UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
September 18, 1997
Date of Report (Date of earliest event reported)
COVOL TECHNOLOGIES, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 0-27803 87-0547337
(State or other juris- (Commission File (IRS Employer
diction of incorporation) Number) Identification No.)
3280 North Frontage Road
Lehi, Utah, 84043
(Address of principal (Zip Code)
executive offices)
(801) 768-4481
(Registrant's telephone number, including area code)
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Item 5. Other Events
Private Placement of Preferred Stock and Warrants
As of September 18, 1997, and in reliance on Section 4(2) and
Regulation D ("Regulation D") of the Securities Act of 1933, as amended, Covol
Technologies, Inc. (the "Company") privately sold 104,294 Units to three
"accredited investors" as that term is defined under Rule 501 of Regulation D,
for an aggregate purchase price of approximately $2,200,000. Each Unit consisted
of (i) three shares of the Company's Series B Convertible Preferred Stock, par
value $.001 per share (the "Preferred Stock"), and (ii) a warrant to acquire one
share of Company common stock, par value $.001 per share (the "Common Stock") at
a price of $8.00 per share. The purchase price for each Unit was $21.00. The
Warrant is exercisable at any time on or before September 30, 1999.
The Preferred Stock sold as part of a Unit was issued pursuant to the
terms of a Certificate of Designation filed with the Delaware Secretary of State
(the "Certificate of Designation"), a copy of which is included as an Exhibit to
this report. Under the Certificate of Designation, the Preferred Stock (i)
accrues dividends on a daily basis at a rate equal to the 2-year treasury bond
rate plus one and one-half percent (initially 7.29% per annum but subject to a
one-time adjustment on March 18, 1998) on the liquidation value ($7.00) of each
share from the date of issuance until paid or converted (with no compounding of
dividends being authorized) payable semi-annually in the discretion of the
Company, (ii) is redeemable by the Company at any time after 30 days' written
notice, (iii) has no voting rights unless specifically authorized by the
Delaware General Corporate Law, (iv) is convertible by the Company at any time
after September 30, 1998. The Units were privately placed pursuant to
Subscription Agreements between the Company and the accredited investors.
In connection with the sale of the Series B Preferred Stock, the
Company issued as a finders fee to two accredited investors warrants to acquire
an aggregate of 62,576 shares of the Company's Common Stock at a price of $8.00
per share at any time prior to September 30, 1999. Statements related to the
foregoing offering are neither offers to sell nor solicitations of offers to
buy.
Private Placement of Common Stock and Warrants
As of September 30, 1997, the Company accepted subscriptions for the
purchase of 100,000 Units pursuant to a Confidential Private Placement
Memorandum, dated August 28, 1997 (the "Memorandum"), at a price of $35.00 per
Unit with an aggregate purchase price of $3,500,000. Each Unit consisted of five
(5) shares of Common Stock of the Company together with a warrant to purchase
one (1) additional share. The exercise price of the warrant is $8.00 per share
and the warrant must be exercised by April 30, 1998. Pursuant to the terms of
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the Memorandum, the Company has granted to purchasers of the Units piggyback
registration rights on the shares of Common Stock underlying the Units and the
shares of Common Stock which have or may become issuable from the exercise of
the warrant.
Effective as of September 30, 1997, the Company also conditionally
accepted additional subscriptions for $600,000 pursuant to the Memorandum (the
"Conditional Subscriptions"). Because the Conditional Subscriptions result in a
total offering of approximately 117,143 Units at an aggregate purchase price of
approximately $4,100,000, the Conditional Subscriptions are subject to the
appropriate approval by the prior purchasers under the Memorandum to an increase
in the maximum offering amount under the Memorandum from 100,000 Units (at an
aggregate purchase price of $3,500,000) to approximately 117,143 Units (at an
aggregate offering price of approximately $4,100,000). If the appropriate
approvals are not obtained, the Conditional Subscriptions will be rejected and
the offering under the Memorandum will remain closed with respect to the
subscriptions for $3,500,000 already received and accepted by the Company
effective as of September 30, 1997. If the appropriate approvals are obtained,
the Conditional Subscriptions will be closed separately from the prior
subscriptions as soon as practical after the approval is obtained.
