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EXHIBIT 3.5
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF
8% SERIES A CONVERTIBLE PREFERRED STOCK
OF
WALL STREET STRATEGIES CORPORATION
(PURSUANT TO THE NEVADA GENERAL CORPORATION LAW)
WALL STREET STRATEGIES CORPORATION, a corporation organized
and existing under the laws of the State of Nevada (the "Company"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Company pursuant to authority of the Board of Directors as required by
the Nevada General Corporation Law.
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Company (the "Board of Directors" or the
"Board") in accordance with the provisions of the Certificate of Incorporation
of the Company, as amended, the Board of Directors hereby authorizes a series of
the Company's previously authorized Preferred Stock, par value $0.001 per share
(the "Preferred Stock"), and hereby states the designations and number of shares
and fixes the relative rights, preferences, privileges, powers and restrictions
thereof as follows:
8% SERIES A CONVERTIBLE PREFERRED STOCK:
Section 1. Designation, Amount and Par Value. The series of
preferred stock shall be designated as 8% Series A Convertible Preferred Stock
(the "Preferred Stock") and the number of shares so designated shall be ten (10)
(which shall not be subject to increase without the consent of the holders of
the Preferred Stock (each, a "Holder" and collectively, the "Holders")). Each
share of Preferred Stock shall have a par value of $0.001 per share and a stated
value of $100,000 (the "Initial Stated Value").
Section 2. Dividends. Holders shall be entitled to receive,
out of funds legally available therefor, and the Company shall pay, cumulative
dividends at the rate per share (as a percentage of the Initial Stated Value per
share) of 8% per annum, payable quarterly, in arrears on March 31, June 30,
September 30 and December 31 of each year (each a "Dividend Payment Date"),
commencing September 30, 2000 for such share, in cash or, at the option of the
Holder exercisable by notice to the Company to be delivered by facsimile no less
than ten days prior to each Dividend Payment Date (each, a "Dividend Election
Notice"), in shares of Common Stock at the Dividend Ratio (as defined in Section
10), or, if no funds of the Company are legally available for the payment of
dividends, by accretion of the Initial Stated Value. Dividends on the
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Preferred Stock shall be calculated on the basis of a 360-day year, shall accrue
daily commencing on August 18, 2000, and shall be deemed to accrue from such
date whether or not earned or declared and whether or not there are profits,
surplus or other funds of the Company legally available for the payment of
dividends.
Section 3. Voting Rights. Except as otherwise provided herein
and as otherwise required by law, the Preferred Stock shall have no voting
rights. However, so long as any shares of Preferred Stock are outstanding, the
Company shall not, without the affirmative vote of the Holders of a majority of
the shares of the Preferred Stock then outstanding, (a) alter or change
adversely the powers, preferences or rights given to the Preferred Stock or
alter or amend this Certificate of Designation, (b) authorize or create any
class of stock ranking as to dividends or distribution of assets upon a
Liquidation (as defined in Section 4) senior to or otherwise pari passu with the
Preferred Stock ("Pari Passu Securities"), (c) amend its certificate or articles
of incorporation or other charter documents so as to affect adversely any rights
of the Holders, (d) increase the authorized number of shares of Preferred Stock,
or (e) enter into any agreement with respect to the foregoing.
Section 4. Liquidation. Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary (a "Liquidation"),
the Holders shall be entitled to receive out of the assets of the Company,
whether such assets are capital or surplus, for each share of Preferred Stock an
amount equal to the Adjusted Stated Value (as defined in Section 10) per share
before any distribution or payment shall be made to the holders of any Junior
Securities but after any payment or distribution to be made to the holders of
any Senior Securities (as defined in Section 10), and if the assets of the
Company shall be insufficient to pay in full such amounts and amounts payable to
the holders of Pari Passu Securities, then the entire assets to be distributed
to the Holders and holders of Pari Passu Securities, shall be distributed among
the Holders and holders of Pari Passu Securities, ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full. A sale, conveyance or disposition of 50% or more of
the assets of the Company or the effectuation by the Company of a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is disposed of, or a consolidation or merger of the Company with or into
any other company or companies into one or more companies not wholly-owned by
the Company shall not be treated as a Liquidation, but instead shall be subject
to the provisions of Section 5.
