<PAGE>
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 26, 1998
Nanopierce Technologies, Inc.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Nevada 33-19598-D 84-0992908
- ------------------ ------------ -------------------
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
370 Seventeenth Street, Suite 3290
Denver, Colorado 80202
----------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 592-1010
Sunlight Systems, Ltd., 5222 S. Holly, Greenwood Village, CO 80111
----------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Sunlight Systems, Ltd. ( the "Registrant"), a Nevada Corporation, entered
into an agreement dated February 26, 1998 to acquire all or substantially all of
the assets, including the intellectual properties, consisting of patents,
patents applications pending, patent applications in preparation, tradesecrets,
tradenames and trademarks relating to the particle interconnect technology from
Particle Interconnect Corporation, a Colorado corporation, a wholly owned
subsidiary of Intercell Corporation.
In exchange for the acquisition of such intellectual property, the
Registrant issued to Intercell Corporation, Seven Million, Two Hundred and Fifty
Thousand (7,250,000) of its post-split restricted common shares, and in
addition, One Hundred (100) Series A, 8%, Voting, Convertible, Cumulative,
Participating, Preferred Shares, liquidation preference of $22,656.25 per share,
convertible at $0.3257 per share into Seven Million, Two Hundred and Fifty
Thousand (7,250,000) post-spilt restricted common shares of the Registrant.
On February 23, 1998, the Registrant changed its name to Nanopierce
Technologies, Inc., and obtained a new trading symbol on the NASDAQ Bulletin
Board: NPCT. In addition, it caused a reverse stock split on a One for Three
(1:3) basis of the Twelve Million, Seven Hundred and Sixty Thousand, Sixty-Four
(12,760,064) shares issued and outstanding of the Registrant on February 27,
1998. After the reverse split there were Four Million, Two Hundred and Fifty-
Three Thousand, Three Hundred and Fifty-Five (4,253,355) shares issued and
outstanding. After the issuance of the Seven Million, Two Hundred and Fifty
Thousand (7,250,000) post-split shares to Intercell Corporation, the Registrant
had Eleven Million, Five Hundred and Three Thousand, Three Hundred and Fifty-
Five (11,503,355) shares issued and outstanding. As a result of the transaction
described above, as of the date hereof on a fully diluted basis, Intercell
Corporation owned approximately Seventy-Five percent (75%) of the outstanding
common stock of the Registrant.
The principal shareholders of the Registrant approved the transaction on
behalf of the Registrant. Paul H. Metzinger, together with his wife, Cheri L.
Perry, are shareholders of the Registrant and they abstained from voting as
shareholders on the transaction.
Paul H. Metzinger, President and Chief Executive officer of Particle
Interconnect Corporation and Intercell Corporation, its parent company, was
appointed the sole Director of the Registrant, until such time as additional
directors might be appointed. In addition, Paul H. Metzinger was subsequently
appointed as President and Chief Executive Officer of the Registrant.
Paul H. Metzinger and his wife own of record and beneficially, both
directly and indirectly, One Million, Three Hundred and Forty Thousand
(1,340,000) post-split common shares of the Registrant. In addition, as part of
the transaction negotiated with the principal shareholders of the Registrant,
Paul H. Metzinger was granted a presently exercisable option to
2
<PAGE>
purchase up to One Million (1,000,000) shares of the Registrant's common stock
for a period of ten (10) years, at an exercise price of $0.3257 per share.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Registrant entered into an agreement dated February 26, 1998 to acquire
all or substantially all of the assets, including the intellectual properties,
consisting of patents, patents applications pending, patent applications in
preparation, tradesecrets, tradenames and trademarks relating to the particle
interconnect technology from Particle Interconnect Corporation, a Colorado
Corporation, a wholly owned subsidiary of Intercell Corporation. Reference is
made to "Item 1. Changes in Control of Registrant."
ITEM 5. OTHER EVENTS.
On February 23, 1998, the Registrant changed its name to Nanopierce
Technologies, Inc., and obtained a new trading symbol on the NASDAQ Bulletin
Board: NPCT.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements of Business Acquired.*
B. Pro Forma Financial Information.*
C. Exhibits.
2.01 Agreement dated February 26, 1998 by and between Registrant,
Particle Interconnect Corporation and Intercell Corporation.
4.01 Certificate of Designation of Rights and Preferences
27.01 Financial Data Schedule*
* To be filed by amendment.
4
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NANOPIERCE TECHNOLOGIES, INC.