In connection with the sale of the Units under the Memorandum, the
Company has agreed to issue to three accredited investors finder fees in the
form of warrants to acquire an aggregate of up to 166,667 shares of the
Company's Common Stock (up to 195,241 shares if the Conditional Subscriptions
are approved), at a purchase price of $8.00 per share at any time prior to
October 31, 1999. Statements related to the foregoing offering are neither
offers to sell nor solicitations of offers to buy.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Listed below are the exhibits furnished in accordance with
Item 601 of Regulation S-K.
3.1.3 Certificate of Designation, Number, Voting Powers,
Preferences and Rights of the Company's Series B
Convertible Preferred Stock
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
COVOL TECHNOLOGIES, INC.
(Registrant)
/s/ Stanley M. Kimball
-------------------------
Date: October 27, 1997 By: Stanley M. Kimball
Title: Chief Financial Officer
Certificate of Designation, Number, Voting Powers,
Preferences and Rights of the Series of the Preferred Stock
of
COVOL TECHNOLOGIES, INC.
To be Designated
Series B Convertible Preferred Stock
Covol Technologies, Inc., a Delaware corporation (the "Corporation"),
pursuant to authority conferred on the Board of Directors of the Corporation by
its Certificate of Incorporation, as amended, and in accordance with the
provisions of Section 151 of the General Corporation Law of Delaware ("DGCL"),
certifies that the Board of Directors of the Corporation, at a meeting duly
called and held pursuant to Section 141 of the DGCL, duly adopted the following
resolution providing for the establishment and issuance of a series of Preferred
Stock to be designated as "Series B Convertible Preferred Stock" and to consist
of 312,882 shares as follows:
RESOLVED, that, pursuant to the authority expressly granted and vested
in the Board of Directors of this Corporation in accordance with the provisions
of its Certificate of Incorporation, as amended, a series of Preferred Stock of
the Corporation be and hereby is established, consisting of 312,882 shares, to
be designated as "Series B Convertible Preferred Stock" (the "Series B
Preferred"); the Board of Directors be and hereby is authorized to issue such
shares of Series B Preferred Stock from time to time and for such consideration
and on such terms as the Board of Directors shall determine; and subject to the
limitations provided by law and by the Certificate of Incorporation, as amended,
the powers, designations, preferences and relative, participating, option or
other special rights of, and the qualifications, limitations or restrictions
upon, the Series B Preferred Stock shall be as follows:
Section 1. Definitions.
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"Common Stock" means, collectively, the Corporation's common stock, par
value $.001 per share.
"Conversion Stock" means shares of the Corporation's Common Stock;
provided that if there is a change such that the securities issuable upon
conversion of the Series B Preferred are issued by an entity other than the
Corporation or there is a change in the class of securities so issuable, then
the term "Conversion Stock" shall mean one share of the security issuable upon
conversion of the Series B Preferred if such security is issuable in shares, or
shall mean the smallest unit in which such security is issuable if such security
is not issuable in shares.
"Junior Securities" means any of the Corporation's Common Stock.
"Liquidation Value" of any Share as defined in Section 2A hereof, as of
any particular date shall be equal to $7.00.
"Market Price" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the
Corporation and the holders of a majority of the Series B Preferred. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an independent appraiser experienced in
valuing securities jointly selected by the Corporation and the holders of a
majority of the Series B Preferred. The determination of such appraiser shall be
final and binding upon the parties, and the Corporation shall pay the fees and
expenses of such appraiser.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Redemption Date" as to any Share means the date specified in the
notice of any redemption at the Corporation's option or the applicable date
specified herein in the case of any other redemption; provided that no such date
shall be a Redemption Date unless the Liquidation Value of such Share (plus all
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accrued and unpaid dividends thereon) is actually paid in full on such date, and
if not so paid in full, the Redemption Date shall be the date on which such
amount is fully paid.
Section 2. Dividends.
2A. General Obligation. When and as declared by the Corporation's Board
of Directors and to the extent permitted under the General Corporation Law of
Delaware, the Corporation shall pay preferential dividends to the holders of the
Series B Preferred Stock as provided in this Section. Except as otherwise
provided herein, dividends on each share of the Series B Preferred (a "Share")
shall accrue on a daily basis at the rate of 7.29% per annum of the sum of the
Liquidation Value thereof, from and including the date of issuance of such Share
to and including the date on which the Liquidation Value of such Share is paid
or the date on which such Share is converted into shares of Conversion Stock
hereunder; provided, however, that no compounding of such dividends shall be
authorized thereon; provided, also, that on March 18, 1998, the dividend rate of
accrual will be modified one time to equal the rate for two-year treasury bonds
as published in the Wall Street Journal on March 17, 1998 plus 1 1/2%. Such
dividends shall accrue whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends. Such dividends shall be cumulative such that all
accrued and unpaid dividends shall be fully paid or declared with funds
irrevocably set apart for payment before any dividend, distribution or payment
may be made with respect to any Junior Securities. The date on which the
Corporation initially issues any Share shall be deemed to be its "date of
issuance" regardless of the number of times transfer of such Share is made on
the stock records maintained by or for the Corporation and regardless of the
number of certificates which may be issued to evidence such Share.
