FILED
IN THE OFFICE OF THE
STATE OF NEVADA
VSOURCE, INC.
AUG 15 2000
No. C6038-80 Certificate of Designation
--------
/s/Dean Heller
DEAN HELLER SECRETARY OF STATE
VSOURCE, INC.
Certificate of Designation
Robert C. McShirley and Sandford T. Waddell, certify that:
A. They are the duly elected and acting President and Secretary,
respectively, of Vsource, Inc., a Nevada corporation (the "Company");
B. The following resolution, which sets forth the rights, preferences,
privileges and restrictions of the Series 2-A Convertible Preferred
Stock of the Company determined by the Board of Directors of the
Company in accordance with the authorization contained in the
Company's Articles of Incorporation, as amended, was duly adopted by
the Board by unanimous written consent dated as of July 27, 2000:
AUTHORIZATION OF SERIES 2-A CONVERTIBLE PREFERRED STOCK
Resolved that the Board of Directors hereby determines that
2,100,000 shares of Class A Preferred Stock shall be designated
"Series 2-A Convertible Preferred Stock" and that such Series 2-A
Convertible Preferred Stock shall have the rights, preferences,
privileges and restrictions hereinafter set forth:
DESIGNATION OF SERIES 2-A CONVERTIBLE PREFERRED STOCK
1. Designation.
------------
This series of Class A Preferred Stock shall be designated
"Series 2-A Convertible Preferred Stock," par value $0.01 per share("Series 2-A
Preferred").
2. Authorized Number.
------------------
The number of authorized shares of Series 2-A Preferred
shall be two million one hundred thousand (2,100,000) shares.
-1-
<PAGE>
3. Dividends.
----------
The holders of shares of Series 2-A Preferred Stock shall be
entitled to receive, out of any assets legally available therefor, and when, as
and if declared by the Board of Directors, noncumulative dividends in an amount
equal to eight percent (8%) of the Original Issue Price (defined below) per
share annually. No dividend may be declared and paid upon shares of Common Stock
in any fiscal year of the Corporation unless dividends of eight percent of the
Original Issue Price (defined below) per share has first been paid upon or
declared and set aside for payment to the holders of the shares of Series 2-A
Preferred Stock for such fiscal year of the Corporation. No undeclared or unpaid
dividend shall ever bear interest.
4. Liquidation Preference.
------------------------
a. In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, each holder of the
Series 2-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, a preference amount for each outstanding share of Series 2-A
Preferred Stock held by such holder equal to the sum of (A) the price
originally paid to the Corporation for that outstanding share of Series 2-A
Preferred Stock (the "Original Issue Price") at the same time and with the
same priority as the payment to the holders of the Series 1-A Preferred
Stock of $2.50 for each outstanding share of Series 1-A Preferred Stock and
(B) an amount equal to declared but unpaid dividends on such share, if any,
but only to the extent of the Company's retained earnings. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series 1-A Preferred Stock and the Series 2-A Preferred
Stock shall be insufficient to permit the payment to such holders of the
full preferential amount each such holder is entitled to receive, then the
entire assets and funds of the Corporation legally available for
distribution shall be distributed among such holders and the holders of the
Series 1-A Preferred Stock in proportion to the full preferential amount
each such holder is otherwise entitled to receive.
b. After payment to the holders of the Series 2-A Preferred
Stock and the Series 1-A Preferred Stock of the amounts to which they are
entitled to be paid 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 remaining assets and funds
of the Corporation legally available for distribution, if any, shall be
distributed among the holders of the Common Stock, the Series 1-A Preferred
Stock and the Series 2-A Preferred Stock pro rata based on the number of
shares of Common Stock held by each (assuming conversion of all such Series
2-A Preferred Stock pursuant to Paragraph 7 below and of all such Series
1-A Preferred Stock pursuant to Paragraph 7 of the Certificate of
Designation creating the Series 1-A Preferred Stock ).