Date: March 12, 1998 By /s/ Paul H. Metzinger
-------------------------------------------
Paul H. Metzinger, Chief Executive Officer,
President
5
<PAGE>
LIST OF EXHIBITS
2.01 Agreement dated February 26, 1998 by and between Registrant,
Particle Interconnect Corporation and Intercell Corporation.
4.01 Certificate of Designation of Rights and Preferences
27.01 Financial Data Schedule*
* To be filed by amendment.
6
<PAGE>
EXHIBIT 2.01
AGREEMENT
1. The Parties to this Agreement are: Particle Interconnect Corporation, a
Colorado Corporation, Intercell Corporation, a Colorado Corporation,
Nanopierce Technologies, Inc., a Nevada Corporation.
2. Intercell Corporation as the Sole Shareholder of Particle Interconnect
Corporation hereby consents to the sale by Particle Interconnect
Corporation of all or substantially all of its assets, consisting of the
Intellectual Property identified on Exhibit A and such other intellectual
properties as it shall own to Nanopierce Technologies, Inc.
3. Particle Interconnect Corporation by and through its Sole Director, Paul H.
Metzinger hereby consents to the sale by Particle Interconnect Corporation
of all or substantially all of its assets, consisting of the Intellectual
Property identified on Exhibit A and such other intellectual properties as
it shall own to Nanopierce Technologies, Inc.
4. Nanopierce Technologies, Inc. through its sole officer and director Paul H.
Metzinger, hereby agrees to deliver to Intercell Corporation, Seven
Million, Two Hundred and Fifty Thousand (7,250,000) post-split common
shares and One Hundred (100) Series A, 8%, Voting, Convertible, Cumulative,
Participating Preferred Shares, convertible into Seven Million, Two Hundred
and Fifty Thousand (7,250,000) post-split shares.
Dated: February 26, 1998
NANOPIERCE TECHNOLOGIES, INC. INTERCELL CORPORATION
By /s/ Paul H. Metzinger By /s/ Paul H. Metzinger
------------------------------- ------------------------------------
Paul H. Metzinger, President Paul H. Metzinger, President & Chief
& Chief Executive Officer Executive Officer
PARTICLE INTERCONNECT CORPORATION
By /s/ Paul H. Metzinger
------------------------------------
Paul H. Metzinger, President & Chief
Executive Officer
2.01-1
<PAGE>
PARTICLE INTERCONNECT CORPORATION
PATENTS AND APPLICATIONS
Updated: November 6, 1997
<TABLE>
<CAPTION>
Patent Issue Serial File
Number Date Title (Subject) Number Date
- --------- -------- --------------- ---------- --------
<S> <C> <C> <C> <C>
4,804,132 2/14/89 Method of Cold Bonding 90,608 8/28/87
(A method of cold bonding aluminum metal
surfaces using aluminum-coated diamond
particles)
5,083,697 1/28/92 Particle-Enhanced Joining of Metal Surfaces 479,696 2/14/90
(A method of forming metal surfaces using
coatings containing hard particles between the
surfaces and compressive force.)
-- -- 07/720,182 2/11/91
5,334,809 8/2/94 Particle Enhanced Joining of Metal Surfaces 08/16,190 2/11/93
(An electrical junction formed by method of
5,083,697.)
5,430,614 7/4/95 Electrical Interconnect Using Particle Enhanced 08/148,907 11/8/93
Joining of Metal Surfaces
(An integrated circuit carrier with a terminal
array formed by method of 5,471,151.)
5,471,151 11/28/95 Electrical Interconnect Using Particle Enhanced 07/951,860 9/28/92
Joining of Metal Surfaces
(A method of electrically coupling terminals
using particles and compressive force.)
5,506,514 4/9/96 Electrical Interconnect Using Particle Enhanced 08/422,546 4/12/95
Joining of Metal Surfaces
(Apparatus for testing an integrative circuit with
a probe array formed by method of 5,471,151.)
</TABLE>
2.01-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
5,565,280 10/15/96 Electrical Interconnect Using Particle Enhanced 08/422,447 4/12/95
Joining of Metal Surfaces
(Spaced structure with particle enhanced sheet
between two planar sheets.)
-- -- Patternable Particle Filled Adhesive Matrix for 08/320,436 10/7/94
Localized Communication Between Joined
Surfaces
(A mixture of adhesive and particles for joining
substrates.)
5,670,251 9/23/97 Patternable Particle Filled Adhesive Matrix for 8/320,443 10/7/94
Forming Patterned Structures Between Joined
Surfaces
(A joint formed by joining substrates with an
adhesive and particle mixture.)
