EXHIBIT 3.3
Amended and Restated Certificate of Determination for Series A Preferred Stock
AMENDED AND RESTATED
CERTIFICATE OF DETERMINATION
OF
GATEWAY ACCESS SOLUTIONS, INC.
Andrew C. Nester hereby certifies that:
1. He is President and Secretary of Gateway Access Solutions, Inc., a
Nevada corporation.
2. The number of shares designated herein as Series A Convertible Preferred
Stock is five million three hundred thousand (5,300,000), four million six
hundred thousand (4,600,000) of which have been issued.
3. The following resolutions were duly adopted by the Board of Directors on
February 19, 2004:
WHEREAS, the Articles of Incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, comprising ten million
(10,000,000) shares, issuable from time to time in one or more series;
WHEREAS, the Board of Directors of the Corporation is authorized to fix the
designation and number of shares of any series of preferred stock and the
rights, preferences, privileges and restrictions pertaining to any wholly
unissued class or series of shares;
WHEREAS, on October 13, 2003, the Board of Directors of the Corporation
adopted a Certificate of Designation authorizing a series of four million six
hundred thousand (4,600,000) shares of preferred stock, $.001 par value, to be
designated Series A Convertible Preferred Stock (the "Series A Preferred
Stock"), and the Corporation has issued all of such shares;
WHEREAS, the Board of Directors of the Corporation desires, pursuant to its
authority as aforesaid, to increase the number of authorized shares of Series A
Preferred Stock from four million six hundred thousand (4,600,000) shares to
five million three hundred thousand (5,300,000) shares and has duly approved
such increase by resolution on February 19, 2004;
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the authority expressly
granted to and vested in the Board of Directors of this Corporation by the
provisions of the Articles of Incorporation of this Corporation, the Board of
Directors hereby creates a series of five million three hundred thousand
(5,300,000) shares of preferred stock, $.001 par value, to be designated Series
A Convertible Preferred Stock (the "Series A Preferred Stock") and hereby fixes
the relative rights and preferences of the Series A Preferred Stock (in addition
to the rights and preferences set forth in the Articles of Incorporation of this
Corporation which are applicable to the preferred stock of all series) as
follows:
1. Dividends and Other Distributions.
(a) The holders of the then outstanding Series A Preferred Stock shall be
entitled to receive when, as and if declared by the Board of Directors out of
any funds legally available therefor, noncumulative dividends at the rate of
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1. Dividends and Other Distributions - continued
Five-Tenths of a Cent ($0.005) per annum per share. No dividends or other
distributions (other than pro rata dividends or distributions payable solely in
Common Stock) shall be paid with respect to the Common Stock during any fiscal
year of the Corporation until dividends in the amount of Five-Tenths of a Cent
($0.005) per share on the Series A Preferred Stock shall have been paid or
declared and set apart during that fiscal year. Dividends on the Series A
Preferred Stock shall not be cumulative and no rights shall accrue to the
holders of Series A Preferred Stock in the event that the Corporation shall fail
to declare or pay dividends on the Series A Preferred Stock, whether or not the
earnings of the Corporation are sufficient to pay such dividends in whole or in
part.
(b) Other Distributions. In the event the Corporation shall declare a
distribution (other than any distribution described in Section 2) payable in
securities of other persons, evidences of indebtedness issued by the Corporation
or other persons, assets (excluding cash dividends) or options or rights to
purchase any such securities or evidences of indebtedness (excluding those
options or rights referred to in Section 4(e) hereof), then, in each such case,
the holders of the Series A Preferred Stock shall be entitled to a proportionate
share of any such distribution as though the holders of the Series A Preferred
Stock were the holders of the number of shares of Common Stock of the
Corporation into which their respective shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, in which the aggregate
consideration to be paid to the Corporation or its shareholders in such
transaction is less than or equal to a price per share of Common Stock (assuming
conversion of the Series A Preferred Stock) of Five Cents ($0.05) (as adjusted
for any stock dividends, combinations or splits with respect to such shares, and
rounded to the nearest tenth of a penny), the holders of the Series A Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets or surplus funds of the Corporation to the holders of the
Common Stock by reason of their ownership thereof, the amount of Five Cents
($0.05) per share (as adjusted for any stock dividends, combinations or splits
with respect to such shares), plus all declared but unpaid dividends on such
shares for each share of Series A Preferred Stock then held by them. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series A Preferred Stock
in proportion to the preferential amount each such holder is otherwise entitled
to receive. After payment to the holders of the Series A Preferred Stock of the
amounts set forth above, the entire remaining assets and funds of the
Corporation legally available for distribution, if any, shall be distributed
among the holders of the Common Stock in proportion to the number of shares of
outstanding Common Stock then held by each of them.