-2-
<PAGE>
c. For purposes of this Section 4, a liquidation,
dissolution or winding up of the Corporation shall be deemed to be
occasioned by or to include (i) the acquisition of the Corporation by
another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation but, excluding any merger effected exclusively for the
purpose of changing the domicile of the Corporation), or (ii) a sale of all
or substantially all of the assets of the Corporation; unless the
Corporation's shareholders of record as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or sale
(by virtue of securities issued as consideration for the Corporation's
acquisition or sale or otherwise) hold a majority of the voting power of
the surviving or acquiring entity. In any of such events, if the
consideration received by the Corporation received is other than cash, its
value will be deemed its fair market value. The fair market value of common
stock which is publicly traded on an exchange or the NASDAQ National Market
System or Small Cap Market shall be the average of the daily market prices
of that stock over the 20 consecutive trading days immediately preceding
(and not including) the date the Corporation or its shareholders receive
such stock. The daily market price for each trading day shall be: (A) the
closing price on that day on the principal exchange on which such common
stock is then listed or admitted to trading or on NASDAQ, as applicable; or
(B) if no sale takes place on that day on such exchange or NASDAQ, the
average of the official closing bid and asked prices for that stock.
Otherwise, the fair market value of such consideration shall be determined
in good faith by the Board of Directors and provided in writing by the
Corporation to the holders of the Series 2-A Preferred Stock within five
(5) days of the date of such determination; provided, however, that the
fair market value of such consideration shall be determined by appraisal in
accordance with the following provisions if the holders of at least
two-thirds of then outstanding Series 2-A Preferred Stock object in writing
to the Board of Director's determination within 15 days of their receipt of
notice of such determination by the Board of Directors. A single appraiser
shall selected jointly by the holders of a majority of the Series 2-A
Preferred Stock and the Corporation. If the holders of the Series 2-A
Preferred Stock and the Corporation are unable to agree on an appraiser
within twenty (20) days of the Board of Directors receiving notice of such
holders' objection to the Board of Directors' determination, each shall
immediately appoint an appraiser who shall determine such fair market
value.
-3-
<PAGE>
If the lower of the appraised fair market values is not less than ninety
percent (90%) of the higher appraised fair market value, the final fair
market value of such consideration shall be the average of the appraised
values. If the lower of the appraised values is less than ninety percent
(90%) of the higher appraised values, the original appraisers shall appoint
a final appraiser who shall pick one of the two prior values determined by
the first two appraisers. All appraisal reports shall be completed no later
than sixty (60) days after the appointment of the appraiser engaged to
render such appraisal. All appraisal fees and costs shall be paid by the
Corporation; provided, however, that if the final appraised value is no
more than ten percent (10%) higher than that determined by the Board, the
appraisal fees and costs shall be subtracted from the liquidation
preference to be paid to the holders of the Series 2-A Preferred Stock.
5. Redemption.
------------
a. Redemption at the Option of the Corporation. The Corporation
-------------------------------------------
shall not have the right to call or redeem any shares of the Series 2-A
Preferred Stock.
b. Redemption at the Option of the Holders. The holders of the
----------------------------------------
Series 2-A Preferred Stock shall not have any right to require the
Corporation to redeem all or any part of the Series 2-A Preferred Stock
held by them.
6. Voting Rights. The holder of each share of Series 2-A Preferred
------------
Stock shall have the right to one vote for each share of Common Stock into which
such Series 2-A Preferred Stock could then be converted (with any fractional
share determined on an aggregate conversion basis being rounded down to the
nearest whole share), and with respect to such vote, such holder shall have full
voting rights and powers equal to the voting rights and powers of the holders of
Common Stock, and shall be entitled, notwithstanding any provision hereof, to
notice of any shareholders' meeting in accordance with the by-laws of the
Company, and shall be entitled to vote, together with holders of Common Stock,
with respect to any question upon which holders of Common Stock have the right
to vote.