Section 5. Conversion. Each share of Preferred Stock shall be
convertible into shares of Common Stock at the Conversion Ratio (as defined in
Section 10) at the option of the Holder, at any time and from time to time from
and after thirty days from the Original Issue Date (as defined in Section 10).
Holders shall effect conversions by surrendering the certificate or certificates
representing the shares of Preferred Stock to be converted to the Escrow Agent
(as defined in Section 6) and to the Company, together with the form of
conversion notice attached hereto as Exhibit A (a "Conversion Notice") in
accordance with the terms of the Escrow Agreement (as defined in Section 10);
provided, however, that after depletion of the Escrowed Shares (as defined in
Section 8(b)(ii)), such certificate and the Conversion Notice shall be sent to
the Company only. Each Conversion Notice shall specify the number of shares of
Preferred
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Stock to be converted, the applicable Conversion Price and the date on which
such conversion is to be effected, which date may not be prior to the date the
Holder delivers such Conversion Notice by facsimile to the Company and/or the
Escrow Agent, as the case may be (the "Conversion Date"). If no Conversion Date
is specified in a Conversion Notice, the Conversion Date shall be the date that
such Conversion Notice is deemed delivered under Section 9. If the Holder is
converting less than all shares of Preferred Stock represented by the
certificate or certificates tendered by the Holder with the Conversion Notice,
or if a conversion hereunder cannot be effected in full for any reason, the
Company shall promptly deliver to such Holder a certificate representing the
number of shares of Preferred Stock as have not been converted.
Section 6. Redemption.
(a) Optional Redemption. (i) Subject to the provisions in this
paragraph, the Company may deliver to the Holder (and, as long as any Escrowed
Shares shall remain available for release, to the Escrow Agent) a notice that it
desires to redeem all or any part of the Preferred Stock then outstanding (a
"Redemption Notice") in which case it shall have the right to redeem the
Preferred Stock for cash, or, at the Company's option, in shares of Common Stock
at the Redemption Ratio, ten days after delivery of the Redemption Notice at
125% of the Initial Stated Value of the shares of Preferred Stock then held by
the Holder (the "Redemption Value"); provided, however, that no right of
redemption shall exist unless an Underlying Shares Registration Statement (as
defined in Section 10) is then in effect; and provided further that the Holder
shall have the right to convert the Preferred Stock by delivering to the Company
a Conversion Notice (or, as long as any Escrowed Shares shall remain available
for release, to the Escrow Agent, with a copy of such Conversion Notice to the
Company) and convert the Preferred Stock during said ten day period at 75% of
the closing bid price of the Common Stock on the date immediately preceding the
date on which the Redemption Notice was delivered by facsimile. All accrued
dividends that remain unpaid on the date on which the Redemption Notice was
delivered by facsimile to the Holder (the "Redemption Date") shall be payable in
cash or, at the option of the Holder exercisable by delivery of a Dividend
Election Notice to the Company within five days after the Redemption Date, in
shares of Common Stock at the Dividend Ratio.
(b) Mandatory Redemption. The shares of Preferred Stock for
which Conversion Notices have not previously been received and that have not
been redeemed by the Company shall be automatically redeemed for cash at the
Initial Stated Value, or, at the option of the Company, converted into shares of
Common Stock at the Redemption Ratio on August 18, 2003 (the "Mandatory
Redemption Date"). Any accrued dividends that remain unpaid on the Automatic
Redemption Date shall be payable in cash or, at the option of the Holder
exercisable by delivery of a Dividend Election Notice to the Company within five
days after the Mandatory Redemption Date, in shares of Common Stock at the
Dividend Ratio.
Section 7. Liquidated Damages. At any time after depletion of
the Escrowed Shares, if the Company does not deliver the shares of Common Stock
to the Holder prior to the expiration of five Trading Days after a Conversion
Notice is delivered in accordance with the terms hereof, then, in addition to
all other remedies the Holder may have, (i) the Holder shall have the right to
revoke such Conversion Notice, and (ii) the Company shall pay to the Holder,
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on demand and in immediately available funds, as liquidated damages for such
failure and not as a penalty, the amounts stated in the following schedule,
which liquidated damages shall begin to accrue on the sixth Trading Day after
the Conversion Date.
