CERTIFICATE OF DESIGNATIONS
OF SERIES B PREFERRED STOCK OF
FORESTINDUSTRY.COM, INC.
Joe Perraton hereby certifies that:
1. He is the President and Secretary of forestindustry.com, Inc., a
Delaware corporation (the "Corporation").
2. The number of shares of Preferred Stock authorized by the Corporation's
Certificate of Incorporation is Five Million (5,000,000) shares. Seven Hundred
Fifty (750) of the preferred shares have been issued and are outstanding.
3. The Corporation's board of directors (the "Board") wishes to establish a
new series of Preferred Stock to be designated "Series B Preferred Stock", and
the initial number of shares constituting such series shall be One Thousand Two
Hundred (1,200), none of which have been issued or are outstanding.
4. Pursuant to the authority contained in its Certificate of Incorporation,
as amended, and in accordance with the provisions of Section 151(g) of the
General Corporation Law of the State of Delaware, the Board has duly adopted the
following resolutions:
WHEREAS, Article IV of the Certificate of Incorporation of the Corporation
presently authorizes the issuance of Five Million (5,000,000) shares of
Preferred Stock, $0.0001 par value, in one or more series upon terms and
conditions that are to be designated by the Board; and
WHEREAS, the Board wishes to designate One Thousand Two Hundred (1,200)
shares of the Corporation's Preferred Stock as "Series B Preferred Stock," and
WHEREAS, the terms, conditions, voting rights, preferences, limitations and
special rights of the Series B Preferred Stock in their entirety are as provided
herein.
NOW, THEREFORE, BE IT RESOLVED, that a series of the class of authorized
Preferred Stock of the Corporation hereinafter designated "Series B Preferred
Stock" is hereby created (hereinafter referred to as the "Preferred Stock"), and
that the designation and amount thereof and the rights, preferences, privileges
and restrictions granted to or imposed upon the Series B Preferred Stock or the
holders thereof are as follows:
A. Designation and Amount. The shares of such series shall be
designated as the "Series B Preferred Stock" and the number of shares
initially constituting such series shall be One Thousand Two Hundred
(1,200), par value $.0001.
B. Dividends. Each holder of a share of the Series B Preferred
Stock shall not be entitled to receive any dividends.
C. Conversion Rights. At the option of the holder and, without
the payment of any additional consideration, each share of Series B
Preferred Stock shall be convertible as follows:
<PAGE>
(1) Conversion Rate. From and after the calendar day
following the day on which the Corporation receives payment in
full for Preferred Stock from and issues Preferred Stock to a
particular holder of Preferred Stock (the "Closing Date"), all
Preferred Stock held by that holder shall be convertible at the
option of the holder into such number of shares of common stock
of the Corporation ("Common Stock") as is calculated by the
Conversion Rate (as hereinafter defined). The Conversion Rate
shall be that number of shares of Common Stock equal to $1,000
divided by seventy per cent (70%) of the average Market Price (as
hereinafter defined) of the shares of Common Stock for the five
(5) trading days immediately prior to the Conversion Date (as
hereinafter defined), provided that in no event shall: (i) less
than 250 shares of Common Stock be issued upon conversion of each
one share of Preferred Stock; and (ii) more than 5,000 shares of
Common Stock be issued upon conversion of each one share of
Preferred Stock.
(2) Market Price. Market Price for a particular date shall
be the average closing price of the shares of Common Stock on
such date, as reported by the National Association of Securities
Dealers Automated Quotation System (`NASDAQ"), or the average
closing price in the over-the-counter market if other than
NASDAQ.
(3) No Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of the Preferred Stock, and
in lieu thereof the number of shares of Common Stock to be issued
for each share of Preferred Stock converted shall be rounded down
to the nearest whole share of Common Stock. Such number of whole
shares of Common Stock to be issued upon the conversion of one
share of Preferred Stock shall be multiplied by the number of
shares of Preferred Stock submitted for conversion pursuant to
the Notice of Conversion (defined below) to determine the total
number of shares of Common Stock to be issued in connection with
any one particular conversion.
(4) Method of Conversion. In order to convert Preferred
Stock into shares of Common Stock, a holder of Preferred Stock
shall:
(A) complete, execute and deliver to the Corporation
and the Corporation's Transfer Agent, the conversion
certificate attached hereto as Exhibit A (the "Notice of
Conversion"), and
(B) surrender the certificate or certificates
representing the Preferred Stock being converted (the
"Converted Certificate") to the Transfer Agent.
