[SEAL]
DEAN HELLER
Secretary of State
204 North Carson Street
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz
Amended Certificate of Designation
Before Issuance of Class or Series
PURSUANT TO NRS 78-1955)
Important: Read attached instructions before completing form.
ABOVE SPACEIS FOR OFFICE USE ONLY
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF DESIGNATION
FOR NEVADA PROFIT CORPORATIONS
(PURSUANT TO NRS 78.1955 - BEFORE ISSUANCE OF CLASS OR SERIES)
1. NAME OF CORPORATION:
Cyberlux Corporation
2. THE ORIGINAL CLASS OR SERIES OF STOCK SET FORTH:
800,000 Shares of Series A Convertible Preferred Stock, Par Value $0.001
3. BY A RESOLUTION OF THE BOARD OF DIRECTORS THE ORIGINAL CLASS OR SERIES IS
AMENDED AS FOLLOWS:
The Conversion price as stated in Section 5(e) has been amended from $0.20
per share to $0.10 per share.
Section 6, Right of Refusal has been amended to change the purchase price
for first Refusal Shares from an amount equal to the Liquidation
Preference amount equal to an average market price of shares of Common
Stock over a ten (10) day period from the date of the Notice of
Conversion.
The terms, rights and preferences of the Series B Convertible Preferred
Stock is attached to this Certificate as Exhibit A.
4. AS OF THE DATE OF THIS CERTIFICATE, NO SHARES OF THE CLASS OR SERIES OF STOCK
HAVE BEEN ISSUED.
5. EFFECTIVE DALE OF FILING (OPTIONAL): (MUST NOT BE LATER THAT 90 DAYS AFTER
THE CERTIFICATE IS FILED)
6. OFFICER SIGNATURE (REQUIRED):
IMPORTANT: FAILURE TO INCLUDE ANY OF ABOVE INFORMATION AND SUBMIT THE PROPER
FEES MAY CAUSE THIS FILING TO BE REJECTED.
FILING FEE: $175.00
SUBMIT IN DUPLICATE
This form must be accompanied by appropriate fees. See attached fee schedule.
EXHIBIT A
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND PREFERENCES
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CYBERLUX CORPORATION
The undersigned, an Officer of Cyberlux Corporation, a Nevada corporation
(the "Company"), in accordance with the provisions of the General
Corporation Law of the State of Nevada, does hereby certify that, pursuant
to the authority conferred upon the Board of Directors by the Articles of
Incorporation of the Company, the following resolution creating a series
of Series B Convertible Preferred Stock, was duly adopted on January 6,
2004:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by provisions of the Articles of
Incorporation of the Company (the "Articles of Incorporation"), there
hereby is created out of the shares of Preferred Stock, par value $.001
per share, of the Company authorized in Article IV of the Articles of
Incorporation (the "Preferred Stock"), a series of Preferred Stock of the
Company, to be named "Series B Convertible Preferred Stock," consisting of
eight hundred thousand (800,000) shares, which series shall have the
following designations, powers, preferences and relative and other special
rights and the following qualifications, limitations and restrictions:
Designation and Rank. The designation of such series of the Preferred Stock
shall be the Series B Convertible Preferred Stock, par value $.001 per share
(the "Series B Preferred Stock"). The maximum number of shares of Series B
Preferred Stock shall be eight hundred thousand (800,000) shares. The Series B
Preferred Stock shall rank pari passu with the Company's Series A Convertible
Preferred Stock and prior to the common stock, par value $.001 per share (the
"Common Stock"), and to all other classes and series of equity securities of the
Company which by their terms do not rank senior to the Series B Preferred Stock
("Junior Stock"). The Series B Preferred Stock shall be subordinate to and rank
junior to all indebtedness of the Company now or hereafter outstanding.
Dividends.