<TABLE>
<CAPTION>
Late Payment For Each $10,000
No. Business Days Late of the Debenture Being Converted
---------------------- --------------------------------
<S> <C>
1 $100
2 $200
3 $300
4 $400
5 $500
>5 $500 +$200 for each Business Day
Late beyond 5 days from The
Delivery Date
</TABLE>
Nothing in this Certificate of Designation shall limit the
Holder's right to seek specific performance of the Company's obligations
hereunder and other remedies and damages for the Company's actions or inactions
resulting in the transfer agent's failure to issue and deliver the Common Stock
to the Holder.
Section 8. Adjustments, Escrow, Other Matters.
(a) Adjustments. (i) If the Company, at any time while any
shares of Preferred Stock are outstanding, shall (a) pay a stock dividend or
otherwise make a distribution or distributions on shares of its Junior
Securities or Pari Passu Securities payable in shares of Common Stock, (b)
subdivide outstanding shares of Common Stock into a larger number of shares, (c)
combine outstanding shares of Common Stock into a smaller number of shares, or
(d) issue by reclassification and exchange of the Common Stock any shares of
capital stock of the Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section 8(a)(i) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
(ii) In case of any reclassification of the Common
Stock, or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, the Holders of the Preferred
Stock then outstanding shall have the right thereafter to convert such shares
only into the shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holders of the Preferred Stock shall
be entitled upon such event to receive such amount of securities, cash or
property as a holder of the number of shares of Common Stock of the Company into
which such shares of Preferred Stock could have been converted immediately prior
to such reclassification or share exchange would have been entitled. This
provision shall similarly apply to successive reclassifications or share
exchanges.
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(iii) In case of any (1) merger or consolidation of the
Company with or into another Person, or (2) sale by the Company of all or
substantially all of the assets of the Company in one or a series of related
transactions, a Holder shall have the right thereafter to (A) convert its shares
of Preferred Stock into the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and such Holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the shares of Common Stock into which such
shares of Preferred Stock could have been converted immediately prior to such
merger, consolidation or sale would have been entitled, or (B) in the case of a
merger or consolidation, (x) require the surviving entity to issue shares of
convertible preferred stock or convertible debentures with such aggregate stated
value or in such face amount, as the case may be, equal to the Adjusted Stated
Value of the shares of Preferred Stock then held by such Holder, plus all
accrued and unpaid dividends and other amounts owing thereon, which newly issued
shares of preferred stock or debentures shall have terms identical (including
with respect to conversion) to the terms of the Preferred Stock (except, in the
case of debentures, as may be required to reflect the differences between debt
and equity) and shall be entitled to all of the rights and privileges of a
Holder of Preferred Stock set forth herein and the agreements pursuant to which
the Preferred Stock was issued (including, without limitation, as such rights
relate to the acquisition, transferability, registration and listing of such
shares of stock other securities issuable upon conversion thereof), and (y)
simultaneously with the issuance of such convertible preferred stock or
convertible debentures, shall have the right to convert such instrument only
into shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of Common Stock following such merger or
consolidation. In the case of clause (B), the conversion price applicable for
the newly issued shares of convertible preferred stock or convertible debentures
shall be based upon the amount of securities, cash and property that each share
of Common Stock would receive in such transaction, the Conversion Ratio
immediately prior to the effectiveness or closing date for such transaction and
the Conversion Price stated herein. The terms of any such merger, sale or
consolidation shall include such terms so as continue to give the Holders of
Preferred Stock the right to receive the securities, cash and property set forth
in this Section upon any conversion or redemption following such event. This
provision shall similarly apply to successive such events.