(b) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, in which the aggregate
consideration to be paid to the Corporation or its shareholders in such
transaction is greater than a price per share of Common Stock (assuming
conversion of the Series A Preferred Stock) of Five Cents ($0.05) (as adjusted
for any stock dividends, combinations or splits with respect to such shares, and
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2. Liquidation Preference - continued
rounded to the nearest tenth of a penny), the entire remaining assets and funds
of the Corporation legally available for distribution, if any, shall be
distributed among the holders of Series A Preferred Stock and Common Stock of
this corporation in the same proportion as the number of shares of Common Stock
and Common Stock issuable upon the conversion of Series A Preferred Stock then
held by each of them bears to the total number of shares of Common Stock and
Common Stock issuable upon conversion of Series A Preferred Stock.
(c) For purposes of this Section 2, (i) any acquisition of the Corporation
by means of merger or other form of corporate reorganization in which
outstanding shares of the Corporation are exchanged for securities or other
consideration issued, or caused to be issued, by the acquiring corporation or
its subsidiary (other than a mere reincorporation transaction) or (ii) a sale of
all or substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation and shall entitle the
holders of Series A Preferred Stock and Common Stock to receive at the closing
in cash, securities or other property (valued as provided in Section 2(d) below)
amounts as specified in Sections 2(a) or 2(b) above.
(d) Whenever the distribution provided for in this Section 2 shall be
payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.
3. Voting Rights.
Each holder of shares of the Series A Preferred Stock shall be entitled to
the number of votes equal to the number of shares of Common Stock into which
such shares of Series A Preferred Stock could be converted and shall have voting
rights and powers equal to the voting rights and powers of the Common Stock
(except as otherwise expressly provided herein or as required by law, voting
together with the Common Stock as a single class) and shall be entitled to
notice of any stockholders' meeting in accordance with the Bylaws of the
Corporation. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Series A Preferred Stock held by each holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward). Each holder of Common Stock shall be entitled to one (1) vote
for each share of Common Stock held.
4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share and on or prior to the fifth day prior to the Redemption
Date, if any, as may have been fixed in any Redemption Notice with respect to
the Series A Preferred Stock, at the office of the Corporation or any transfer
agent for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing Five Cents ($0.05) by the Conversion
Price applicable to such share, determined as hereinafter provided, in effect on
the date the certificate is surrendered for conversion. The price at which
shares of Common Stock shall be deliverable upon conversion of shares of the
Series A Preferred Stock (the "Series A Conversion Price") shall initially be
Five Cents ($0.05) per share of Common Stock. Such initial Series A Conversion
Price shall be adjusted as hereinafter provided.
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
(b) Automatic Conversion. Each share of Series A Preferred Stock shall
automatically be converted into shares of Common Stock at the then-effective
Series A Conversion Price Conversion Price, upon the earlier of (i) the date
specified by vote or written consent or agreement of holders of more than fifty
percent (50%) of the shares of Series A Preferred Stock then outstanding, or
(ii) immediately upon the closing of the sale of the Corporation's Common Stock
in a firm commitment, underwritten public offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), other than a
registration relating solely to a transaction under Rule 145 under such Act (or
any successor thereto) or to an employee benefit plan of the Corporation, the
aggregate proceeds to the Corporation and/or any selling stockholders (after
deduction for underwriters' discounts and expenses relating to the issuance,
including without limitation fees of the Corporation's counsel) of which exceed
$5,000,000.