Payment of Dividends. The holders of record of shares of Series B Preferred
Stock shall be entitled to receive, out of any assets at the time legally
available therefor and when and as declared by the Board of Directors, dividends
at the rate of twelve percent (12%) of the stated Liquidation Preference Amount
(as defined in Section 4 hereof) per share per annum commencing on the date of
issuance (the "Issuance Date") of the Series B Preferred Stock (the "Dividend
Payment"), and no more, payable semi-annually at the option of the Company in
cash or in shares of Common Stock, in an amount equal to the quotient of (i) the
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Dividend payment divided by (ii) the Conversion Price (as defined in Section
5(c) hereof). If the Company elects or is required to pay any dividend in Common
Stock, the Company will give the holders of record of shares of the Series B
Preferred Stock ten (10) trading days notice prior to the date of the applicable
Dividend Payment. In the case of shares of Series B Preferred Stock outstanding
for less than a full year, dividends shall be pro rated based on the portion of
each year during which such shares are outstanding. Dividends on the Series B
Preferred Stock shall be cumulative, shall accrue and be payable semi-annually.
Dividends on the Series B Preferred Stock are prior and in preference to any
declaration or payment of any distribution (as defined below) on any outstanding
shares of Junior Stock. Such dividends shall accrue on each share of Series B
Preferred Stock from day to day whether or not earned or declared so that if
such dividends with respect to any previous dividend period at the rate provided
for herein have not been paid on, or declared and set apart for, all shares of
Series B Preferred Stock at the time outstanding, the deficiency shall be fully
paid on, or declared and set apart for, such shares on a pro rata basis with all
other equity securities of the Company ranking on a parity with the Series B
Preferred Stock as to the payment of dividends before any distribution shall be
paid on, or declared and set apart for Junior Stock.
So long as any shares of Series B Preferred Stock are outstanding, the Company
shall not declare, pay or set apart for payment any dividend or make any
distribution on any Junior Stock (other than dividends or distributions payable
in additional shares of Junior Stock), unless at the time of such dividend or
distribution the Company shall have paid all accrued and unpaid dividends on the
outstanding shares of Series B Preferred Stock.
In the event of a dissolution, liquidation or winding up of the Company pursuant
to Section 4, all accrued and unpaid dividends on the Series B Preferred Stock
shall be payable on the day immediately preceding the date of payment of the
preferential amount to the holders of Series B Preferred Stock. In the event of
a voluntary conversion pursuant to Section 5(a), all accrued and unpaid
dividends on the Series B Preferred Stock being converted shall be payable on
the day immediately preceding the Voluntary Conversion Date (as defined in
Section 5(b)(i)).
For purposes hereof, unless the context otherwise requires, "distribution" shall
mean the transfer of cash or property without consideration, whether by way of
dividend or otherwise, payable other than in shares of Common Stock or other
equity securities of the Company, or the purchase or redemption of shares of the
Company (other than redemptions set forth in Section 8 below or repurchases of
Common Stock held by employees or consultants of the Company upon termination of
their employment or services pursuant to agreements providing for such
repurchase or upon the cashless exercise of options held by employees or
consultants) for cash or property.
Voting Rights.
Class Voting Rights. The Series B Preferred Stock shall have the following class
voting rights (in addition to the voting rights set forth in Section 3(b)
hereof). So long as any shares of the Series B Preferred Stock remain
outstanding, the Company shall not, without the affirmative vote or consent of
the holders of at least 75% of the shares of the Series B Preferred Stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting, in which the holders of the Series B Preferred Stock vote separately as
a class: (i) authorize, create, issue or increase the authorized or issued
amount of any class or series of stock, including but not limited to the
issuance of any more shares of previously authorized Common Stock or Preferred
Stock, ranking senior to the Series B Preferred Stock, with respect to the
distribution of assets on liquidation, dissolution or winding up; (ii) amend,
alter or repeal the provisions of the Series B Preferred Stock, whether by
merger, consolidation or otherwise, so as to adversely affect any right,
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preference, privilege or voting power of the Series B Preferred Stock; provided,
however, that any creation and issuance of another series of Junior Stock shall
not be deemed to adversely affect such rights, preferences, privileges or voting
powers; (iii) repurchase, redeem or pay dividends on, shares of the Company's
Junior Stock; (iv) amend the Articles of Incorporation or By-Laws of the Company
so as to affect materially and adversely any right, preference, privilege or
voting power of the Series B Preferred Stock; provided, however, that any
creation and issuance of another series of Junior Stock or any other class or
series of equity securities which by its terms shall rank on parity with the
Series B Preferred Stock shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers; (v) effect any
distribution with respect to Junior Stock; or (vi) reclassify the Company's
outstanding securities. Notwithstanding the foregoing to the contrary, the
Company shall not issue any securities senior to or on parity with the Series B
Preferred Stock without the affirmative vote or consent of the holders of at
least 75% of the shares of the Series B Preferred Stock outstanding at the time.