7. Conversion.
------------
The holders of the Series 2-A Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
a. Right to Convert. Each share of Series 2-A Preferred Stock
----------------
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, 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 the
Original Issue Price by the then applicable Conversion Price, determined as
hereinafter provided, in effect on the date the certificate evidencing such
share is surrendered for conversion.
-4-
<PAGE>
The initial Conversion Price per share for Series 2-A Preferred Stock (the
"Conversion Price") shall be the Original Issue Price. Such initial
Conversion Price shall be adjusted as hereinafter provided.
b. Automatic Conversion. Each share of Series 2-A Preferred Stock
--------------------
shall automatically be converted into shares of Common Stock at the then
effective Conversion Price as provided in Section 7.a. above, immediately
upon the closing of a public offering of the Corporation's Common Stock
with aggregate gross proceeds of at least $20,000,000 and a per share price
to the public of at least Thirteen Dollars ($13.00), or at the election of
the holders of a majority of the outstanding shares of Series 2-A Preferred
Stock.
c. Mechanics of Conversion. Before any holder of Series 2-A
-----------------------------
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates thereof,
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 it elects to convert the same and shall state therein the
number of shares to be converted and the name or names in which it 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 a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled. 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 2-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.
d. Conversion Price Adjustments. The Conversion Price shall be
-------------------------------
subject to the following adjustments:
(1) Adjustment for Stock Splits and Combinations. If the
----------------------------------------------
Corporation at any time or from time to time after the first issuance
of Series 2-A Preferred Stock (the "Purchase Date") effects a
subdivision of the outstanding Common Stock, by stock split or
otherwise, the Conversion Price then in effect immediately before that
subdivision shall be proportionately decreased; and, conversely, if
the Corporation at any time or from time to time after the Purchase
Date combines the outstanding shares of Common Stock, by reverse stock
split or otherwise, the Conversion Price then in effect immediately
before that combination shall be proportionately increased.
-5-
<PAGE>
Any adjustment under this Section d(1) shall become effective at the
close of business on the date the subdivision or combination becomes
effective.
(2) Adjustment for Certain Dividends and Distributions. In
---------------------------------------------------
the event the Corporation at any time or from time to time after the
Purchase Date either makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of Common
Stock, then and in each such event the Conversion Price then in effect
shall be decreased as of the time of such issuance or, in the event
such a record date is fixed, as of the close of business on such
record date, by multiplying the Conversion Price then in effect by a
fraction (1) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance on the close of business on such record date, and (2)
the denominator of which shall be (i) 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 (ii)
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, that if such record date
is fixed and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Conversion Price
shall be recomputed accordingly as of the close of business on such
record date or date fixed therefor and thereafter the Conversion Price
shall be adjusted pursuant to this Section d(2) as of the time of
actual payment of such dividend or distribution. For purposes of the
foregoing formula, "the total number of shares of Common Stock issued
and outstanding" on a particular date shall include shares of Common
Stock issuable upon conversion of stock or securities convertible into
Common Stock and the exercise of warrants, options or rights for the
purchase of Common Stock which are outstanding on such date.
(3) Adjustments for Other Dividends and Distributions. In
---------------------------------------------------
the event the Corporation at any time or from time to time after the
Purchase Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Corporation other than
shares of Common Stock, then and in each such event,
-6-
<PAGE>
provision shall be made so that each Holder of Series 2-A Preferred
Stock shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation which it would have received had the
Holder's shares of Series 2-A Preferred Stock been converted into
Common Stock as of the date of such event and had it thereafter,
during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as
aforesaid during such period, subject to all other adjustments called
for during such period under this Section 5 with respect to the rights
of such Holder.