2B. Dividend Reference Date. To the extent not paid semi-annually on
April 1 and October 1 of each year, commencing on the first semi-annual date
following the date of issuance, all dividends which have accrued on each Share
outstanding during the six month period (or other period in the case of the
initial Dividend Reference Date) ending upon each such Dividend Reference Date
shall be accumulated and shall remain accumulated dividends with respect to such
Share until paid.
2C. Distribution of Partial Dividend Payments. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series B Preferred, such payment
shall be distributed ratably among the holders thereof based upon the number of
Shares held by each such holder.
2D. Payment of Stock Dividends. In the sole discretion of the
Corporation, any dividends accruing on Shares of Series B Preferred may be paid
in lieu of cash dividends by the issuance of additional Shares of Series B
Preferred (including fractional Shares) having an aggregate Liquidation Value at
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the time of such payment equal to the amount of the dividend to be paid;
provided that if the Corporation pays less than the total amount of dividends
then accrued on the Series B Preferred in the form of additional Shares, such
payment in Shares shall be made pro rata to the holders of Series B Preferred
based upon the aggregate accrued but unpaid dividends on the Shares of Series B
Preferred held by each such holder.
Section 3. Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation,
each holder of Series B Preferred shall be entitled to be paid, before any
distribution or payment is made upon any Junior Securities, an amount in cash
equal to the aggregate Liquidation Value (plus all accrued and unpaid dividends)
of all Shares held by such holder, and the holders of Series B Preferred shall
not be entitled to any further payment. If upon any such liquidation,
dissolution or winding up of the Corporation, the Corporation's assets to be
distributed among the holders of the Series B Preferred are insufficient to
permit payment to such holders of the aggregate amount which they are entitled
to be paid, then the entire assets to be distributed shall be distributed
ratably among such holders based upon the aggregate Liquidation Value (plus all
accrued and unpaid dividends) of the Series B Preferred held by each such
holder. Prior to the liquidation, dissolution or winding up of the Corporation,
the Corporation shall declare for payment all accrued and unpaid dividends with
respect to the Series B Preferred. The Corporation shall mail written notice of
such liquidation, dissolution or winding up, not less than 60 days prior to the
payment date stated therein, to each record holder of Series B Preferred.
Neither the consolidation or merger of the Corporation into or with any other
entity or entities, nor the sale or transfer by the Corporation of less than
substantially all of its assets, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section.
Section 4. Redemption.
4A. Optional Redemptions. The Corporation may at any time redeem all or
any portion of Series B Preferred then outstanding. On any such redemption, the
Corporation shall pay a price per Share equal to the Liquidation Value thereof
plus all accrued and unpaid dividends thereon.
4B. Redemption Payment. For each Share which is to be redeemed, the
Corporation shall be obligated on the Redemption Date to pay to the holder
thereof (upon surrender by such holder at the Corporation's principal office of
the certificate representing such Share) an amount in immediately available
funds equal to the Liquidation Value of such Share (plus all accrued and unpaid
dividends thereon). If the funds of the Corporation legally available for
redemption of Shares on any Redemption Date are insufficient to redeem the total
number of Shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of Shares ratably
among the holders of the Shares to be redeemed based upon the aggregate
Liquidation Value of such Shares (plus all accrued and unpaid dividends thereon)
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held by each such holder. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of Shares, such funds shall
immediately be used to redeem the balance of the Shares which the Corporation
has become obligated to redeem on any Redemption Date but which it has not
redeemed.