Subject to paragraph C(7) hereof, the Notice of Conversion shall
be effective and in full force and effect for a particular date if
delivered to the Corporation and the Transfer Agent on that particular
date prior to 5:00 pm, pacific time, by facsimile transmission or
otherwise, provided that particular date is a business day, and
provided that the original Notice of Conversion and the Converted
Certificate are delivered to and received by the Transfer Agent within
three (3) business days thereafter and that particular date shall be
referred to herein as the "Conversion Date." The person or persons
entitled to receive the shares of Common Stock to be issued upon
conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of the Conversion Date. If
the original Notice of Conversion and the Converted Certificate are
not delivered to and received by the Transfer Agent within three (3)
business days following the Conversion Date, the Notice of Conversion
shall become null and void as if it were never given and the
Corporation shall, within two (2) business days thereafter, instruct
<PAGE>
the Transfer Agent to return to the holder by overnight courier any
Converted Certificate that may have been submitted in connection with
any such conversion. In the event that any Converted Certificate
submitted represents a number of shares of Preferred Stock that is
greater than the number of such shares that is being converted
pursuant to the Notice of Conversion delivered in connection
therewith, the Transfer Agent shall deliver a certificate representing
the remaining number of shares of Preferred Stock not converted.
(5) Absolute Obligation to issue Common Stock. Upon receipt of a
Notice of Conversion, the Corporation shall absolutely and
unconditionally be obligated to cause a certificate or certificates
representing the number of shares of Common Stock to which a
converting holder of Preferred Stock shall be entitled as provided
herein, which shares shall constitute fully paid and non-assessable
shares of Common Stock and shall be issued to, delivered by overnight
courier to, and received by such holder by the sixth (6th) business
day following the Conversion Date. Such delivery shall be made at such
address as such holder may designate therefor in its Notice of
Conversion or in its written instructions submitted together
therewith.
(6) Minimum Conversion. No less than 10 shares of Preferred Stock
may be converted at any one time by a particular holder, unless the
holder then holds less than 10 shares and converts all such shares
held by it at that time.
(7) Deemed Conversion. Notwithstanding any other provision
herein, and provided that a registration statement in respect of the
Common Stock to be issued upon the conversion of the Preferred Stock
has been filed with and declared effective (the "Effective Date") by
the U.S. Securities and Exchange Commission on or before the Effective
Date, all of the Preferred Stock outstanding on the Effective Date
shall be deemed to convert into shares of Common Stock as is
calculated by the Conversion Rate as defined in paragraph C(1) above,
provided that, in the event that this paragraph would result in a
particular holder of Preferred Stock holding, together with the shares
of Common Stock then held by that holder, more than 9.9% of the
Corporation's then issued and outstanding Common Stock, the conversion
deemed hereby shall be postponed until such time as the particular
holder holds such number of shares of Common Stock that, together with
the shares of Common Stock then held by that holder, would constitute
less than 9.9% of the Corporation's then issued and outstanding Common
Stock. The responsibility for notifying the Corporation of the
application of this qualification shall be upon the particular holder.
Adjustments to Conversion Rate
(8) Reclassification, Exchange, Dividend and Substitution. If the
Common Stock to be issued on conversion of the 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, reverse stock split or forward stock split or stock
dividend or otherwise (other than a subdivision or combination of
shares provided for above), the holders of the Preferred Stock shall,
upon its conversion be entitled to receive, in lieu of the Common
Stock which the holders would have become entitled to receive but for
such change, a number of shares of such other class or classes of
stock that would have been subject to receipt by the holders if they
had exercised their rights of conversion of the Preferred Stock
immediately before that change.
(9) Reorganizations, Mergers, Consolidations or Sale of Assets.
If at any time there shall be a capital reorganization of the
Corporation's common stock (other than a subdivision, combination,
<PAGE>
reclassification or exchange of shares provided for elsewhere in this
Section C) or merger of the Corporation into another corporation, or
the sale of the Corporation's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of
such reorganization, merger or sale, lawful provision shall be made so
that the holders of the Preferred Stock receive the number of shares
of stock or other securities or property of the Corporation, or of the
successor corporation resulting from such merger, to which holders of
the Common Stock deliverable upon conversion of the Preferred Stock
would have been entitled on such capital reorganization, merger or
sale if the Preferred Stock had been converted immediately before that
capital reorganization, merger or sale to the end that the provisions
of this paragraph (including adjustment of the Conversion Rate then in
effect and the number of shares issuable upon conversion of the
Preferred Stock) shall be applicable after that event as nearly
equivalently as may be practicable.
