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CERTIFICATE OF DESIGNATION
OF
PANDEL SERIES STOCK
OF
FIBERCHEM, INC.
_______________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
_______________________
FiberChem, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "CORPORATION"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation on June 29, 2000 pursuant to authority of the Board of
Directors as required by Section 151 of the General Corporation Law of the State
of Delaware:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (the "BOARD OF DIRECTORS" or the
"BOARD") in accordance with the provisions of its Certificate of Incorporation,
the Board of Directors hereby authorizes a series of the Corporation's
previously authorized preferred stock, par value $0.01 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:
Of the total number of shares of Preferred Stock , $0.01 par
value, authorized under the Corporation's Certificate of Incorporation, 750,000
shares shall be of a series designated as Pandel Series Stock:
ARTICLE I
The rights and preferences of the holders of the shares of Pandel
Series Stock shall be as set forth in this ARTICLE I.
SECTION 1. DIVIDENDS.
(a) DIVIDEND ACCRUALS AND PAYMENTS. The
Corporation shall not be required to declare or pay a dividend
on the Pandel Series Stock, except as set forth in this
Section 1. No cash dividend or other distribution shall be
paid, or declared and set apart for payment, on any share of
Common Stock, unless a cash
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dividend or other distribution is paid, or declared and set
apart for payment, with respect to each outstanding share of
Pandel Series Stock in an amount equal to the dividend paid or
declared on a share of Common Stock multiplied by the Pandel
Series Stock Ratio (as hereinafter defined).
(b) RATABLE ALLOCATION OF DIVIDENDS. If at any
time the Corporation pays less than the total amount of
dividends then accrued and payable with respect to all
outstanding shares of Pandel Series Stock, such payment will
be distributed ratably among the holders of such shares of
Pandel Series Stock PRO RATA in proportion to the aggregate
accrued but unpaid dividends on the shares of Pandel Series
Stock held by each such holder.
SECTION 2. LIQUIDATION, DISSOLUTION, OR WINDING-UP.
In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or
involuntary, the holders of outstanding shares of Pandel
Series Stock shall be entitled to be paid out of the assets of
the Corporation available for distribution to stockholders,
before any payment shall be made to or set aside for the
holders of any other class or series of capital stock ranking
on liquidation junior to the Pandel Series Stock, an amount
equal to the greater of: (i) $.10 per share of Pandel Series
Stock held (subject to adjustment in proportion to any change
in the Pandel Series Stock Ratio), plus all accrued and unpaid
dividends on the Pandel Series Stock through the date of such
liquidation, dissolution or winding-up; and (ii) such holders'
PRO RATA share of any assets remaining available for
distribution to the holders of Pandel Series Stock and Common
Stock after payment of the liquidation preference applicable
to any preferred stock ranking senior to the Pandel Series
Stock and the Common Stock upon such liquidation based on the
number of shares of stock held by each (with each holder of
shares of Pandel Series Stock being deemed for such purpose to
hold a number of shares of stock equal to the number of shares
of Pandel Series Stock owned by such holder as of the date of
such liquidation, dissolution or winding up of the Corporation
multiplied by the Pandel Series Stock Ratio ) (the "PANDEL
SERIES STOCK LIQUIDATION VALUE"). The Common Stock and the
Pandel Series Stock shall rank on liquidation junior to (i)
any shares of preferred stock of any series outstanding
immediately prior to the date of first issuance of the Pandel
Series Stock and (ii) any shares of preferred stock of the
series designated Special Stock. If upon any liquidation,
dissolution or winding-up of the Corporation, whether
voluntary or involuntary, the assets lawfully available to be
distributed to the holders of Pandel Series Stock shall be
insufficient to permit payment to such stockholders of their
full applicable Pandel Series Stock Liquidation Value per
share, then all of the assets of the Corporation lawfully
available for distribution shall be distributed PRO RATA among
the holders of shares of Pandel Series Stock in proportion to
the number of shares of Pandel Series Stock held by them as of
the date of such liquidation, dissolution or winding-up of the
Corporation.
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SECTION 3. VOTING RIGHTS.