4C. Notice of Redemption. The Corporation shall mail written notice of
each redemption of any Series B Preferred to each record holder thereof not more
than 60 nor less than 30 days prior to the date on which such redemption is to
be made. Irrespective of mailing any notice of redemption which relates to a
redemption at the Corporation's option, the Corporation shall not become
obligated to redeem the total number of Shares specified in such notice at the
time of redemption specified therein if such notice contains conditions
precedent which must be satisfied prior to redemption. In case fewer than the
total number of Shares represented by any certificate are redeemed, a new
certificate representing the number of unredeemed Shares shall be issued to the
holder thereof without cost to such holder within ten (10) business days after
surrender of the certificate representing the redeemed Shares.
4D. Determination of the Number of Each Holder's Shares to be Redeemed.
Except as otherwise provided herein, the number of Shares of Series B Preferred
to be redeemed from each holder thereof in redemptions hereunder shall be the
number of Shares determined by multiplying the total number of Shares to be
redeemed times a fraction, the numerator of which shall be the total number of
Shares then held by such holder and the denominator of which shall be the total
number of Shares then outstanding.
4E. Dividends After Redemption Date. No Share is entitled to any
dividends accruing after the date on which the Liquidation Value of such Share
(plus all accrued and unpaid dividends thereon) is paid to the holder thereof.
On such date all rights of the holder of such Share shall cease, and such Share
shall not be deemed to be outstanding.
4F. Redeemed or Otherwise Acquired Shares. Any Shares which are
redeemed or otherwise acquired by the Corporation shall be cancelled, and shall
be deemed to be undesignated authorized and unissued preferred shares.
4G. Other Redemptions or Acquisitions. The Corporation shall not redeem
or otherwise acquire any Series B Preferred, except as expressly authorized
herein or pursuant to a purchase offer made pro-rata to all holders of Series B
Preferred on the basis of the number of Shares owned by each such holder.
4H. Accrued Dividends Must be Paid Prior to Any Redemption. The
Corporation may not redeem any Series B Preferred, unless all dividends accrued
on the outstanding Series B Preferred through the immediately preceding Dividend
Reference Date have been paid in full.
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Section 5. Voting Rights. The Series B Preferred shall have
no voting rights unless specifically authorized by
the DGCL.
Section 6. Conversion.
6A. Conversion Procedure.
(i)At any time and from time to time, any holder of Series B
Preferred may convert all or any portion of the Series B Preferred (including
any fraction of a Share) held by such holder into a number of shares of
Conversion Stock computed by multiplying the number of Shares to be converted by
$7.00 and dividing the result by the Conversion Price then in effect.
(ii)Each conversion of Series B Preferred shall be deemed to
have been effected as of the close of business on the date on which the
certificate or certificates representing the Series B Preferred to be converted
have been surrendered at the principal office of the Corporation. At such time
as such conversion has been effected, the rights of the holder of such Series B
Preferred as such holder shall cease and the Person or Persons in whose name or
names any certificate or certificates for shares of Conversion Stock are to be
issued upon such conversion shall be deemed to have become the holder or holders
of record of the shares of Conversion Stock represented thereby.
(iii)The conversion rights of any Share subject to redemption
hereunder shall terminate on the Redemption Date for such Share unless the
Corporation has failed to pay to the holder thereof the Liquidation Value
thereof (plus all accrued and unpaid dividends thereon).
(iv)As soon as possible after a conversion has been effected
(but in any event within ten (10) business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
(b) payment in an amount equal to all accrued
dividends with respect to each Share converted, which have not been
paid prior thereto, plus the amount payable under subparagraph (ix)
below with respect to such conversion; provided, however, that such
accrued dividends may, at the Corporation's option, be converted into
an additional number of shares of Conversion Stock by dividing the
amount of unpaid dividends by the Conversion Price; and
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(c) a certificate representing any Shares of Series B
Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
(v)If the Corporation is not permitted under applicable law to
pay any portion of the accrued dividends on the Series B Preferred being
converted, the Corporation may (i) pay such dividends to the converting holder
as soon thereafter as funds of the Corporation are legally available for such
payment or (ii) such portion of the unpaid dividends may, at the Corporation's
option, be converted into an additional number of shares of Conversion Stock
determined by dividing the amount of the unpaid dividends to be applied for such
purpose, by the Conversion Price.
(vi)The issuance of certificates for shares of Conversion
Stock upon conversion of Series B Preferred shall be made with a nominal
transfer charge to the holders of such Series B Preferred for any issuance tax
in respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Conversion Stock. Upon
conversion of each Share of Series B Preferred, the Corporation shall take all
such actions as are necessary in order to insure that the Conversion Stock
issuable with respect to such conversion shall be validly issued, fully paid and
nonassessable.