(b) Share Reserve. (i) Notwithstanding the provisions of
Section 8(b)(ii) hereof, the Company covenants that it will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of Preferred Stock and
payment of dividends on Preferred Stock, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holders, not less than such number of shares of Common Stock as
shall be issuable upon the conversion of all outstanding shares of Preferred
Stock. If at any time the Company shall have insufficient shares of Common Stock
to enable it to perform its obligations hereunder, the Company shall call and
hold a special meeting within 30 days of such occurrence for the sole purpose of
increasing the number of authorized shares of Common Stock. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and nonassessable.
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(ii) The Company has deposited with the Escrow Agent
1,000,000 shares of Common Stock (the "Escrowed Shares") to ensure issuance to
the Holders of shares of Common Stock upon conversion of the shares of Preferred
Stock. Upon conversion of shares of Preferred Stock, the appropriate number of
Escrowed Shares are to be released by the Transfer Agent in accordance with the
terms of an Escrow Agreement between the Company, the Escrow Agent and the
initial purchaser of the Preferred Stock. Until depletion of the Escrowed
Shares, all Conversion Notices shall be delivered to the Escrow Agent with
copies to be delivered to the Company.
(c) No Fractional Shares. Upon a conversion hereunder the
Company shall not be required to issue stock certificates representing fractions
of shares of Common Stock, but shall round to the next highest whole number and
disregard the fraction.
(d) Issuance at no Charge. The issuance of certificates for
Common Stock on conversion of Preferred Stock shall be made without charge to
the Holders thereof for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificate, provided that
the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate
upon conversion in a name other than that of the Holder of such shares of
Preferred Stock so converted.
(e) Cancellation of Preferred Stock. Shares of Preferred
Stock converted into Common Stock or redeemed in accordance with the terms
hereof shall be canceled and may not be reissued.
Section 9. Notices. Any and all notices or other
communications or deliveries to be provided by the Holders of the Preferred
Stock hereunder, including, without limitation, any Conversion Notice, shall be
in writing and delivered personally, by facsimile or sent by a nationally
recognized overnight courier service, addressed to the attention of the Chief
Executive Officer addressed to 80 Broad Street, New York, New York 10004, or
Facsimile No.: (212) 514-9582, or to such other address or facsimile number as
shall be specified in writing by the Company for such purpose. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile or sent by
a nationally recognized overnight courier service, addressed to each Holder at
the facsimile telephone number or address of such Holder appearing on the books
of the Company, or if no such facsimile telephone number or address appears, at
the principal place of business of the Holder. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
8:00 p.m. (New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 8:00 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) upon receipt, if sent by a nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given.
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Section 10. Definitions. For the purposes hereof, the
following terms shall have the following meanings:
"Adjusted Stated Value" means the Initial Stated Value plus
all unpaid and accrued dividends to the date of conversion to the extent not
paid in cash in accordance with the terms hereof .
"Common Stock" means the Company's common stock, $0.001 par
value per share, and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"Conversion Price" means the lesser of (i) 80% of the average
of the three lowest closing bid prices in the 20 Trading Days ending on the last
day prior to a Conversion Date, a Dividend Payment Date, a Redemption Date or
the Automatic Redemption Date, as the case may be, or (ii) $2.25.
"Conversion Ratio" means, at any time, a fraction, the
numerator of which is the Adjusted Stated Value and the denominator of which is
the Conversion Price at such time.
"Dividend Ratio" means, on any Dividend Payment Date,
Redemption Date or the Automatic Redemption Date, a fraction, the numerator of
which is the amount of unpaid but accrued dividends due on such date, and the
denominator of which is the Conversion Price at such time.
"Escrow Agreement" means that certain escrow agreement by and
between the Company, the Escrow Agent and the initial purchaser of the shares of
Preferred Stock.
"Escrow Agent" means Bryan Cave LLP.
"Junior Securities" means the Common Stock and all other
equity securities of the Company other than those securities that are
outstanding on the Original Issue Date and which are explicitly senior in rights
or liquidation preference to the Preferred Stock.
"Original Issue Date" shall mean August 18, 2000.
"Person" means a corporation, an association, a partnership,
an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
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"Redemption Ratio" means, (i) if on any Redemption Date, a
fraction, the numerator of which is the Redemption Value, and the denominator of
which is the Conversion Price at such time, and (ii) if on the Automatic
Redemption Date, a fraction, the numerator of which is the Initial Stated Value,
and the denominator of which is the Conversion Price at such time.