(c) Mechanics of Conversion.
(i) Before any holder of Series A Preferred Stock shall be entitled to
convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and shall give written
notice to the Corporation at such office that he elects to convert the same
and shall state therein the name or names in which he wishes the
certificate or certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series A Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of surrender of the
shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
(ii) If the conversion is in connection with an underwritten offering
of securities pursuant to the Securities Act, the conversion may, at the
option of any holder tendering shares of Series A Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the
sale of securities pursuant to such offering, in which event the person(s)
entitled to receive the Common Stock upon conversion of the Series A
Preferred Stock shall not be deemed to have converted such Series A
Preferred Stock until immediately prior to the closing of such sale of
securities.
(d) Adjustments to Series A Conversion Price for Certain Diluting Issues.
(i) Special Definitions. For purposes of this Section 4(d), the
following definitions apply:
(1) "Options" shall mean rights, options, or warrants to subscribe
for, purchase or otherwise acquire either Common Stock or Convertible
Securities (defined below).
(2) "Original Issue Date" shall mean the date on which a share of
Series A Preferred Stock was first issued.
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
(3) "Convertible Securities " shall mean any evidences of
indebtedness, shares (other than Common Stock and Series A Preferred Stock)
or other securities convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Section 4(d)(iii), deemed to be
issued) by the Corporation after the Original Issue Date, other than shares
of Common Stock issued or issuable:
(A) upon conversion of shares of Series A Preferred Stock;
(B) to officers, directors or employees of, or consultants to, the
Corporation pursuant to stock option or stock purchase plans or agreements
on terms approved by the Board of Directors, but not exceeding 4,000,000
shares of Common Stock (net of any repurchases of such shares or
cancellations or expirations of options), subject to adjustment for all
subdivisions and combinations;
(C) as a dividend or distribution on Series A Preferred Stock; or
(D) for which adjustment of the Series A Conversion Price is made
pursuant to Section 4(e).
(ii) No Adjustment of Conversion Price. Any provision herein to the
contrary notwithstanding, no adjustment in the Conversion Price for Series
A Preferred Stock shall be made in respect of the issuance of Additional
Shares of Common Stock unless the consideration per share (determined
pursuant to Section 4(d)(v) hereof) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the Series A
Conversion Price in effect on the date of, and immediately prior to, such
issue.
(iii) Deemed Issue of Additional Shares of Common Stock. In the event
the Corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities
then entitled to receive any such Options or Convertible Securities, then
the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein designed to
protect against dilution) of Common Stock issuable upon the exercise of
such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities and
Options therefor, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall
have been fixed, as of the close of business on such record date, provided
that in any such case in which Additional Shares of Common Stock are deemed
to be issued:
(1) no further adjustments in the Series A Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of
such Convertible Securities;
(2) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase or decrease in the
consideration payable to the Corporation, or decrease or increase in the
number of shares of Common Stock issuable, upon the exercise, conversion or
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
exchange thereof, the Series A Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities (provided,
however, that no such adjustment of the Series A Conversion Price shall
affect Common Stock previously issued upon conversion of the Series A
Preferred Stock);
(3) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not
have been exercised, the Series A Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(A) in the case of Convertible Securities or Options for Common Stock
the only Additional Shares of Common Stock issued were the shares of Common
Stock, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation upon such
exercise, or for the issue of all such Convertible Securities which were
actually converted or exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange and
(B) in the case of Options for Convertible Securities only the
Convertible Securities, if any, actually issued upon the exercise thereof
were issued at the time of issue of such Options, and the consideration
received by the Corporation for the Additional Shares of Common Stock
deemed to have been then issued was the consideration actually received by
the Corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Corporation (determined pursuant to Section 4(d)(v)) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(4) no readjustment pursuant to clause (2) or (3) above shall have the
effect of increasing the Series A Conversion Price to an amount which
exceeds the lower of (a) the Series A Conversion Price on the original
adjustment date, or (b) the Series A Conversion Price that would have
resulted from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date;
(5) in the case of any Options which expire by their terms not more
than 30 days after the date of issue thereof, no adjustment of the Series A
Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner
provided in clause (3) above.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares
of Common Stock. In the event this Corporation shall issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed
to be issued pursuant to Section 4(d)(iii)) without consideration or for a
consideration per share less than the Series A Conversion Price in effect
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
on the date of and immediately prior to such issue, then and in such event,
the Series A Conversion Price shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by
multiplying the Series A Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which the
aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the Series A
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued. For the purpose of the above
calculation, the number of shares of Common Stock outstanding immediately
prior to such issue shall be calculated on a fully diluted basis, as if all
shares of Series A Preferred Stock and all Convertible Securities had been
fully converted into shares of Common Stock immediately prior to such
issuance and any outstanding warrants, options or other rights for the
purchase of shares of stock or convertible securities had been fully
exercised immediately prior to such issuance (and the resulting securities
fully converted into shares of Common Stock, if so convertible) as of such
date, but not including in such calculation any additional shares of Common
Stock issuable with respect to shares of Series A Preferred Stock,
Convertible Securities, or outstanding options, warrants or other rights
for the purchase of shares of stock or convertible securities, solely as a
result of the adjustment of the Series A Conversion Price (or other
conversion ratios) resulting from the issuance of the Additional Shares of
Common Stock causing the adjustment in question.
(v) Determination of Consideration. For purposes of this Section 4(d),
the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at the aggregate
amount of cash received by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than cash, be computed at
the fair value thereof at the time of such issue, as determined in good
faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are issued together
with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (A) and (B) above, as determined
in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration per share
received by the Corporation for Additional Shares of Common Stock deemed to
have been issued pursuant to Section 4(d)(iii), relating to Options and
Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration
(as set forth in the instruments relating thereto, without regard to any
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
provision contained therein designed to protect against dilution) payable
to the Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained
therein designed to protect against the dilution) issuable upon the
exercise of such Options or conversion or exchange of such Convertible
Securities.
(e) Adjustments to Conversion Prices for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that this
Corporation at any time or from time to time after the Original Issue Date
shall declare or pay, without consideration, any dividend on the Common
Stock payable in Common Stock or in any right to acquire Common Stock for
no consideration, or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend in
Common Stock or in any right to acquire Common Stock), or in the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Series A Conversion Price in effect immediately prior to
such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that
this Corporation shall declare or pay, without consideration, any dividend
on the Common Stock payable in any right to acquire Common Stock for no
consideration, then the Corporation shall be deemed to have made a dividend
payable in Common Stock in an amount of shares equal to the maximum number
of shares issuable upon exercise of such rights to acquire Common Stock.
(f) Adjustments for Reclassification and Reorganization. If the Common
Stock issuable upon conversion of the Series A Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for
in Section 4(e) above or a merger or other reorganization referred to in
Section 2(c) above), the Series A Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series A
Preferred Stock shall be convertible into, in lieu of the number of shares
of Common Stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock
equivalent to the number of shares of Common Stock that would have been
subject to receipt by the holders upon conversion of the Series A Preferred
Stock immediately before that change.
(g) No Impairment. The Corporation will 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, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Corporation, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 4 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 A Preferred Stock against
impairment.
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
(h) Certificates as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price pursuant to
this Section 4, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare
and furnish to each holder of Series A Preferred Stock a certificate
executed by the Corporation's President or Chief Financial Officer setting
forth such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting
forth (i) such adjustments and readjustments, (ii) the Series A Conversion
Price at the time in effect, and (iii) the number of shares of Common Stock
and the amount, if any, of other property which at the time would be
received upon the conversion of the Series A Preferred Stock.