5,642,055 6/24/97 Electrical Interconnect Using Particle Enhanced 08/422,445 4/12/95
Joining of Metal Surfaces
(Testing apparatus including a terminal array
produced by the method of 5,471,151.)
08/422,446 4/12/95
-- -- Electrical Interconnect Using Particle Enhanced 08/749,376 11/6/96
Joining of Metal Surfaces
(A crimp for coupling a power transmission
medium to a contact point formed by the method
of 5,471,151.)
5,634,265 6/3/97 Electrical Interconnect Using Particle Enhanced 08/422,448 4/12/95
Joining of Metal Surfaces
(A method of forming a contact surface for
connecting electronic elements from a metal
containing interconnect particles.)
-- -- Method and Apparatus for Handling Electronic 08/440,497 5/10/95
Devices
(A preciser or handler with spaced dividers and
ridges forming a test site array of recesses.)
</TABLE>
2.01-3
<PAGE>
<TABLE>
<CAPTION>
Patent Issue Serial File
Number Date Title (Subject) Number Date
- ------ ----- --------------- ------ ----
<S> <C> <C> <C> <C>
-- -- Method and Apparatus of Handling Electronic 08/855,964 5/14/97
Devices
(A method of testing electronic devices using a
handler and test board with probe array.)
-- -- Spiral Leaf Spring Contact ??? 5/15/97
Spiral Leaf Spring Contact PCT/US 6/6/97
97/09899
Method of Joining Surfaces with Patternable 08/854,107 5/9/97
Adhesive and Particle Matrix
(Method of joining substrates using patterned
coatings of a mixture of adhesive and particles.)
-- -- High Ionic Flow Rate Plating Process and
Apparatus
(A latch apparatus for high ionic apparatus for
high ionic electro-coating substrates with metal
and particles.)
Electroplating Process
(Apparatus for high ionic continuous electro-
coating of substrates with metal and particles.)
Method and Apparatus for Conductivity Joining
Components
(Conductive tape.)
</TABLE>
2.01-4
<PAGE>
EXHIBIT 4.01
CERTIFICATE OF DESIGNATION OF
SERIES A PREFERRED STOCK
OF
NANOPIERCE TECHNOLOGIES, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is
Nanopierce Technologies, Inc., a Nevada corporation.
2. The Certificate of Incorporation of the Company authorizes the
issuance of Five Million (5,000,000) shares of preferred stock, $0.0001 par
value per share, and expressly vests in the Board of Directors of the Company
the authority provided therein to issue any or all of said shares in one (1) or
more series and by resolution or resolutions to establish the designation and
number and to fix the relative rights and preferences of each series to be
issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series A issue of Preferred Stock:
RESOLVED, that One Hundred (100) of the Five Million (5,000,000) authorized
shares of Preferred Stock of the Company shall be designated Series A Preferred
Stock, $0.0001 par value per share, shall possess the rights and preferences set
forth below and shall be issued to INTERCELL CORPORATION, a Colorado Corporation
("Holder").:
Section 1. Designation and Amount. The shares of such series shall have
----------------------
$0.0001 par value and shall be designated as Series A Preferred Stock (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be One Hundred (100). The Series A Preferred Stock shall
have a Deemed Purchase Price of Twenty-Two Thousand, Six Hundred and Fifty-Six
Dollars and Twenty-Five Cents ($22,656.25) per share, for an aggregate of Two
Million, Two Hundred and Sixty-Five thousand, Six Hundred and Twenty-Five
Dollars ($2,265,625.00).
Section 2. Rank. The Series A Preferred Stock shall rank: (i) prior and
----
senior to any other class or series of Preferred Shares or series of capital
stock of the Company hereafter created (collectively, the "Senior Securities");
(ii) prior to all of the Company's Common Stock, $0.001 par value per share
("Common Stock"); (iii) prior to any class or series of capital stock of the
Company hereafter created not specifically ranking by its terms senior to or on
parity with any Series A Preferred Stock of whatever subdivision (collectively,
with the Common Stock and
4.01-1
<PAGE>
any such Preferred Stock, "Junior Securities"); and (iv) on parity with any
class or series of capital stock of the Company hereafter created specifically
ranking by its terms on parity with the Series A Preferred Stock ("Parity
Securities") in each case as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary (all
such distributions being referred to collectively as "Distributions").