(4) Adjustment for Recapitalization, Reclassification, or
---------------------------------------------------
Exchange. If the Common Stock issuable upon the conversion of the
Series 2-A Preferred Stock is changed into the same or a different
number of shares of any class or classes of stock of the Corporation,
whether by recapitalization, reclassification or other exchange (other
than a subdivision or combination of shares, or a stock dividend or a
reorganization, merger, consolidation or sale of assets, provided for
elsewhere in this Section d), then and in any such event each Holder
of Series 2-A Preferred Stock shall have the right thereafter to
convert the Series 2-A Preferred Stock into the kind and amount of
stock and other securities and property receivable upon such
recapitalization, reclassification or other exchange by holders of the
number of shares of Common Stock into which the number of shares of
Series 2-A Preferred Stock then by such Holder could be converted
immediately prior to such recapitalization, reclassification or other
exchange, all subject to further adjustment as provided herein.
(5) Reorganizations, Mergers, Consolidations or Sales of
---------------------------------------------------
Assets. If at any time or from time to time there is a capital
reorganization of the Common Stock (other than a subdivision or
combination of shares or a stock dividend or a recapitalization,
reclassification or other exchange of shares, provided for elsewhere
in this Section d) or a merger or consolidation of the Corporation
with or into another corporation, or the sale of all or substantially
all of the Corporation's assets to any other person, then, as a part
of such capital reorganization, merger, consolidation or sale,
provision shall be made so that each Holder of the Series 2-A
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series 2-A Preferred Stock the number of shares of
stock or other securities or property of the Corporation, or of the
successor corporation resulting from such capital reorganization,
merger, consolidation or sale, to which a holder of the number of
shares of Common Stock deliverable upon such exercise would have been
entitled on such capital reorganization, merger, consolidation or
sale.
-7-
<PAGE>
In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section d with respect to the
rights of each Holder of Series 2-A Preferred Stock after the capital
reorganization, merger, consolidation or sale to the end that the
provisions of this Section d (including the number of shares
deliverable upon conversion of the Series 2-A Preferred Stock) shall
continue to be applicable after that event and shall be as nearly
equivalent to the provisions hereof as may be practicable.
(6) Sale of Shares Below Conversion Price.
-------------------------------------
(a) If at any time or from time to time after the
Purchase Date, the Corporation issues or sells, or is deemed by
the express provisions of this Section d(6) to have issued or
sold, Additional Shares of Common Stock (as hereinafter defined),
other than as a dividend or other distribution on any class of
stock as provided in Section d(2) and other than upon a
subdivision or combination of shares of Common Stock as provided
in Section d(1), for an Effective Price (as hereinafter defined)
less than the then existing Conversion Price, then and in each
such case the then existing Conversion Price shall be reduced, as
of the opening of business on the date of such issue or sale, to
a price determined by multiplying that Conversion Price by a
fraction the numerator of which shall be (A) the number of shares
of Common Stock outstanding at the close of business on the day
next preceding the date of such issue or sale, plus (B) the
number of shares of Common Stock which the aggregate
consideration received (or by the express provisions hereof is
deemed to have been received) by the Corporation for the total
number of Additional Shares of Common Stock so issued would
purchase at such Conversion Price, plus (C) the number of shares
of Common Stock underlying Other Securities (as hereinafter
defined) and the denominator of which shall be (X) the number of
shares of Common Stock outstanding at the close of business on
the date of such issue after giving effect to such issue of
Additional Shares of Common Stock, plus (Y) the number of shares
of Common Stock underlying the Other Securities at the close of
business on the date of such issue or sale.
-8-
<PAGE>
(b) For the purpose of making any adjustment required
under this Section d(6), the consideration received by the
Corporation for any issue or sale of securities shall (A) to the
extent it consists of cash be computed at the amount of cash
received by the Corporation, (B) to the extent it consists of
property other than cash, be computed at the fair value of that
property as determined in accordance with the procedure set forth
in Section 4.c. above, and (C) if Additional Shares of Common
Stock, Convertible Securities (as hereinafter defined) or rights
or options to purchase either Additional Shares of Common Stock
or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Corporation for a
consideration which covers both, be computed as the portion of
the consideration so received that may be reasonably determined
in good faith by the Board to be allocable to such Additional
Shares of Common Stock, Convertible Securities or rights or
options under the procedure set forth in Section 4.c. above.