General Voting Rights. Except with respect to transactions upon which the Series
B Preferred Stock shall be entitled to vote separately as a class pursuant to
Section 3(a) above and except as otherwise required by Nevada law, the Series B
Preferred Stock shall have no voting rights. The Common Stock into which the
Series B Preferred Stock is convertible shall, upon issuance, have all of the
same voting rights as other issued and outstanding Common Stock of the Company.
Notwithstanding anything contained herein to the contrary, in the event that the
holders of all outstanding shares of Common Stock and all outstanding shares of
all classes of preferred stock of the Company are entitled to vote on a
corporate matter, each share of Series B Preferred Stock shall have voting
rights equal to ten times the number of shares of Common Stock such holder of
Series B Preferred Stock would receive upon conversion of such holder's shares
of Series B Preferred Stock.
Liquidation Preference.
In the event of the liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, the holders of shares of the Series B
Preferred Stock then outstanding shall be entitled to receive, out of the assets
of the Company available for distribution to its stockholders, an amount equal
to one dollar ($1.00) per share (the "Liquidation Preference Amount") of the
Series B Preferred Stock plus any accrued and unpaid dividends before any
payment shall be made or any assets distributed to the holders of the Common
Stock or any other Junior Stock. If the assets of the Company are not sufficient
to pay in full the Liquidation Preference Amount plus any accrued and unpaid
dividends payable to the holders of outstanding shares of the Series B Preferred
Stock and any series of preferred stock or any other class of stock on a parity,
as to rights on liquidation, dissolution or winding up, with the Series B
Preferred Stock, then all of said assets will be distributed among the holders
of the Series B Preferred Stock and the other classes of stock on a parity with
the Series B Preferred Stock, if any, ratably in accordance with the respective
amounts that would be payable on such shares if all amounts payable thereon were
paid in full. The liquidation payment with respect to each outstanding
fractional share of Series B Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each outstanding
share of Series B Preferred Stock. All payments for which this Section 4(a)
provides shall be in cash, property (valued at its fair market value as
determined by an independent appraiser reasonably acceptable to the holders of a
majority of the Series B Preferred Stock) or a combination thereof; provided,
however, that no cash shall be paid to holders of Junior Stock unless each
holder of the outstanding shares of Series B Preferred Stock has been paid in
cash the full Liquidation Preference Amount plus any accrued and unpaid
dividends to which such holder is entitled as provided herein. After payment of
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the full Liquidation Preference Amount plus any accrued and unpaid dividends to
which each holder is entitled, such holders of shares of Series B Preferred
Stock will not be entitled to any further participation as such in any
distribution of the assets of the Company.
A consolidation or merger of the Company with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the
Company, or the effectuation by the Company of a transaction or series of
related transactions in which more than 50% of the voting shares of the Company
is disposed of or conveyed, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this Section 4. In the event of
the merger or consolidation of the Company with or into another corporation, the
Series B Preferred Stock shall maintain its relative powers, designations and
preferences provided for herein and no merger shall result inconsistent
therewith.
Written notice of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, stating a payment date and the place
where the distributable amounts shall be payable, shall be given by mail,
postage prepaid, no less than forty-five (45) days prior to the payment date
stated therein, to the holders of record of the Series B Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.
