CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
SERIES C PREFERRED STOCK OF
GREENSHIFT CORPORATION
Pursuant to the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), the
undersigned officer does hereby certify:
FIRST: That by the certificate of incorporation duly filed in the State of
Delaware, as amended January 8, 2003, the total number of shares which this
corporation may issue is stated to be as follows:
"FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 220,000,000, of which 200,000,000 shares with a
par value of $0.001 each shall be Common Stock and of which 20,000,000
shares with a par value of $0.001 each shall be Preferred Stock. The Board
of Directors of the Corporation is authorized to the full extent now or
hereafter permitted by the laws of the State of Delaware to provide for the
issuance from time to time in one or more series of any number of shares of
Preferred Stock, and, by filing a certificate pursuant to the Delaware
General Corporate Law, to establish the number of shares to be included in
each such series, and to fix the designations, powers, preferences, and
rights, and the qualifications, limitations and restrictions of each such
series."
SECOND: That pursuant to the authority so vested in the Board of Directors of
the Corporation by the provisions of the Corporation's Certificate of
Incorporation, the Board of Directors, at a meeting duly convened and held on
February 15, 2006, adopted the following resolutions:
RESOLVED: That pursuant to the authority vested in the Board of Directors
of the Corporation by the Corporation's Certificate of Incorporation, as
amended, a series of Preferred Stock of the Corporation be, and it hereby
is, created out of the authorized but unissued shares of the capital stock
of the Corporation, such series to be designated Series C Preferred Stock,
to consist of One Million (1,000,000) shares, par value $0.001 per share,
which shall have the following designations, preferences, rights,
qualifications, limitations and restrictions:
1. Voting. Unless otherwise required by law, the holder of each
share of Series C Preferred Stock shall be entitled to cast at
any meeting of stockholders of the Corporation (or in any written
action of stockholders in lieu of a meeting) the number of votes
that equals the number of shares of the Corporation's Common
Stock into which that share of Series C Preferred Stock could be
converted by the holder on the record date for the stockholder
action (assuming that on the record date the Corporation was not
registered as a Business Development Company).
2. Dividends. In the event that the Corporation's Board of Directors
declares a dividend payable to holders of any class of stock, the
holder of each share of Series C Preferred Stock shall be
entitled to receive a dividend equal in amount and kind to the
dividend which would be payable to the holder of the number of
shares of the Corporation's Common Stock into which that share of
Series C Preferred Stock could be converted by the holder on the
record date for payment of the dividend (assuming that on the
record date the Corporation was not registered as a Business
Development Company).
3. Liquidation. Upon the liquidation, dissolution and winding up of
the Corporation, the holder each share of the Series C Preferred
Stock shall be entitled to receive in cash out of the assets of
the Corporation, whether from capital or from earnings available
for distribution to its stockholders, before any amount shall be
paid to the holders of Common Stock, the sum of one tenth of one
Cent (i.e $0.001), after which the holders of Series C Preferred
Stock shall not be entitled to participate in the distribution.
4. Conversion. At any time when the Corporation is not registered
with the Securities and Exchange Commission as a Business
Development Company, the holder of a share of Series C Preferred
Stock shall have the right to convert that share of Series A
Preferred Stock into two hundred fifty-seven (257) fully-paid and
nonassessable shares of Common Stock. The ratio of 257 shares of
Common Stock for one share of Series A Preferred Stock, as
adjusted pursuant to Subsection 4.4 below, is referred to herein
as the "Conversion Ratio."
4.1 Conversion Notice. The Holder of a share of Series C
Preferred Stock may exercise its conversion right by giving
a written conversion notice in the form of Exhibit A hereto
(the "Conversion Notice") (x) by facsimile to the
Corporation confirmed by a telephone call or (y) by
overnight delivery service, with a copy by facsimile to the
Corporation's transfer agent for its Common Stock, as
designated by the Corporation from time to time (the
"Transfer Agent") and to its counsel, as designated by the
Corporation from time to time. If such conversion will
result in the conversion of all of such Holder's Series C
Preferred Stock, the Holder shall also surrender the
certificate for the Series C Preferred Stock to the
Corporation at its principal office (or such other office or
agency of the Corporation may designate by notice in writing
to the Holder) at any time during its usual business hours
on the date set forth in the Conversion Notice.
4.2 Issuance of Certificates; Time Conversion Effected.
4.2.1 Promptly, but in no event more than three (3) Trading Days,
after the receipt of the Conversion Notice referred to in
Subsection 4.1 and surrender of the Series C Preferred Stock
certificate (if required), the Corporation shall issue and
deliver, or the Corporation shall cause to be issued and
delivered, to the Holder, registered in such name or names
as the Holder may direct, a certificate or certificates for
the number of whole shares of Common Stock into which the
Series C Preferred Stock has been converted. In the
alternative, if the Corporation's Transfer Agent is a
participant in the electronic book transfer program, the
Transfer Agent shall credit such aggregate number of shares
of Common Stock to which the Holder shall be entitled to the
Holder's or its designee's balance account with The
Depository Trust Corporation. Such conversion shall be
deemed to have been effected, and the "Conversion Date"
shall be deemed to have occurred, on the date on which such
Conversion Notice shall have been received by the
Corporation and at the time specified stated in such
Conversion Notice, which must be during the calendar day of
such notice. The rights of the Holder of the Series C
Preferred Stock shall cease, and the person or persons in
whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby, on the
Conversion Date. Issuance of shares of Common Stock issuable
upon conversion that are requested to be registered in a
name other than that of the registered Holder shall be
subject to compliance with all applicable federal and state
securities laws.