(c) For the purpose of the adjustment required under
this Section d(6), if the Corporation issues or sells any rights
or options for the purchase of, or stock or other securities
convertible into, Additional Shares of Common Stock (such
convertible stock or securities being hereinafter referred to as
"Convertible Securities") and if the Effective Price of such
Additional Shares of Common Stock is less than the Conversion
Price then in effect, then in each case the Corporation shall be
deemed to have issued at the time of the issuance of such rights
or options or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of
the consideration, if any, received by the Corporation for the
issuance of such rights or options or Convertible Securities,
plus, in the case of such rights or options, the minimum amounts
of consideration, if any, payable to the Corporation upon the
exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if
any, payable to the Corporation (other than by cancellation of
liabilities or obligations evidenced by such Convertible
Securities) upon the conversion thereof. No further adjustment of
the Conversion Price, adjusted upon the issuance of such rights,
options or Convertible Securities, shall be made as a result of
the actual issuance of Additional Shares of Common Stock on the
exercise of any such rights or options or the conversion of any
such Convertible Securities.
-9-
<PAGE>
If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire
without having been exercised, the Conversion Price adjusted upon
the issuance of such rights, options or Convertible Securities
shall be readjusted to the Conversion Price which would have been
in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional
Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of
such Convertible Securities, and such Additional Shares of Common
Stock, if any, were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the
consideration, if any, actually received by the Corporation for
the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling
the Convertible Securities actually converted, plus the
consideration, if any, actually received by the Corporation
(other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities) on the conversion of
such Convertible Securities.
(d) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Corporation after the
Purchase Date, whether or not subsequently reacquired or retired
by the Corporation, other than: (A) shares of Common Stock issued
upon conversion of the Series 2-A Preferred Stock or any other
options or warrants or convertible securities outstanding or
issuable on the Purchase Date; (B) shares of Common Stock
issuable or issued to the directors, officers and employees of or
consultants to the Corporation; (C) shares of Common Stock
issuable or issued as part of an acquisition by the Corporation
of all of or certain assets (including technology rights) or
shares of another company or entity whether through a purchase,
merger, exchange, reorganization or the like; (D) shares of
Common Stock issuable or issued pursuant to equipment financing
or leasing arrangements; or (E) shares issued in a public
offering of the Corporation's securities. The "Effective Price"
of Additional Shares of Common Stock shall mean the quotient
determined by dividing the total number of Additional Shares of
Common Stock issued or sold, or deemed to have been issued or
sold by the Corporation under this Section d(6), into the
aggregate consideration received, or deemed to have been received
by the Corporation for such issue under this Section d(6), for
such Additional Shares of Common Stock. "Other Securities" with
respect to an issue or sale of Additional Shares of Common Stock
shall mean (i) preferred stock, debentures and notes convertible
into Common Stock, and (ii) options or warrants to purchase
Common Stock at a price that is no greater than 95% of the
Effective Price of such issue or sale of Additional Shares of
Common Stock.
-10-
<PAGE>
The "number of shares of Common Stock underlying Other
Securities" on a particular date shall mean the number of shares
of Common Stock issuable upon the exercise or conversion, as the
case may be, of such Other Securities at the close of business on
such date but only to the extent that the holders thereof have
the fully vested legal right to exercise or convert such Other
Securities on such date and to retain the Common Stock issued
upon such exercise or conversion.
(7) Upon the occurrence of each adjustment or readjustment
of the Conversion Price, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof, and shall prepare and furnish to the holders of the Series 2-A
Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based.
e. Notices of Record Date. In the event of any taking by the
-----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any security
or right convertible into or entitling the holder thereof to receive or any
right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive any other
right, the Corporation shall mail to each holder of Series 2-A Preferred
Stock at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution, security or right, and the amount
and character of such dividend, distribution, security or right.
f. 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 2-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 2-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 2-A Preferred Stock, the Corporation will
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 Articles of
Incorporation.