(10) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, merger, dissolution, 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 C 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 Preferred Stock
against impairment.
(11) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate for any shares of
Preferred Stock pursuant to paragraphs C(8) or (9) hereof, 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 Preferred Stock effected thereby a
certificate 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 Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Conversion Rate 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 such holder's shares of Preferred Stock.
(12) Reservation of Stock. 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 B Preferred Stock the number of its shares of
Common Stock as shall from time to time be sufficient to effect any
conversion of any or all outstanding shares of the Series B Preferred
Stock. 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 B Preferred Stock, the
Corporation shall 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.
D. Voting Rights. Except as otherwise expressly provided by law or
this Certificate of Determination, the holders of the Series B Preferred
Stock shall have no voting rights.
E. Liquidation Preferences. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, holders of Preferred Stock shall be entitled to receive an
amount equal to $1,000.00 per share. After the full preferential
liquidation amount has been paid to, or determined and set apart for the
Preferred Stock and all other series of preferred stock hereafter
<PAGE>
authorized and issued, if any, the remaining assets of the Corporation
available for distribution to shareholders shall be distributed ratably to
the holders of the Common Stock. In the event the assets of the Corporation
available for distribution to its shareholders are insufficient to pay the
full preferential liquidation amount per share required to be paid to the
holders of Corporation's Preferred Stock, the entire amount of assets of
the Corporation available for distribution to shareholders shall be paid up
to their respective full liquidation amounts first to the holders of the
Series A Preferred Stock, then to the holders of the Series B Preferred
Stock, then to any other series of preferred stock hereafter authorized and
issued, all of which amounts shall be distributed ratably among holders of
each such series of preferred stock, and the Common Stock shall receive
nothing. A reorganization or any other consolidation or merger of the
Corporation with or into any other corporation, or any other sale of all or
substantially all of the assets of the Corporation, shall not be deemed to
be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section E, and the Preferred Stock shall be entitled only
to: (i) the rights provided in any agreement or plan governing the
reorganization or other consolidation, merger or sale of assets
transaction; (ii) the rights contained in the Delaware General Business
Corporation Law; and (iii) the rights contained in other Sections hereof.
F. Notices
(1) In the event of the establishment 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
distribution, the Corporation shall mail to each holder of Preferred
Stock at least twenty (20) calendar 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 distribution and the amount and
character of such distribution.
(2) Any notices required by the provisions hereof to be given to
the holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid and return
receipt requested, and addressed to each holder of record at its
address appearing on the books of the Corporation or to such other
address of such holder or its representative may direct.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations of Series B Preferred Stock to be duly executed by its President
and Chief Executive Officer and attested to by its Secretary and has caused its
corporate seal to be affixed hereto, this 1st day of August, 2000.
FORESTINDUSTRY.COM, INC.
/s/ JOE PERRATON
--------------------------
Joe Perraton, CEO and
President
ATTEST:
By: /s/ JOE PERRATON
--------------------------
Joe Perraton, Secretary
<PAGE>
EXHIBIT A
CONVERSION CERTIFICATE
FORESTINDUSTRY.COM, INC.
Series B Convertible Preferred Stock
The undersigned holder (the "Holder") is surrendering to forestindustry.com,
Inc., a Delaware corporation (the "Corporation"), one or more certificates
representing shares of Series B Preferred Stock of the Corporation (the
"Preferred Stock") in connection with the conversion of all or a portion of the
Preferred Stock into shares of Common Stock, $0.0001 par value per share, of the
Corporation (the "Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock was issued by the
Corporation pursuant to the exemption for registration under the United
States Securities Act of 1933, as amended (the "Securities Act"),
provided by a private placement exemption in compliance with SEC policy
pronouncements.
2. The Holder represents and warrants that all offers and sales of the
Common Stock issued to the Holder upon such conversion of the Preferred
Stock shall be made (a) pursuant to an effective registration statement
under the Securities Act (in which case the Holder represents that a
prospectus has been delivered), (b) in compliance with Rule 144, or (c)
pursuant to some other exemption from registration.
Number of Shares of Preferred Stock Being Converted:
Applicable Conversion Rate:
OR
Applicable Alternative Conversion Rate:
Number of Shares of Common Stock to be Issued:
Conversion Date:
Delivery instructions for certificates of Common Stock and for new
certificates representing any remaining shares of Preferred Stock:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
-------------------------
Name of Holder - Printed
-------------------------
Signature of Holder