Conversion. Subject to Section 6 hereof, the holder of Series B Preferred Stock
shall have the following conversion rights (the "Conversion Rights"):
Right to Convert. At any time on or after June 30, 2004, the holder of any such
shares of Series B Preferred Stock may, at such holder's option, subject to the
limitations set forth in Section 7 herein, elect to convert (a "Voluntary
Conversion") all or any portion of the shares of Series B Preferred Stock held
by such person into a number of fully paid and nonassessable shares of Common
Stock equal to the quotient of (i) the Liquidation Preference Amount of the
shares of Series B Preferred Stock being converted divided by (ii) the
Conversion Price (as defined in Section 5(c) below) then in effect as of the
date of the delivery by such holder of its notice of election to convert. In the
event of a notice of redemption of any shares of Series B Preferred Stock
pursuant to Section 8 hereof, the Conversion Rights of the shares designated for
redemption shall terminate at the close of business on the last full day
preceding the date fixed for redemption, unless the redemption price is not paid
on such redemption date, in which case the Conversion Rights for such shares
shall continue until such price is paid in full. In the event of a liquidation,
dissolution or winding up of the Company, the Conversion Rights shall terminate
at the close of business on the last full day preceding the date fixed for the
payment of any such amounts distributable on such event to the holders of Series
B Preferred Stock. In the event of such a redemption or liquidation, dissolution
or winding up, the Company shall provide to each holder of shares of Series B
Preferred Stock notice of such redemption or liquidation, dissolution or winding
up, which notice shall (i) be sent at least fifteen (15) days prior to the
termination of the Conversion Rights and (ii) state the amount per share of
Series B Preferred Stock that will be paid or distributed on such redemption or
liquidation, dissolution or winding up, as the case may be.
Mechanics of Voluntary Conversion. The Voluntary Conversion of Series B
Preferred Stock shall be conducted in the following manner:
Holder's Delivery Requirements. To convert Series B Preferred Stock into full
shares of Common Stock on any date (the "Voluntary Conversion Date"), the holder
thereof shall (A) transmit by facsimile (or otherwise deliver), for receipt on
or prior to 5:00 p.m., New York time on such date, a copy of a fully executed
notice of conversion in the form attached hereto as Exhibit I (the "Conversion
Notice"), to the Company, and (B) surrender to a common carrier for delivery to
the Company as soon as practicable following such Voluntary Conversion Date but
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in no event later than three (3) business days after such date the original
certificates representing the shares of Series B Preferred Stock being converted
(or an indemnification undertaking with respect to such shares in the case of
their loss, theft or destruction) (the "Preferred Stock Certificates") and the
originally executed Conversion Notice.
Company's Response. Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder. Upon receipt
by the Company of a copy of the fully executed Conversion Notice, the Company or
its designated transfer agent (the "Transfer Agent"), as applicable, shall,
within three (3) business days following the date of receipt by the Company of
the fully executed Conversion Notice (so long as the applicable Preferred Stock
Certificates and original Conversion Notice are received by the Company on or
before such third business day), issue and deliver to the Depository Trust
Company ("DTC") account on the Holder's behalf via the Deposit Withdrawal Agent
Commission System ("DWAC") as specified in the Conversion Notice, registered in
the name of the holder or its designee, for the number of shares of Common Stock
to which the holder shall be entitled. If the number of shares of Preferred
Stock represented by the Preferred Stock Certificate(s) submitted for conversion
is greater than the number of shares of Series B Preferred Stock being
converted, then the Company shall, as soon as practicable and in no event later
than three (3) business days after receipt of the Preferred Stock Certificate(s)
and at the Company's expense, issue and deliver to the holder a new Preferred
Stock Certificate representing the number of shares of Series B Preferred Stock
not converted.