-11-
<PAGE>
g. Fractional Shares. No fractional share shall be issued upon
-----------------
the conversion of any share or shares of Series 2-A Preferred Stock. All
shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 2-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 aforemen-tioned 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 (determined as provided in Section
5.c.).
h. Notices. Any notice required by the provisions of this Section
-------
5 to be given to the holders of shares of Series 2-A Preferred Stock shall
be deemed given if deposited in the United States mail, postage prepaid,
return receipt requested, and addressed to each holder of record at his
address appearing on the books of the Corporation.
8. Amendment.
----------
Any term relating to the Series 2-A Preferred Stock may be amended and
the observance of any term relating to the Series 2-A Preferred Stock may be
waived (either generally or in a particular instance) only with the vote or
written consent of holders of a majority of the outstanding shares of the Series
2-A Preferred Stock. Any amendment so effected shall be binding upon the
Corporation and any holder of the Series 2-A Preferred Stock.
9. Restrictions and Limitations.
-------------------------------
So long as any shares of Series 2-A Preferred Stock remain
outstanding, the Corporation shall not, without the vote or written consent by
the holders of a majority of the outstanding shares of Series 2-A Preferred
Stock, voting together as a single class:
a. Increase or decrease (other than by conversion) the total
number of authorized shares of Series 2-A Preferred Stock; or
-12-
<PAGE>
b. Amend the Articles of Incorporation of the Corporation to
change the rights, preferences, privileges or limitations of the Series
2-A Preferred Stock.
10. No Reissuance of Series 2-A Preferred Stock.
--------------------------------------------------
No share or shares of Series 2-A Preferred Stock acquired by the
Corporation by reason of redemption, purchase, conversion or otherwise shall be
reissued, and all such shares shall be returned to the status of undesignated
shares of Preferred Stock.
11. Residual Rights.
-----------------
Holders of shares of Series 2-A Preferred Stock shall not have
any pre-emptive rights. All rights accruing o the outstanding shares of the
Company not expressly provided for to the contrary herein shall be vested in the
Common Stock.
C. That the number of shares of Series 2-A Preferred Stock is 2,100,000; and
D. That none of such shares of Series 2-A Preferred Stock has been issued.
-13-
<PAGE>
IN WITNESS WHEREOF Vsource, Inc. has caused this certificate to be executed
by Robert C. McShirley, its President and Sandford T. Waddell, its Secretary, on
the date set forth below.
Dated: 7/27, 2000
----
/s/ Robert C. McShirley
-----------------------------------
Robert C. McShirley, President
/s/ Sandford T. Waddell
-----------------------------------
Sandford T. Waddell, Secretary
STATE OF California )
---------------------
) ss:
COUNTY OF Ventura )
---------------------
On personally appeared before me, a
----------------------------------
Notary Public, Robert C. McShirley and Sandford T. Waddell, who acknowledged
---------------------- --------------------
that they executed the above instrument.
/s/ Sylvia Lazaris
-----------------------------------
(SEAL) Notary Public
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
State of Califormia }
} SS
County of Ventura }
On July 27, 2000, before me, Sylvia Lazaris, Notary personally appeard Robert C.
------------- ---------------------- ---------
McShirley & Sandford T. Waddell
-----------------------------------
[ ] personally known to me
[X] proved to me on the basis of satisfactory
evidence
to be the person(s) whose name(s) is/are
subscribed to the within instrument and
acknowledged to me that they executed the same
in their authorizedcapacity(ies), and that by
their signature(s) on the instrument the
person(s) or entity upon behalf of which the
person(s) acted,
[SEAL] WITNESS my hand and official seal
/s/ Sylvia Lazaris
-----------------------------------
signature of Notary Public
-14-
<PAGE>
