shareholders of the Company.
(b) Notwithstanding the provisions of Paragraph 6(a) above, every
holder of Preferred Stock shall be entitled to exercise such voting
rights prescribed by Section 7-110-104 of the Colorado Business
Corporation Act ("CBCA") or any successor provision of the CBCA
affording comparable rights to shareholders.
7. CONVERSION.
The Preferred Stock shall have the following conversion rights (the
"Conversion Rights"):
(a) OPTIONAL CONVERSION. Holders of outstanding shares of Preferred
Stock shall have an option at any time to convert each share of
Preferred Stock into four shares of the Company's Common Stock (the
"Initial Conversion Value").
(b) AUTOMATIC CONVERSION. The foregoing notwithstanding, the
outstanding shares of Preferred Stock shall be automatically converted
into shares of Common Stock provided there is a Registration Statement
in effect registering for sale under the Securities Act of 1933, as
amended (the "Securities Act") the shares of Common Stock issuable
upon such conversion, upon the earlier of (i) the third anniversary of
the date of issue or (ii) the sum of the public trading prices of the
Preferred Stock and the two Warrants included in the Units has equaled
or exceeded $_______ for at least ten consecutive trading days.
(c) MECHANICS OF CONVERSION. The conversion of all outstanding
shares of Preferred Stock to Common Stock shall occur automatically as
provided in Paragraph 7(b) above ("Triggering Events"). The Company
shall, within ten (10) days of either Triggering Event, provide
written notice, first class postage pre-paid, to each holder of record
of the Preferred Stock to be converted, at his post office address
last shown on the records of the Company, of the conversion (the
"Conversion Notice"). The Conversion Notice shall state:
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(i) That all of the holder's outstanding shares of Preferred
Stock were converted;
(ii) The number of shares of Preferred Stock held by the
holder that were converted;
(iii) The effective date of the Conversion (the
"Conversion Date") and the number of shares of Common Stock
which the holder will receive; and
(iv) That the holder is to surrender to the Company, in
the manner and at the place designated, his certificate or
certificates representing the shares of Preferred Stock
converted.
Thereafter, each holder of Preferred Stock to be converted shall
surrender the certificate or certificates representing such shares to
the Company, in the manner and at the place designated in the
Conversion Notice, and thereupon the requisite number of shares of
Common Stock shall be issued in the name of the person whose name
appears on the surrendered certificate or certificates as the owner
thereof, and each surrendered certificate shall be cancelled and
retired. Notwithstanding that the certificates evidencing any of the
shares of Preferred Stock shall not have been surrendered, all rights
with respect to such shares shall forthwith after the Conversion Date,
terminate, except only the right of the holders to receive the
appropriate number of shares of Common Stock upon surrender of their
certificate or certificates therefor.
(d) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company
shall at any time or from time to time after the Original Issue Date
for a series of the Preferred Stock effect a subdivision of the
outstanding Common Stock, the Conversion Value then in effect
immediately before that subdivision shall be proportionately
decreased, and conversely, if the Company shall at any time or from
time to time after the Original Issue Date for a series of the
Preferred Stock combine the outstanding shares of Common Stock, the
Conversion Value then in effect immediately before the combination
shall be proportionately increased. Any adjustment under this
Paragraph 7(d) shall become effective at the close of business on the
date the subdivision or combination becomes effective.
(e) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION. If
the Common Stock issuable upon the conversion of the Preferred Stock
shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation, or sale of assets provided for
elsewhere in this Paragraph 7), then and in each such event the holder
of each share of Preferred Stock shall have the right thereafter to
convert such share into the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares
of Common Stock into which such shares
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of Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further
adjustments as provided herein.