"Securities Act " means the Securities Act of 1933, as
amended.
"Trading Day" means (a) a day on which the Common Stock is
traded on a stock exchange, or (b) if the Common Stock is not listed on a stock
exchange, a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC, or (c) if the Common Stock is not quoted on the
OTC, a day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided,
however, that in the event that the Common Stock is not listed or quoted as set
forth in (a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of New York are authorized or required by law
or other government action to close.
"Underlying Shares" means, collectively, the shares of Common
Stock into which the shares of Preferred Stock are convertible in accordance
with the terms hereof.
"Underlying Shares Registration Statement" means a
registration statement that meets the requirements of the Securities Act and
registers the resale of all Underlying Shares by the Holder, who shall be named
as a "selling stockholder" thereunder.
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EXHIBIT 3.5
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby elects to convert the number of shares of 8% Series A
Convertible Preferred Stock indicated below, into shares of Common Stock, $0.001
par value per share (the "Common Stock"), of Wall Street Strategies Corporation,
a Nevada corporation (the "Company"), according to the conditions hereof, as of
the date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any.
If this Conversion Notice is to be delivered to the Escrow Agent, the
undersigned warrants and represents by checking the box that it has been advised
that a registration statement with respect to the resale of the Common Stock
issuable pursuant to this Conversion Notice is in effect. [ ]
To the extent that no registration statement is effective with respect to the
shares to be issued hereunder, the undersigned certifies and represents (a) that
it is not a U.S. person as such term is defined in Regulation S promulgated
under the Securities Act of 1933, as amended (the "Act"), (b) that it is not
acting for the account or benefit of any U.S. person (as defined in Regulation
S), (c) that this share of Preferred Stock has not been converted in the United
States and (d) that the Common Stock issuable upon exercise of this share of
Preferred Stock will not be delivered in the United States. THE UNDERSIGNED
COVENANTS THAT ALL OFFERS AND SALES BY THE UNDERSIGNED OF THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SHARE OF PREFERRED STOCK SHALL BE MADE
SOLELY IN COMPLIANCE WITH REGULATION S, INCLUDING ANY APPLICABLE DISTRIBUTION
COMPLIANCE PERIODS, PURSUANT TO REGISTRATION OF THE COMMON STOCK UNDER THE ACT
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND THAT THE
UNDERSIGNED HAS CONSULTED WITH LEGAL COUNSEL CONCERNING ANY SUCH APPLICABLE
RESTRICTIONS UNDER REGULATION S. The undersigned understands that the
certificate(s) representing the shares of Common Stock issuable upon delivery of
this Conversion Notice will bear a legend setting forth the foregoing
restrictions.
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Conversion calculations:
Date to Effect Conversion:
Applicable Conversion Price:
Number of shares of Preferred Stock to be Converted:
Stated Value of shares of Preferred Stock to be Converted:
Stated Value of Shares remaining available for conversion at
Conversion Price:
Number of shares of Common Stock to be Issued:
Signature
Name
Address
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IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Company as of the 12th day of September 2000.
WALL STREET STRATEGIES CORPORATION
By: /s/ Charles V. Payne
-------------------------------
Charles V. Payne
Chief Executive Officer and President
By: /s/ David McCallen
-------------------------------
David McCallen
Secretary
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STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 12th day of September, 2000, before me, the
undersigned, a Notary Public in and for the County of New York, State of New
York personally appeared:
Charles V. Payne
Known to me to be the person whose name is subscribed to the
foregoing Certificate of Designation and acknowledged to me that he executed the
same.
/s/ Gary L. Scott
------------------------------------
Notary Public
Commission expires:
(SEAL)
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STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 12th day of September, 2000, before me, the
undersigned, a Notary Public in and for the County of New York, State of New
York personally appeared:
David McCallen
Known to me to be the person whose name is subscribed to the
foregoing Certificate of Designation and acknowledged to me that he executed the
same.
/s/ Gary L. Scott
---------------------------------
Notary Public
Commission expires:
(SEAL)
13
