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AMENDED CERTIFICATE OF DESIGNATION
Andrew Hromyk certifies that he is the President and Secretary of Paramount
Services Corp., a Delaware corporation (hereinafter referred to as the
"Company") and that, pursuant to the Company's Certificate of Incorporation, as
amended, and Section 151 of the General Business Corporation Law , the Board of
Directors of the Company adopted the following resolutions on February 3, 2000.
The Certificate of Designation filed with the Secretary of State for the State
of Delaware January 27, 2000 is hereby amended in its entirety and the following
is adopted in its place:
Creation of Series A Convertible Preferred Stock
1. There is hereby created a series of preferred stock consisting of 500 shares
and designated as the Series A Convertible Preferred Stock ( "Preferred Stock"),
having the voting powers, preferences, relative, participating, limitations,
qualifications, optional and other special rights and the qualifications,
limitations and restrictions thereof that are set forth below.
Conversion Provisions
2. The holders of Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
Conversion
(a) Right to Convert. Subject to paragraph (m) hereof, from and after the
forty-fifth (45th) calendar day following the day on which the Company
receives payment in full for Preferred Stock from and issues Preferred
Stock to a particular holder of Preferred Stock (the "Issuance 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
Company ("Common Stock") as is calculated by the Conversion Rate (as
hereinafter defined). The Conversion Rate, subject to the exception
defined in paragraph 2(b) hereof, shall be that number of shares of
Common Stock equal to $1,000 divided by the lesser of: (i) seventy five
per cent (75%) of the average Market Price (as hereinafter defined) of
the shares of Common Stock for the ten trading days immediately prior
to the Conversion Date (as hereinafter defined); or (ii) $2.00.
(b) Failure to Register Exemption. In the event that a registration statement
in respect of the Common Stock to be issued upon the conversion of the
Preferred Stock has not been filed with and declared effective by the
Securities and Exchange Commission on or before the date which is twelve
months following the Issuance Date (the "Anniversary Date"), the number of
shares of Common Stock issued to a particular holder will be calculated by
the Failure to Register Conversion Rate. The Failure to Register Conversion
Rate shall be that number of shares of Common Stock equal to $1,000 divided
by the lesser of: (i) fifty per cent (50%) of the Market Price of the
shares of Common Stock on the day immediately preceding the Anniversary
Date; or (ii) $2.00.
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(c) Market Price. Market Price for a particular date shall be the closing
bid 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 closing bid price in the over-the-counter
market if other than NASDAQ.
(d) 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 number of shares 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
conversions.
(e) 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 Company and the Company's Transfer
Agent, Interwest Transfer Co. Inc. (the "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 2(h) hereof, the Notice of Conversion shall be
effective and in full force and effect for a particular date if
delivered to the Company 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 at 1981 East Murray
Holladay Road, Suite 100, PO Box 17136, Salt Lake City, Utah 84117
Telephone 801-272-9294 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 Company shall, within two (2) business days thereafter, instruct
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 advise the Company to
deliver a certificate representing the remaining number of shares of
Preferred Stock not converted.
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(f) Absolute Obligation to issue Common Stock. Upon receipt of a Notice of
Conversion, the Company 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.
(g) 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.
(h) 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 by the Securities and Exchange Commission on or before the
Anniversary Date, all of the Preferred Stock outstanding on Anniversary
Date shall be deemed to convert into shares of Common Stock as is
calculated by the Conversion Rate as defined in paragraph 2(a) hereof,
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 Company'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 Company's then
issued and outstanding Common Stock. The onus for notifying the Company of
the application of this qualification shall be upon the particular holder.
Adjustments to Conversion Rate
(i) Reclassification, Exchange 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 changes.
(j) Reorganizations, Mergers, Consolidations or Sale of Assets. If at any time
there shall be a capital reorganization of the Company's common stock
(other than a subdivision, combination, reclassification or exchange of
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shares provided for elsewhere in this Section 2) or merger of the Company
into another corporation, or the sale of the Company'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 Company, 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
purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalently as may be practicable.
(k) No Impairment. The Company will not, by amendment of its Articles 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 Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2 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.
(l) 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 2(i) or (j) hereof, the Company 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 Company 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
(m) Limitation on Conversion. Notwithstanding anything to the contrary set
forth herein the Preferred Stock held by a particular Purchaser shall
not convert if, upon giving effect to such conversion, the aggregate
number of shares of Common Stock beneficially owned by that Purchaser
and its affiliates exceed 9.9% of the outstanding shares of the Common
Stock following such conversion.
Liquidation Provisions
3. In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, holders of Preferred Stock shall be entitled
to receive an amount equal to $1,000.00 per share, plus any accrued and unpaid
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dividends. 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 authorized and issued, if any, the remaining assets of
the Company available for distribution to shareholders shall be distributed
ratably to the holders of the Common Stock. In the event the assets of the
Company 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 Company's Preferred Stock, the entire amount of assets of the Company
available for distribution to shareholders shall be paid up to their respective
full liquidation amounts first to the holders of 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 Company with or into any other
corporation, or any other sale of all or substantially all of the assets of the
Company, shall not be deemed to be a liquidation, dissolution or winding up of
the Company within the meaning of this Section 3, 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.
Dividend Provisions
4. The holders of shares of Preferred Stock shall not be entitled to receive
any dividends.
Reservation of Stock to be issued upon Conversion
5. 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
effecting the conversion of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient, based on the
Conversion Rate then in effect, to effect the conversion of all then outstanding
shares of the 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 Preferred Stock, then, in addition to all
rights, claims and damages to which the holders of the Preferred Stock shall be
entitled to receive at law or in equity as a result of such failure by the
Company to fulfill its obligations to the holders hereunder, the Company will
take any and all corporate or other action as may, in the opinion of its
counsel, be helpful, appropriate or necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
Notices
6. In the event of the establishment by the Company 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 Company shall mail to each
holder of 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 distribution and the amount and character of such
distribution.
7. 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 Company or to such
other address of such holder or its representative as such holder may direct.
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Voting Provisions
8. Except as otherwise expressly provided or required by law, the Preferred
Stock shall have no voting rights.
IN WITNESS WHEREOF, the Company has caused this Amended Certificate of
Designation of Series A Convertible Preferred Stock to be duly executed by its
President and attested to by its Secretary the 3rd day of February, 2000, who,
by signing their names hereto, acknowledge that this Certificate of Designation
is the act of the Company and state to the best of their knowledge, information
and belief, under the penalties of perjury, that the above matters and facts are
true in all material respects.
PARAMOUNT SERVICES CORP.
Andrew Hromyk, President
Andrew Hromyk, Secretary
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EXHIBIT A
CONVERSION CERTIFICATE
PARAMOUNT SERVICES CORP.
Series A Convertible Preferred Stock
The undersigned holder (the "Holder") is surrendering to Paramount Services
Corp., a Delaware corporation (the "Company"), one or more certificates
representing shares of Series A Convertible Preferred Stock of the Company (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
Company (the "Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock was issued by the Company
pursuant to the exemption for registration under the United States Securities
Act of 1933, as amended (the "Securities Act"), provided by Regulation D
promulgated thereunder.
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
