ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
AMERICAN QUANTUM CYCLES, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of American Quantum Cycles, Inc.
("Corporation"), a corporation organized and existing under and by virtue of the
Business Corporation Act of the State of Florida, and assigned Document No.
J05073, does hereby certify that the following resolutions were adopted by the
Board of Directors of the Company pursuant to the authority of the Board of
Directors as required by Section 602.0602 of the Florida Business Corporation
Act.
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Company (the "Board of Directors" or the "Board") in
accordance with the provisions of its Articles of Incorporation and Bylaws, each
as amended through the date hereof, the Board of Directors hereby authorizes a
series of the Company's previously authorized Preferred Stock, par value $.001
per share (the "Preferred Stock"), and hereby states the designation and number
of shares, and fixes the relative rights, preferences, privileges, powers and
restrictions thereof as follows:
ARTICLE I
DESIGNATION AND STATED AMOUNT; DIVIDENDS
The designation of this series, which consists of 500,000 shares of
Preferred Stock, is the Series C Convertible Preferred Stock (the "Series C
Preferred Stock") and the stated value shall be $42.16 per share (the "Stated
Value"). The Series C Preferred Stock will bear no dividends, and the holders of
the Series C Preferred Stock will not be entitled to receive dividends on the
Series C Preferred Stock.
JAMES M. SCHNEIDER, ESQ., FLA BAR # 214338
Atlas Pearlman, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
Phone No.: (954) 763-1200
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ARTICLE II
DISTRIBUTIONS UPON LIQUIDATION,
DISSOLUTION OR WINDING UP
In the event of any voluntary or involuntary liquidation, dissolution
or other winding up of the affairs of the Company, subject to the rights of
Series A and Series B Convertible Preferred Stock, but before any distribution
or payment shall be made to the holders of Junior Securities (as hereinafter
defined), the holders of the Series C Preferred Stock shall be entitled to be
paid the Stated Value per share of all outstanding shares of Series C Preferred
Stock as of the date of such liquidation or dissolution or such other winding up
of the affairs of the Company either in cash or in property taken at its fair
value as determined by the Board of Directors, or both, at the election of the
Board of Directors. If such payment shall have been made in full to the holders
of the Series C Preferred Stock, the remaining assets and funds of the Company
shall be distributed among the holders of Junior Securities, according to their
respective shares and priorities. If, upon any such liquidation, dissolution or
other winding up of the affairs of the Company, the net assets of the Company
distributable among the holders of all outstanding shares of the Series C
Preferred Stock shall be insufficient to permit the payment in full to such
holders of the preferential amounts to which they are entitled, then the entire
net assets of the Company shall be distributed among the holders of the Series C
Preferred Stock ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
ARTICLE III
CONVERSION RIGHTS
Each outstanding share of Series C Preferred Stock shall automatically
be converted, without any further act of the Company or any of its shareholders,
into fully paid and non-assessable shares of Common Stock of the Company
immediately ipso facto upon the filing by the Company of its Articles of
Amendment to its Articles of Incorporation increasing the number of authorized
Common Stock to the minimum amount necessary and sufficient to permit the full
conversion of the Series C Preferred Stock. Immediately upon the filing of this
Amendment, the Company shall proceed as expeditiously as possible to perform all
acts necessary to effect Articles of Amendment to its Articles of Incorporation
in order to increase its authorized Common Stock in order to permit this
conversion of the Series C Preferred Stock. The Company will effectuate the
Articles of Amendment pursuant to general authorization by the shareholders of
the Company at a duly called meeting of the shareholders. The holders of the
Series C Preferred Stock, upon conversion, will receive 38.39 shares of Common
Stock of the Company for each share of Series C Preferred Stock of the Company.
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No fractional share or scrip representing a fractional share will be
issued upon conversion of the Series C Preferred Stock, which shall be rounded
to the nearest whole share of Common Stock. In the event of any
reclassification, merger, consolidation or change of shares of the Series C
Preferred Stock and/or the Common Stock of the Company, the Company shall make
adjustments to the conversion ratio which shall be nearly as equivalent to that
stated above as may be practical.