Dispute Resolution. In the case of a dispute as to the arithmetic calculation of
the number of shares of Common Stock to be issued upon conversion, the Company
shall cause its Transfer Agent to promptly issue to the holder the number of
shares of Common Stock that is not disputed and shall submit the arithmetic
calculations to the holder via facsimile as soon as possible, but in no event
later than two (2) business days after receipt of such holder's Conversion
Notice. If such holder and the Company are unable to agree upon the arithmetic
calculation of the number of shares of Common Stock to be issued upon such
conversion within one (1) business day of such disputed arithmetic calculation
being submitted to the holder, then the Company shall within one (1) business
day submit via facsimile the disputed arithmetic calculation of the number of
shares of Common Stock to be issued upon such conversion to the Company's
independent, outside accountant. The Company shall cause the accountant to
perform the calculations and notify the Company and the holder of the results no
later than seventy-two (72) hours from the time it receives the disputed
calculations. Such accountant's calculation shall be binding upon all parties
absent manifest error. The reasonable expenses of such accountant in making such
determination shall be paid by the Company, in the event the holder's
calculation was correct, or by the holder, in the event the Company's
calculation was correct, or equally by the Company and the holder in the event
that neither the Company's or the holder's calculation was correct. The period
of time in which the Company is required to effect conversions or redemptions
under this Certificate of Designation shall be tolled with respect to the
subject conversion or redemption pending resolution of any dispute by the
Company made in good faith and in accordance with this Section 5(b)(iii).
Record Holder. The person or persons entitled to receive the shares of Common
Stock issuable upon a conversion of the Series B Preferred Stock shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.
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Conversion Price. The term "Conversion Price" shall mean $.10 per share, subject
to adjustment under Section 5(d) hereof. Notwithstanding any adjustment
hereunder, at no time shall the Conversion Price be greater than $.10 per share;
provided, however that the Conversion Price may be greater than $.10 per share
if it is adjusted pursuant to Section 5(d)(i).
Adjustments of Conversion Price.
Adjustments for Stock Splits and Combinations. If the Company shall at any time
or from time to time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the Conversion Price shall be proportionately
decreased. If the Company shall at any time or from time to time after the
Issuance Date, combine the outstanding shares of Common Stock, the Conversion
Price shall be proportionately increased. Any adjustments under this Section
5(d)(i) shall be effective at the close of business on the date the stock split
or combination becomes effective.
Adjustments for Certain Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in shares of Common Stock, then, and in
each event, the Conversion Price shall be decreased as of the time of such
issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying the Conversion Price then
in effect by a fraction:
the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date; and
the denominator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution.
Adjustment for Other Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in securities of the Company other than
shares of Common Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the holders of Series
B Preferred Stock shall receive upon conversions thereof, in addition to the
number of shares of Common Stock receivable thereon, the number of securities of
the Company which they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the Conversion
Date, retained such securities (together with any distributions payable thereon
during such period), giving application to all adjustments called for during
such period under this Section 5(d)(iii) with respect to the rights of the
holders of the Series B Preferred Stock; provided, however, that if such record
date shall have been fixed and such dividend is not fully paid or if such
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distribution is not fully made on the date fixed therefor, the Conversion Price
shall be adjusted pursuant to this paragraph as of the time of actual payment of
such dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of Series B Preferred Stock
simultaneously receive (i) a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Series B Preferred Stock had been
converted into Common Stock on the date of such event or (ii) a dividend or
other distribution of shares of Series B Preferred Stock which are convertible,
as of the date of such event, into such number of shares of Common Stock as is
equal to the number of additional shares of Common Stock being issued with
respect to each share of Common Stock in such dividend or distribution.
Adjustments for Reclassification, Exchange or Substitution. If the Common Stock
issuable upon conversion of the Series B Preferred Stock at any time or from
time to time after the Issuance Date shall be changed to the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 5(d)(i), (ii)
and (iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 5(d)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall be made and provisions shall be made (by
adjustments of the Conversion Price or otherwise) so that the holder of each
share of Series B Preferred Stock shall have the right thereafter to convert
such share of Series B Preferred Stock into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such share of Series B Preferred Stock might have been converted
immediately prior to such reclassification, exchange, substitution or other
change, all subject to further adjustment as provided herein.
Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at
any time or from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section 5(d)(i),
(ii) and (iii), or a reclassification, exchange or substitution of shares
provided for in Section 5(d)(iv)), or a merger or consolidation of the Company
with or into another corporation where the holders of outstanding voting
securities prior to such merger or consolidation do not own over 50% of the
outstanding voting securities of the merged or consolidated entity, immediately
after such merger or consolidation, or the sale of all or substantially all of
the Company's properties or assets to any other person (an "Organic Change"),
then as a part of such Organic Change an appropriate revision to the Conversion
Price shall be made if necessary and provision shall be made if necessary (by
adjustments of the Conversion Price or otherwise) so that the holder of each
share of Series B Preferred Stock shall have the right thereafter to convert
such share of Series B Preferred Stock into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
5(d)(v) with respect to the rights of the holders of the Series B Preferred
Stock after the Organic Change to the end that the provisions of this Section
5(d)(v) (including any adjustment in the Conversion Price then in effect and the
number of shares of stock or other securities deliverable upon conversion of the
Series B Preferred Stock) shall be applied after that event in as nearly an
equivalent manner as may be practicable.
No Impairment. The Company shall not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
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avoid or seek 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 the carrying out of all the provisions of this Section 5 and in
the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the holders of the Series B Preferred Stock
against impairment.
Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Series B Preferred Stock pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such Series B Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the holder of
such affected Series B Preferred Stock, at any time, furnish or cause to be
furnished to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the time, and the number of
shares of Common Stock and the amount, if any, of other securities or property
which at the time would be received upon the conversion of a share of such
Series B Preferred Stock. Notwithstanding the foregoing, the Company shall not
be obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted amount.
Issue Taxes. The Company shall pay any and all issue and other taxes, excluding
federal, state or local income taxes, that may be payable in respect of any
issue or delivery of shares of Common Stock on conversion of shares of Series B
Preferred Stock pursuant thereto; provided, however, that the Company shall not
be obligated to pay any transfer taxes resulting from any transfer requested by
any holder in connection with any such conversion.
Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile or three (3)
business days following being mailed by certified or registered mail, postage
prepaid, return-receipt requested, addressed to the holder of record at its
address appearing on the books of the Company. The Company will give written
notice to each holder of Series B Preferred Stock at least twenty (20) days
prior to the date on which the Company closes its books or takes a record (I)
with respect to any dividend or distribution upon the Common Stock, (II) with
respect to any pro rata subscription offer to holders of Common Stock or (III)
for determining rights to vote with respect to any Organic Change, dissolution,
liquidation or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public. The Company
will also give written notice to each holder of Series B Preferred Stock at
least twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no event shall
such notice be provided to such holder prior to such information being made
known to the public.
Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Series B 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 average of the Closing Bid
Prices of the Common Stock for the five (5) consecutive trading immediately
preceding the Voluntary Conversion Date or Mandatory Conversion Date, as
applicable.
Reservation of Common Stock. The Company shall, so long as any shares of Series
B Preferred Stock are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Series B Preferred Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
of the Series B Preferred Stock then outstanding; provided that the number of
shares of Common Stock so reserved shall at no time be less than 100% of the
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number of shares of Common Stock for which the shares of Series B Preferred
Stock are at any time convertible. The initial number of shares of Common Stock
reserved for conversions of the Series B Preferred Stock and each increase in
the number of shares so reserved shall be allocated pro rata among the holders
of the Series B Preferred Stock based on the number of shares of Series B
Preferred Stock held by each holder of record at the time of issuance of the
Series B Preferred Stock or increase in the number of reserved shares, as the
case may be. In the event a holder shall sell or otherwise transfer any of such
holder's shares of Series B Preferred Stock, each transferee shall be allocated
a pro rata portion of the number of reserved shares of Common Stock reserved for
such transferor. Any shares of Common Stock reserved and which remain allocated
to any person or entity which does not hold any shares of Series B Preferred
Stock shall be allocated to the remaining holders of Series B Preferred Stock,
pro rata based on the number of shares of Series B Preferred Stock then held by
such holder.
Retirement of Series B Preferred Stock. Conversion of Series B Preferred Stock
shall be deemed to have been effected on the applicable Conversion Date. Upon
conversion of only a portion of the number of shares of Series B Preferred Stock
represented by a certificate surrendered for conversion, the Company shall issue
and deliver to such holder at the expense of the Company, a new certificate
covering the number of shares of Series B Preferred Stock representing the
unconverted portion of the certificate so surrendered as required by Section
5(b)(ii).