Except as otherwise expressly provided herein or as
required by applicable law (and not subject to waiver by the
Corporation), the holder of each share of Pandel Series Stock
shall be entitled to vote on all matters on which holders of
Common Stock are entitled to vote, including, without
limitation, the election of directors . Each share of Pandel
Series Stock shall entitle the holder thereof to such number
of votes per share as shall equal the number of shares of
Pandel Series Stock owned by such holder as of the record date
for the determination of stockholders entitled to vote on such
matter, or if no record date is established, at the date such
vote is taken or any written consent of stockholders is
solicited, multiplied by the Pandel Series Stock Ratio. Except
as otherwise expressly provided herein or expressly required
by applicable law, the holders of shares of Pandel Series
Stock, any other class of stock possessing voting rights and
Common Stock, respectively, shall vote together as a single
class on all matters submitted to a vote or consent of
stockholders.
SECTION 4. CONVERSION; PANDEL SERIES STOCK RATIO AND
ADJUSTMENTS. Shares of Pandel Series Stock shall be subject to conversion into
shares of Common Stock as set forth in this Section 4.
(a) AUTOMATIC CONVERSION.
(i) AUTOMATIC CONVERSION ON DECEMBER 31,
2000 OR UPON NOTICE. Provided the Corporation shall
have a sufficient number of shares of Common Stock
reserved for issuance upon conversion of the Pandel
Series Stock as hereinafter provided then, on
December 31, 2000 without notice, or at any time
prior to December 31, 2000 on not less than fifteen
days prior written notice to each holder of Pandel
Series Stock given by first-class mail at the address
of such holder as it appears on the records of the
Corporation, each share of Pandel Series Stock
outstanding shall be converted into a number of fully
paid and non-assessable shares of Common Stock equal
to the product obtained by multiplying (A) the number
of shares of Pandel Series Stock being converted, by
(B) the Pandel Series Stock Ratio (as defined in
Section 4(b)) then in effect, automatically and
without further action.
(ii) MECHANICS OF AUTOMATIC CONVERSION. Upon
any automatic conversion of shares of Pandel Series
Stock into shares of Common Stock pursuant to this
Section 4(a), the holders of such converted shares
shall surrender the certificates formerly
representing such shares at the office of the
Corporation or of any transfer agent for Common
Stock. Thereupon, there shall be issued and delivered
to each such holder, promptly at such office and in
his name as shown on such surrendered certificate or
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certificates, a certificate or certificates for the
number of shares of Common Stock into which such
shares of Pandel Series Stock were so converted. The
Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock
issuable upon such conversion unless and until
certificates formerly evidencing the converted shares
of Pandel Series Stock are either delivered to the
Corporation or its transfer agent, as hereinafter
provided, or the holder thereof notifies the
Corporation or such transfer agent that such
certificates have been lost, stolen, or destroyed and
executes and delivers an agreement in form and
substance satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by
it in connection therewith.
(b) PANDEL SERIES STOCK RATIO. The Pandel Series
Stock Ratio initially shall be 100, subject to adjustment as
provided in this Section 4.
(c) ADJUSTMENTS FOR EXTRAORDINARY COMMON STOCK
EVENTS. Upon the happening of an Extraordinary Common Stock
Event (as defined in Section 4(d) hereof), automatically and
without further action, and simultaneously with the happening
of such Extraordinary Common Stock Event, the Pandel Series
Stock Ratio shall be adjusted by multiplying the then
effective Pandel Series Stock Ratio by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding (excluding treasury stock) immediately after
such Extraordinary Common Stock Event, and the denominator of
which shall be the number of shares of Common Stock
outstanding (excluding treasury stock) immediately before such
Extraordinary Common Stock Event.
(d) EXTRAORDINARY COMMON STOCK EVENT. As used
herein, "EXTRAORDINARY COMMON STOCK EVENT" means (i) the
issuance of additional shares of Common Stock as a dividend or
other distribution on outstanding Common Stock , (ii) the
subdivision of outstanding shares of Common Stock into a
greater number of shares of Common Stock, or (iii) the
combination of outstanding shares of Common Stock into a
smaller number of shares of Common Stock.
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IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation to be signed by its duly authorized officers on this
27th day of July, 2000.
FIBERCHEM, INC.
By: /s/ Melvin W. Pelley
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Name: Melvin W. Pelley
Title: Chief Financial Officer & Secretary
