ARTICLES OF AMENDMENT
OF
TELKONET, INC.
a Utah corporation
TELKONET, INC. (the "Corporation"), a Utah corporation, pursuant to the
Revised Utah Business Corporation Act, hereby adopts the following Articles of
Amendment as a revision of the Amended and Restated Articles of Incorporation of
Telkonet, Inc.
ARTICLE I
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The name of the Corporation is Telkonet, Inc.
ARTICLE II
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The duration of the Corporation is perpetual.
ARTICLE III
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These Articles of Amendment amend the provisions of the Amended and
Restated Articles of Incorporation and have been duly adopted by the Board of
Directors of the Corporation. Shareholder approval of these Articles of
Amendment was not required.
ARTICLE IV
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Article III (Capital Stock) of the Amended and Restated Articles of
Incorporation of the Corporation is amended so that it will read in its entirety
as follows:
The Corporation is authorized to issue two classes of shares to be
designated, respectively, "COMMON STOCK" and "PREFERRED STOCK." The total number
of shares of Common Stock authorized to be issued is one hundred million
(100,000,000) and the total number of shares of Preferred Stock authorized to be
issued is fifteen million (15,000,000). All shares of stock authorized hereunder
shall have a par value of 1/10th of one cent ($.001) per share.
The preferences, limitations and relative rights of each class of
shares (to the extent established hereby), and the express grant of authority to
the Board of Directors to amend these Restated Articles of Incorporation to
divide the Preferred Stock into series, to establish and modify the preferences,
limitations and relative rights of each share of Preferred Stock, and to
otherwise impact the capitalization of the Corporation, subject to certain
limitations and procedures and as permitted by Section 602 of the Utah Act, are
as follows:
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A. COMMON STOCK.
1. VOTING RIGHTS. Except as otherwise expressly provided by law
or in this Article III, each outstanding share of Common Stock
shall be entitled to one (1) vote on each matter to be voted
on by the shareholders of the Corporation.
2. LIQUIDATION RIGHTS. Subject to any prior or superior rights of
liquidation as may be conferred upon any shares of Preferred
Stock, and after payment or provision for payment of the debts
and other liabilities of the Corporation, upon any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holders of Common Stock then
outstanding shall be entitled to receive all of the assets and
funds of the Corporation remaining and available for
distribution. Such assets and funds shall be divided among and
paid to the holders of Common Stock, on a pro-rata basis,
according to the number of shares of Common Stock held by
them.
3. DIVIDENDS. Dividends may be paid on the outstanding shares of
Common Stock as and when declared by the Board of Directors,
out of funds legally available therefor; provided, however,
that no dividends shall be made with respect to the Common
Stock until any preferential dividends required to be paid or
set apart for any shares of Preferred Stock have been paid or
set apart.
4. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary
herein or in any amendment hereto or thereto shall be vested
in the Common Stock.
5. PREEMPTIVE RIGHTS. No holder of shares of Common Stock shall
be entitled to any preemptive or preferential rights of
subscription to any shares of any class of capital stock of
the Corporation, whether now or hereafter authorized, or to
any obligations convertible into capital stock of the
Corporation issued or sold. The term "obligations convertible
into capital stock" shall include any notes, bonds or other
evidences of indebtedness to which are attached or with which
are issued warrants or other rights to purchase capital stock
of the Corporation.
B. PREFERRED STOCK.
The Board of Directors, without shareholder action, may amend the
Corporation's Restated Articles, pursuant to the authority granted to the Board
of Directors by Subsection 1002(1)(e) and within the limits set forth in Section
602 of the Utah Act, to do any of the following:
(i) designate and determine, in whole or in part, the
preferences, limitations and relative rights of the Preferred Stock before the
issuance of any shares of Preferred Stock;
(ii) create one or more series of Preferred Stock, fix the number
of shares of each such series (within the total number of authorized shares of
Preferred Stock available for designation as a part of such series), and
designate and determine, in whole or in part, the preferences, limitations and
relative rights of each series of Preferred Stock all before the issuance of any
shares of such series;
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(iii) alter or revoke the preferences, limitations and relative
rights granted to or imposed upon the Preferred Stock (before the issuance of
any shares of Preferred Stock), or upon any wholly-unissued series of Preferred
Stock); or
(iv) increase or decrease the number of shares constituting any
series of Preferred Stock, the number of shares of which was originally fixed by
the Board of Directors, either before or after the issuance of shares of the
series, provided that the number may not be decreased below the number of shares
of such series then outstanding, or increased above the total number of
authorized shares of Preferred Stock available for designation as a part of such
series.
C. SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK. Pursuant to the
powers and authority granted in the Amended and Restated Articles of
Incorporation of the Corporation to the board of directors of the Corporation,
the board of directors does hereby adopt and designate 5,000,000 shares of
Preferred Stock as Series A Redeemable Convertible Preferred Stock of the
Corporation having the powers, designations, preferences and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions on such preferences and/or rights as set forth in
Exhibit A hereto which is incorporated by reference herein and made a part
hereof.
IN WITNESS WHEREOF, these Articles of Amendment of the Articles of
Incorporation have been adopted and executed on October __, 2000.
/s/ L. Peter Larson
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L. Peter Larson, President and
Chief Executive Officer
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<PAGE>
UNITED STATES OF AMERICA )
STATE OF MARYLAND : SS
CITY/COUNTY OF ANNE ARUNDAL )
On this 12 day of October, 2000, before me personally appeared L.
Peter Larson, to me known and being duly sworn, deposes and says that he is the
President and Chief Executive Officer of Telkonet, Inc., and that he is
authorized to and did execute the above instrument.
/s/ David S. Martino
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Notary Public
My Commission Expires:
11/1/03
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