(f) REORGANIZATION, MERGERS, CONSOLIDATIONS, OR SALES OF ASSETS. If
at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification, or exchange of shares provided for
elsewhere in this Paragraph 7) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all of the company's assets to any other person, then,
as a part of such reorganization, merger, consolidation, or sale,
provision shall be made so that the holders of the Preferred Stock
shall thereafter be entitled to receive upon conversion of the
Preferred Stock, the number of shares of stock or other securities or
property of the Company, or of the successor corporation resulting
form such merger or consolidation or sale, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any such
case, appropriate adjustment shall be made in the application of the
provisions of this Paragraph 7 with respect to the rights of the
holders of the Preferred Stock after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Paragraph 7 (including adjustment of the Conversion Value then in
effect and the number of shares purchasable upon conversion of the
Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
(g) DEFINITION. The term "Additional Shares of Common Stock" as used
herein shall mean all shares of Common Stock issued or deemed issued
(including a right or option to purchase Common Stock, or shares of
stock or an obligation convertible into Common Stock) by the Company
after the Original Issue Date for a series of Preferred Stock, whether
or not subsequently reacquired or retired by the Company, other than
(1) shares of Common Stock, and (2) shares or other securities issued
to employees, officers, directors, consultants or other persons
performing services for the Company pursuant to any stock offering,
option, plan, or arrangement approved by the Board of Directors of the
Company.
(h) NOTICES OF RECORD DATE. In the event of (i) any taking by the
Company of a record of the holders of any class or series of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution or (ii) any
reclassification or recapitalization of the capital stock of the
Company, any merger or consolidation of the Company, or any transfer
of all or substantially all of the assets of the Company to any other
corporation, entity, or person, or any voluntary or involuntary
dissolution, liquidation, or winding up of the Company, the Company
shall mail to each holder of Preferred Stock at least 30 days prior to
the record date specified therein, a notice specifying (A) the date on
which any such record is to be taken for the purpose of such dividend
or distribution and a description of such dividend or distribution,
(B) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation, or winding
up is expected to become effective, and (C) the time, if any is to be
fixed, as to when the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares of Common Stock
(or other securities) for securities or other property deliverable
upon
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such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation, or winding up.
(i) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the
fair market value of one share of the Company's Common Stock on the
date of conversion, as determined in good faith by the Board.
(j) NOTICES. Any notice required by the provisions of this Paragraph
7 to be given to the holder of shares of the Preferred Stock shall be
deemed given when personally delivered to such holder or five (5)
business days after the same has been deposited in the United States
mail, certified or registered mail, return receipt requested, postage
prepaid, and addressed to each holder of record at his address
appearing on the books of the Company.
(k) PAYMENT OF TAXES. The Company will pay all taxes and other
governmental charges that may be imposed in respect of the issue or
delivery of shares of Common Stock upon conversion of shares of
Preferred Stock.
(l) NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Articles of Incorporation or participate in any reorganization,
transfer of assets, consolidation, merger, dissolution, issue, or sale
of securities or any other voluntary action, for the purpose of
avoiding or seeking to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in carrying out all such action
as may be reasonably necessary or appropriate in order to protect the
conversion rights of the holders of the Preferred Stock against
dilution or other impairment.
8. NO PREEMPTIVE RIGHTS.
No holder of the Series A Preferred Stock of the Corporation shall be
entitled, as of right, to purchase or subscribe for any part of the
unissued stock of the Corporation or of any stock of the Corporation to be
issued by reason of any increase of the authorized capital stock of the
Corporation, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the
Corporation or to purchase or subscribe for any stock of the Corporation
purchased by the Corporation or by its nominee or nominees, or to have any
other preemptive rights now or hereafter defined by the laws of the State
of Colorado.
9. NO REISSUANCE OF PREFERRED STOCK.
No share or shares of Preferred Stock acquired by the Company by
reason of purchase, conversion, or otherwise shall be reissued, and all
such shares shall be cancelled, retired, and eliminated from the shares
which the Company shall be authorized to issue.
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IN WITNESS WHEREOF, said CELL ROBOTICS INTERNATIONAL, INC, has caused
this Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock to be duly executed by its President and attested by its
Secretary and has caused its corporate seal to be affixed hereto, this _______
day of _______________, 199___.
CELL ROBOTICS INTERNATIONAL, INC.
Attest:
By:
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Secretary Ronald K. Lohrding, President
[Corporate Seal]
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