Right of First Refusal. Notwithstanding anything contained herein to the
contrary, upon receipt by the Company of a Notice of Conversion delivered by a
holder of Series B Preferred Stock, the Company shall provide, prior to
effecting such conversion, written notice to all other holders of shares of
Series B Preferred Stock (the "First Refusal Notice") of the receipt of such
Conversion Notice and a copy of such Conversion Notice. Within ten (10) business
days after receipt of the First Refusal Notice and a copy of the Conversion
Notice, each holder of Series B Preferred Stock shall inform the Company whether
such holder will purchase up to its pro rata share of the shares of Series B
Preferred Stock subject to the Conversion Notice (the "First Refusal Shares").
If a holder elects to purchase First Refusal Shares, such holder shall pay to
the holder of the First Refusal Shares an amount equal to an average market
price of shares of Common Stock over a ten (10) business day period from receipt
of the Notice of Conversion. For purposes of this Section 6, all references to
"pro rata" means, for any holder of shares of Series B Preferred Stock electing
to purchase the First Refusal Shares, the percentage obtained by dividing (x)
the total number of shares of Series B Preferred Stock held by such holder by
(y) the total number of shares of Series B Preferred Stock held by all of the
participating holders.
Regulatory Compliance. If any shares of Common Stock to be reserved for the
purpose of conversion of Series B Preferred Stock require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be.
No Preemptive Rights. No holder of the Series B Preferred Stock shall be
entitled to rights to subscribe for, purchase or receive any part of any new or
additional shares of any class, whether now or hereinafter authorized, or of
bonds or debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of
any class, or any bond, debentures or other evidences of indebtedness
convertible into or exchangeable for shares, may be issued and disposed of by
the Board of Directors on such terms and for such consideration (to the extent
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permitted by law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.
Issue Taxes. The Company shall pay any and all issue and other taxes, including
federal, state or local income taxes, that may be payable in respect of any
issue or delivery of Series B Preferred Stock on conversion of accrued
management fees and other liabilities.
Vote to Change the Terms of or Issue 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 75% of the then outstanding shares of Series B
Preferred Stock, shall be required for any change to this Certificate of
Designation or the Company's Articles of Incorporation which would amend, alter,
change or repeal any of the powers, designations, preferences and rights of the
Series B Preferred Stock.
Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing the shares of Series B Preferred
Stock, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company
shall execute and deliver new preferred stock certificate(s) of like tenor and
date; provided, however, the Company shall not be obligated to re-issue
Preferred Stock Certificates if the holder contemporaneously requests the
Company to convert such shares of Series B Preferred Stock into Common Stock.
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.
The remedies provided in this Certificate of Designation shall be cumulative and
in addition to all other remedies available under this Certificate of
Designation, at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy contained herein shall be deemed a
waiver of compliance with the provisions giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of this Certificate of Designation. Amounts
set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the
holder thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of the Series B Preferred Stock and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holders
of the Series B Preferred Stock shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
Specific Shall Not Limit General; Construction. No specific provision contained
in this Certificate of Designation shall limit or modify any more general
provision contained herein. This Certificate of Designation shall be deemed to
be jointly drafted by the Company and all initial purchasers of the Series B
Preferred Stock and shall not be construed against any person as the drafter
hereof.
Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of
Series B Preferred Stock in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
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IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this 29th day of April 2004.
CYBERLUX CORPORATION
By: _________________________________
Name: John W. Ringo
Title: Secretary
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EXHIBIT I
CYBERLUX CORPORATION
CONVERSION NOTICE
Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series B Preferred Stock of Cyberlux Corporation (the
"Certificate of Designation"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series B Preferred Stock, par value $.001 per share (the "Preferred
Shares"), of Cyberlux Corporation, a Nevada corporation (the "Company"),
indicated below into shares of Common Stock, par value $.001 per share (the
"Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Preferred Shares specified below as of the date
specified below.
Date of Conversion:
Number of Preferred Shares to be converted:
Stock certificate no(s) of Preferred Shares to be converted:
Please confirm the following information:
Conversion Price:
Number of shares of Common Stock
to be issued:
Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:
Issue to:
Facsimile Number:
Authorization:
By:
Title:
Dated:
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