(vii)The Corporation shall assist and cooperate with any
holder of Shares required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of Shares
hereunder (including, without limitation, making any filings required to be made
by the Corporation).
(viii)If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series B Preferred, the Corporation, in lieu of delivering
the fractional share therefor, shall pay an amount to the holder thereof equal
to the Market Price of such fractional interest as of the date of conversion.
(ix)The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series B Preferred, such
number of shares of Conversion Stock issuable upon the conversion of all
outstanding Series B Preferred. All shares of Conversion Stock which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
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(x)If the shares of Conversion Stock issuable by reason of
such conversion of Series B Preferred are convertible into or exchangeable for
any other stock or securities of the Corporation, the Corporation shall, at the
converting holder's option, upon surrender of the Shares to be converted by such
holder as provided above together with any notice, statement or payment required
to effect such conversion or exchange of Conversion Stock, deliver to such
holder or as otherwise specified by such holder a certificate or certificates
representing the stock or securities into which the shares of Conversion Stock
issuable by reason of such conversion are so convertible or exchangeable,
registered in such name or names and in such denomination or denominations as
such holder has specified.
6B. Conversion Price. The Conversion Price shall be $7.00.
6C. Limitation on Conversion. Notwithstanding any other provisions
hereof, no holder of Shares shall be entitled to exercise the conversion rights
under this Section to acquire any share or shares of Common Stock if, as a
result of such conversion, such holder and its affiliates, directly or
indirectly, would own, control or have power to vote a greater quantity of
securities of any kind issued by the Corporation than such holder and its
affiliates would be permitted to own, control or have power to vote under any
law or under any regulation, rules or other requirement of any governmental
authority at any time applicable to such holder and its affiliates. For purposes
of this paragraph, a written statement of the holder involved, to the effect
that such holder is legally entitled to exercise its conversion rights under
this Section to acquire shares of Common Stock and that such holder shall not
violate the prohibitions set forth in the preceding sentence, shall be
sufficient evidence of the legality thereof and shall obligate the Corporation
to deliver certificates representing the shares of Common Stock so purchased in
accordance with the other provisions hereof.
6D. Corporation's Option to Force Conversion. At any time after
September 30, 1998, the Corporation shall have the right to require any holder
of the Series B Preferred to convert such Shares (including accrued dividends
thereon) within thirty (30) days after written notice is given to such holder at
the Conversion Price stated herein.
Section 7. Registration of Transfer.
The Corporation shall keep at its principal office a register for the
registration of Series B Preferred. Subject to compliance with applicable
securities laws, upon the surrender of any certificate representing Series B
Preferred at such place, the Corporation shall, at the request of the record
holder of such certificate, execute and deliver (at the holder's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Shares represented by the surrendered certificate. Each such new
certificate shall be registered in such name and shall represent such number of
Shares as is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Series B Preferred represented by such new certificate from
the date to which dividends have been fully paid on such Series B Preferred
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represented by the surrendered certificate. All transfers of Shares shall be
subject to any restrictions imposed by applicable federal and state securities
laws.
Section 8. Replacement.
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing Shares
of any of the Series B Preferred, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation, or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at the holder's expense) execute and deliver
in lieu of such certificate a new certificate of like kind representing the
number of Shares of such class represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate, and dividends shall accrue on the Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.
Section 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or effective with
respect to any provision of Sections 1 to 10 hereof without the prior written
consent of the holders of at least 51% of the Series B Preferred outstanding at
the time such action is taken; provided that no such action shall change (a) the
rate at which or the manner in which dividends on the Series B Preferred accrue
or the times at which such dividends become payable or the amount payable on
redemption of the Series B Preferred or the times at which redemption of Series
B Preferred is to occur, without the prior written consent of the holders of at
least 80% of the Series B Preferred then outstanding, (b) the Conversion Price
of the Series B Preferred or the number of shares or class of stock into which
the Series B Preferred is convertible, without the prior written consent of the
holder of at least 80% of the Series B Preferred then outstanding or (c) the
percentage required to approve any change described in clauses (a) and (b)
above, without the prior written consent of the holders of at least 80% of the
Series B Preferred then outstanding.
Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices and
(ii) to any stockholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).
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IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Designation to be signed by its President
and attested by its Secretary this ____ day of September, 1997
- -------------------------------
Brent M. Cook
President
Covol Technologies, Inc.
Attest ---------------------------
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