(i) Notices of Record Date. In the event that the Corporation shall
propose at any time: (i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or earned
surplus; (ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights; (iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or (iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up; then, in connection with each
such event, the Corporation shall send to the holders of Series A Preferred
Stock:
(1) at least twenty (20) days' prior written notice of the date on
which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote, if any,
in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and (iv) above, at
least twenty (20) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
(j) Issue Taxes. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series A Preferred Stock pursuant hereto;
provided, however, that the Corporation shall not be obligated to pay any
transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.
(k) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of 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 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
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, the Corporation will
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4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights") - continued
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose, including,
without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Certificate.
(l) Fractional Shares. No fractional share shall be issued upon the
conversion of any share or shares of Series A Preferred Stock. All shares
of Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series A Preferred Stock by a holder thereof shall
be aggregated for purposes of determining whether the conversion would
result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of
a fraction of a share of Common Stock, the Corporation shall, in lieu of
issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction on
the date of conversion (as determined in good faith by the Board of
Directors).
(m) Notices. Any notice required by the provisions of this Section 4
to be given to the holders of shares of Series A Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, or if
sent by facsimile or delivered personally by hand or nationally recognized
courier and addressed to each holder of record at such holder's address or
facsimile number appearing in the records of the Corporation.
5. Protective Provisions. So long as any shares of Series A Preferred Stock
remain outstanding, the Corporation shall not, without the vote or written
consent by the holders of more than fifty percent (50%) of the then outstanding
shares of the Series A Preferred Stock, voting together as a single class:
(a) authorize or issue, or obligate itself to issue, any equity
security (including any security convertible into or exercisable for any
equity security), with powers, designations, preferences or relative,
participating, optional or other special rights prior to or on a parity
with the Series A Preferred Stock;
(b) increase or decrease the authorized number of shares of Series A
Preferred Stock;
(c) sell, convey, or otherwise dispose of all or substantially all of
its property or business or merge into or consolidate with any other
corporation or entity or effect any transaction or series of related
transactions in which more than 50% of the voting power of the Corporation
is disposed;
(d) liquidate, dissolve, recapitalize or reorganize;
(e) amend the Corporation's articles of incorporation or bylaws;
(f) purchase, redeem or otherwise acquire any Common Stock of the
Corporation, or pay or declare any dividend on (other than a pro rata
dividend payable solely in Common Stock) or make any other distribution in
respect of any Common Stock of the Corporation, other than the repurchase
of shares of Common Stock that are subject to stock repurchase agreements
under which the Corporation has the option to repurchase such shares upon
the occurrence of certain events;
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5. Protective Provisions - continued
The covenants set forth in this Section 5 shall terminate and be of no
further force or effect upon the earlier of: (i) the date specified by vote or
written consent or agreement of holders of more than fifty percent (50%) of the
shares of the Series A Preferred Stock then outstanding, voting as a separate
class, or (ii) immediately upon the closing of the sale of the Corporation's
Common Stock in a firm commitment, underwritten public offering registered under
the Securities Act, other than a registration relating solely to a transaction
under Rule 145 under such Act (or any successor thereto) or to an employee
benefit plan of the Corporation, the aggregate proceeds to the Corporation
and/or any selling stockholders (after deduction for underwriters' discounts and
expenses relating to the issuance, including without limitation fees of the
Corporation's counsel) of which exceed $5,000,000.
6. Waiver. Any right granted to the holders of the Series A Preferred Stock
pursuant to this Certificate of Determination may be waived as to all holders of
the Series A Preferred Stock, at the request of the Corporation, by the vote or
written consent or agreement of holders of more than fifty percent (50%) of the
shares of the Series A Preferred Stock then outstanding.
7. No Reissuance of Series A Preferred Stock. No share or shares of Series
A Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.
I further declare under penalty of perjury under the laws of the state of Nevada
that the matters set forth in this certificate are true and correct of my own
knowledge.
Date: February 19, 2003
By: /s/ Andrew C. Nester
---------------------------------
Andrew C. Nester
President and Secretary
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