Section 3. Dividends. The Series A Preferred Stock shall bear an eight
---------
percent (8%), cumulative, participating dividend, commencing March 1, 1998. If
such dividend is not declared and paid, for any reason, the Deemed Purchase
Price of the Series A Preferred Shares shall be increased by such accrued
dividend and shall, at the option of the Holder, be convertible into common
stock of the Company or otherwise redeemed.
Section 4. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of
the Company, either voluntary or involuntary, the Holders of shares of Series A
Preferred Stock shall be entitled to receive, immediately after distributions to
Senior Securities, if any, required by the Company's Certificate of
Incorporation or any Certificate of Designation, and prior in preference to any
distribution to Junior Securities but in parity with any distribution to Parity
Securities, an amount per share equal to the sum of (i) the Series A Deemed
Purchase Price for each outstanding share of Series A Preferred Stock and (ii)
an amount equal to eight percent (8%) of the Series A Deemed Purchase Price per
annum for the period that has passed since March 1, 1998 to the date of the
event of liquidation, dissolution or winding up of the Company. If upon the
occurrence of such event, and after payment in full of the preferential amounts
with respect to the Senior Securities, the assets and funds available to be
distributed among the Holders of the Series A Preferred Stock and Parity
Securities shall be insufficient to permit the payment to such Holders of the
full preferential amounts due to the Holders of the Series A Preferred Stock and
the Parity Securities, respectively, then the entire assets and funds of the
Company legally available for distribution shall be distributed among the
Holders of the Series A Preferred Stock and the Parity Securities, pro rata,
based on the respective liquidation amounts to which each such series of stock
is entitled by the Company's Certificate of Incorporation and any Certificate(s)
of Designation relating thereto.
(b) Upon the completion of the distribution required by subsection
4(a), if assets remain in the Company, they shall be distributed to holders of
Junior Securities in accordance with the Company's Certificate of Incorporation
including any duly adopted certificate(s) of designation.
Section 5. Conversion. The record Holders of this Series A Preferred
----------
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. On and after March 1, 1998, each record
Holder of Series A Preferred Stock shall be entitled, at any time, and
subject to the Company's right of redemption set forth in Section 6(a), at
the office of the Company or any transfer
4.01-2
<PAGE>
agent for the Series A Preferred Stock (the "Transfer Agent"), to convert
each Preferred Share into common shares of the Company, at a conversion
rate of $0.3257 per share (the "Fixed Conversion Price"). Each Preferred
Share is convertible into Seventy-Two Thousand, Five Hundred (72,500)
common shares and if all Preferred shares are converted, in full, the
Holder shall own Seven Million, Two Hundred and Fifty Thousand (7,250,000)
common shares of the Company.
(b) Mechanics of Conversion. In order to convert Series A
Preferred Stock into full shares of Common Stock, the Holder shall (i) fax, on
or prior to 11:59 p.m., Denver, Colorado time (the "Conversion Notice Deadline")
on the date of conversion, a copy of the fully executed notice of conversion
("Notice of Conversion") to the Company at the office of the Company or its
designated transfer agent (the "Transfer Agent") for the Series A Preferred
Stock stating that the Holder elects to convert, which notice shall specify the
date of conversion, the number of shares of Series A Preferred Stock to be
converted, the applicable conversion price and a calculation of the number of
shares of Common Stock issuable upon such conversion (together with a copy of
the front page of each certificate to be converted) and (ii) surrender to a
common courier for delivery to the office of the Company or the Transfer Agent,
the original certificates representing the Series A Preferred Stock being
converted (the "Preferred Stock Certificates"), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
either the Preferred Stock Certificates are delivered to the Company or its
Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subparagraph (i) below). Upon receipt by Company
of a facsimile copy of a Notice of Conversion, Company shall immediately send,
via facsimile, a confirmation of receipt of the Notice of Conversion to Holder
which shall specify that the Notice of Conversion has been received and the name
and telephone number of a contact person at the Company whom the Holder should
contact regarding information related to the Conversion.
(i) Lost or Stolen Certificates. Upon receipt by the
Company of evidence of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing shares of Series A Preferred Stock,
and (in the case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and cancellation of
the Preferred Stock Certificate(s), if mutilated, the Company shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date. However,
Company shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if Holder contemporaneously requests Company to convert such Series
A Preferred Stock into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The Transfer
Agent or the Company (as applicable) shall, no later than the close of business
on the second (2nd) business day (the "Deadline") after receipt by the Company
or the Transfer Agent of a facsimile copy of a Notice of Conversion and receipt
by Company or the Transfer Agent of all necessary documentation duly executed
and in proper form required for conversion, including
4.01-3
<PAGE>
the original Preferred Stock Certificates to be converted (or after provision
for security or indemnification in the case of lost or destroyed certificates,
if required), issue and surrender to a common courier for either overnight or
(if delivery is outside the United States) two (2) day delivery to the Holder at
the address of the Holder as shown on the stock records of the Company a
certificate for the number of shares of Common Stock to which the Holder shall
be entitled as aforesaid.