Upon the filing of Articles of Amendment increasing the number of
authorized Common Stock to the minimum sufficient to effect the conversion
described in paragraph one of this Article III, the outstanding shares of Series
C Preferred Stock shall be converted automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; provided that the
Company shall not be obligated to issue to any such holder certificates
evidencing the shares of Common Stock issuable upon such conversion unless
certificates evidencing the ownership by such holder of shares of Series C
Preferred Stock are either delivered to the Company or any transfer agent of the
Company. Conversion shall be deemed to have been effected on the date of filing
of the Articles of Amendment and such date is referred to herein as the
"Conversion Date." As promptly as practicable thereafter (and after surrender of
the certificate or certificates representing shares of Series C Preferred Stock
to the transfer agent of the Company), the Company shall issue and deliver to or
upon the written order of such holder a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled. The
person in whose name the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a holder of record of such Common Stock on
the Conversion Date. The issuance of certificate for shares of Common Stock upon
conversion shall be made without charge to the holders of such Series C
Preferred Stock for any issuance in respect of the shares of Common Stock or
other costs incurred by the Company in connection with such conversion and the
related issuances of shares of Common Stock.
The number of shares of Common Stock subject to conversion of each
share of Series C Preferred Stock shall be subject to proportionate adjustments
in certain events, including (i) the issuances of capital stock as a dividend or
distribution on Common Stock, and (ii) subdivisions, combinations, forward and
reverse stock splits and reclassifications of the Common Stock. The holders of
Series C Preferred Stock shall receive written notice at least ten (10) days
prior to the fixing of a record date for the issuance to all holders of Common
Stock of rights or warrants entitling them (for a period expiring within 30 days
of such record date) to subscribe for Common Stock, and (ii) the fixing of a
record date for the distribution to all holders of Common Stock of evidence of
indebtedness or assets (other than cash dividends) of the Company or
subscription rights or warrants (other than those referred to above).
Immediately upon any adjustment in the number of shares subject to conversion,
the Company shall give written notice of such adjustment to all holders of
Series C Preferred Stock setting forth in reasonable detail the calculation of
such adjustment.
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The Company shall not close its books against the transfer of Series C
Preferred or of Common Stock issued or issuable upon conversion of Series C
Preferred in any manner which interferes with the timely conversion of Series C
Preferred.
Following the amendment to its Articles of Incorporation to increase
its authorized Common Stock to permit conversion of the Series C Preferred
Stock, the Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the conversion of the Series C Preferred, such number of shares of
Common Stock as are issuable upon the conversion of all outstanding Series C
Preferred.
All shares of Common Stock which are so issuable shall, when issued be
duly and validly issued, outstanding, fully paid and nonassessable and free from
all taxes, liens and charges.
ARTICLE IV
VOTING RIGHTS
The holders of Series C Preferred Stock will not be entitled to vote on
matters submitted to the shareholders of the Company, except as required by the
Florida Business Corporation Act.
To the extent that under the Florida Business Corporation Act the vote
of the holders of the Series C Preferred Stock, voting separately as a class or
series, as applicable, is required to authorize a given action of the Company,
the affirmative vote or consent of the holders of at least a majority of the
then outstanding shares of the Series C Preferred Stock represented at a duly
held meeting at which a quorum is present or by written consent of the holders
of at least a majority of the then outstanding shares of Series C Preferred
Stock (except as otherwise may be required under the Florida Business
Corporation Act) shall constitute the approval of such action by the class.
ARTICLE V
PROTECTION PROVISIONS
So long as any shares of Series C Preferred Stock are outstanding, the
Company shall not, without first obtaining the approval of a majority in
interest of the Holders of the then outstanding shares of Series C Preferred
Stock:
1. alter or change the rights, preferences or privileges of the
Series C Preferred Stock or issue more than 500,000 shares of
Series C Preferred Stock;
2. create any new class or series of capital stock having a
preference over the Series C Preferred Stock as to
distribution of assets upon liquidation, dissolution or
winding up of the Company;
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3. increase the authorized number of shares of Series C Preferred
Stock; or
4. redeem, or declare or pay any cash dividend or distribution
on, any junior securities.
ARTICLE VI
RANK
The Series C Preferred Stock shall rank (i) prior to the Company's
Common Stock; (ii) prior to any class or series of capital stock of the Company
hereafter created that, by its terms, ranks junior to the Series C Preferred
Stock ("Junior Securities"); (iii) junior to the Company's Series A and Series B
Convertible Preferred Stock; (iv) junior to any class or series of capital stock
of the Company hereafter created with the consent of the holders of Series C
Preferred Stock specifically ranking, by its terms, senior to the Series C
Preferred Stock; and (v) pari passu with any class or series of capital stock of
the Company hereafter created specifically ranking by its terms on parity with
the Series C Preferred Stock, in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary.
IN WITNESS WHEREOF, the Company has caused this Amendment of
Designations, Preferences and Rights to be executed by its duly authorized
officer.
AMERICAN QUANTUM CYCLES, INC.
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Richard Hagen, President
DATED: September 25, 2000
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