4.2.2 The Corporation understands that a delay in the issuance of
the shares of Common Stock beyond three (3) Trading Days
after the Conversion Date could result in economic loss to
the Holder of the Series C Preferred Stock. As compensation
to the Holder for such loss, the Corporation agrees to pay
the Holder's actual losses occasioned by any "buy-in" of
Common Stock necessitated by such late delivery.
Furthermore, in addition to any other remedies that may be
available to the Holder, if the Corporation fails for any
reason to effect delivery of such shares of Common Stock
within five (5) Trading Days after the Conversion Date, the
Holder will be entitled to revoke the relevant Conversion
Notice by delivering a notice to such effect to the
Corporation. Upon delivery of such notice of revocation, the
Corporation and the Holder shall each be restored to their
respective positions immediately prior to delivery of such
Conversion Notice, except that the Holder shall retain the
right to receive the actual cost of any "buy-in."
4.3 Fractional Shares. The Corporation shall not, nor shall it
cause the Transfer Agent to, issue any fraction of a share
of Common Stock upon any conversion. All shares of Common
Stock (including fractions thereof) issuable upon conversion
of shares of Series C Preferred Stock by the Holder shall be
aggregated for purposes of determining whether the
conversion would result in the issuance of a fraction of a
share of Common Stock. If, after such aggregation, the
issuance would result in the issuance of a fraction of a
share of Common Stock, the Corporation shall round, or cause
the Transfer Agent to round, such fraction of a share of
Common Stock up to the nearest whole share.
4.4 Adjustment to Conversion Ratio. In order to prevent dilution
of the rights granted under the Series A Preferred Stock,
the Conversion Ratio will be subject to adjustment from time
to time as provided in this Subsection 4.4.
4.4.1 Adjustment of Conversion Ratio upon Subdivision or
Combination of Common Stock. If the Corporation at any time
subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of
shares, the Conversion Ratio in effect immediately prior to
such subdivision will be proportionately increased. If the
Corporation at any time combines (by combination, reverse
stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of
shares, the Conversion Ratio in effect immediately prior to
such combination will be proportionately decreased.
4.4.2 Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or
substantially all of the Corporation's assets or other
transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change." Prior to the consummation
of any Organic Change, the Corporation will make appropriate
provision (in form and substance reasonably satisfactory to
the Holder) to insure that the Holder will thereafter have
the right to acquire and receive in lieu of or in addition
to (as the case may be) the shares of Common Stock otherwise
acquirable and receivable upon the conversion of this Series
C Preferred Stock, such shares of stock, securities or
assets as would have been issued or payable in such Organic
Change with respect to or in exchange for the number of
shares of Common Stock that would have been acquirable and
receivable had this Series C Preferred Stock been converted
into shares of Common Stock immediately prior to such
Organic Change (without taking into account any limitations
or restrictions on the timing of conversions). In any such
case, the Corporation will make appropriate provision (in
form and substance reasonably satisfactory to the Holder)
with respect to the Holder's rights and interests to insure
that the provisions of this Section 4.4.2 will thereafter be
applicable to the Series C Preferred Stock. The Corporation
will not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor
entity (if other than the Corporation) resulting from
consolidation or merger or the entity purchasing such assets
assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a more than
sixty-six and two-thirds percent (66-2/3%) of Series C
Preferred Stock then outstanding), the obligation to deliver
to each holder of Series C Preferred Stock such shares of
stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to
acquire.
4.5 No Reissuance of Series C Preferred Stock. Shares of Series
C Preferred Stock that are converted into shares of Common
Stock as provided herein shall not be reissued.
5. Vote to Change the Terms of or Issue Series C Preferred Stock.
The affirmative vote at a meeting duly called for such purpose,
or the written consent without a meeting, of the holders of not
less than sixty-six and two-thirds percent (66 2/3%) of the then
outstanding shares of Series C Preferred Stock shall be required
for (i) any change to the Corporation's Certificate of
Incorporation that would amend, alter, change or repeal any of
the preferences, limitations or relative rights of the Series C
Preferred Stock, or (ii) any issuance of additional shares of
Series C Preferred Stock.
6. Notices. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata
distribution to the holders of its Common Stock; or
(b) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock
of any class or other rights; or
(c) there shall be any Organic Change; then, in any one or more
of such cases, the Corporation shall give, by first class
mail, postage prepaid, or by facsimile or by recognized
overnight delivery service to non-U.S. residents, addressed
to the Registered Holders of the Series C Preferred Stock at
the address of each such Holder as shown on the books of the
Corporation, (i) at least twenty (20) Trading Days' prior
written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for
determining rights to vote in respect of any such Organic
Change and (ii) in the case of any such Organic Change, at
least twenty (20) Trading Days' prior written notice of the
date when the same shall take place. Such notice in
accordance with the foregoing clause (i) shall also specify,
in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and such notice in
accordance with clause (ii) shall also specify the date on
which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property
deliverable upon such Organic Change.
7. Record Owner. The Corporation may deem the person in whose name
shares of Series C Preferred Stock shall be registered upon the
registry books of the Corporation to be, and may treat him as,
the absolute owner of the Series C Preferred Stock for the
purposes of conversion or redemption and for all other purposes,
and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversion shall be valid
and effective to satisfy and discharge the liabilities arising
under this Certificate of Designations to the extent of the sum
or sums so paid or the conversion so made.
THIRD: That the said resolution of the Board of Directors, and the
creation and authorization of issuance thereby of said series of
preferred stock and determination thereby of the voting rights,
dividend rate, liquidation preference and conversion right, were
duly made by the Board of Directors pursuant to authority as
aforesaid and in accordance with the General Corporation Law of
the State of Delaware.
Signed on February 15, 2006
GREENSHIFT CORPORATION
By: /s/ Kevin Kreisler
----------------------------
Kevin Kreisler
Chairman and Chief Executive Officer