(iii) No Fractional Shares. If any conversion of the Series
A Preferred Stock would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion,
in the aggregate, shall be the next lower number of shares.
(iv) Date of Conversion. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date set forth in
such Notice of Conversion, provided (i) that the advance copy of the Notice of
Conversion is faxed to the Company before 11:59 p.m., Denver, Colorado time, on
the Date of Conversion, and (ii) that the original Preferred Stock Certificates
representing the shares of Series A Preferred Stock to be converted are
surrendered by depositing such certificates with a common courier, as provided
above, and received by the Transfer Agent or the Company as soon as practicable
after the Date of Conversion. The person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record Holder or Holders of such shares of Common Stock on the
Date of Conversion.
(c) Reservation of Stock Issuable Upon Conversion. 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 Series A Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all then outstanding
Series A Preferred Stock; and 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 Series A Preferred Stock, the Company will
take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(A) Adjustment to Conversion Rate.
(i) Adjustment to Fixed Conversion Price Due to Stock
Split, Stock Dividend, Etc. If, prior to the conversion of all of the Series A
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, or other similar event, the Fixed Conversion
Price shall be proportionately reduced, or if the number of outstanding shares
of Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Fixed Conversion Price shall be proportionately
increased.
4.01-4
<PAGE>
(ii) Adjustment Due to Merger, Consolidation, Etc. If, prior
to the conversion of all Series A Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities of the Company or another entity or
there is a sale of all or substantially all the Company's assets, then the
Holders of Series A Preferred Stock shall thereafter have the right to receive
upon conversion of Series A Preferred Stock, upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets which the Holder would have been entitled to receive in such
transaction had the Series A Preferred Stock been converted immediately prior to
such transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holders of the Series A Preferred
Stock to the end that the provisions hereof (including, without limitation,
provisions for the adjustment of the Conversion Price and of the number of
shares issuable upon conversion of the Series A Preferred Stock) shall
thereafter be applicable, as nearly as may be practicable in relation to any
securities thereafter deliverable upon the exercise hereof.
(iii) No Fractional Shares. If any adjustment under this
Section 5(f) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next lower number of shares.
Section 6. Redemption by Company.
---------------------
(a) Company's Right to Redeem at its Election. At any time, the
Company shall have the right, in its sole discretion, to redeem ("Redemption at
Company's Election"), from time to time, any or all of the Series A Preferred
Stock; provided (i) Company shall first provide six (6) months advance written
notice as provided in subparagraph 6(b)(ii) below. If the Company elects to
redeem some, but not all, of the Series A Preferred Stock, the Company shall
redeem a pro-rata amount from each Holder of the Series A Preferred Stock.
(i) Redemption Price At Company's Election. The "Redemption
Price At Company's Election" shall be the Deemed Purchase Price.
For purposes hereof, "Deemed Purchase Price" shall mean the Series A Deemed
Purchase Price (as defined in Section 4(a)) of the shares of Series A Preferred
Stock being redeemed pursuant to this Section 6(a), together with the accrued
but unpaid dividends (as defined in Section 4(a)).
(ii) Mechanics of Redemption at Company's Election. The Company
shall effect each such redemption by giving at least six (6) months prior
written notice ("Notice of Redemption At Company's Election") to the Holders of
the Series A Preferred Stock selected for redemption, at the address and
facsimile number of such Holder appearing in the Company's
4.01-5
<PAGE>
Series A Preferred stock register and to the Transfer Agent, which Notice of
Redemption At Company's Election shall be deemed to have been delivered three
(3) business days after the Company's mailing (by overnight or two (2) day
courier, with a copy by facsimile) of such Notice of Redemption At Company's
Election. Such Notice of Redemption At Company's Election shall indicate (i)
the number of shares of Series A Preferred Stock that have been selected for
redemption, (ii) the date which such redemption is to become effective (the
"Date of Redemption At Company's Election") and (iii) the Redemption Price At
Company's Election, as defined in subsection (a)(i) above.
(b) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to send any Redemption Notice and
begin the redemption procedure under Section 6(a) unless it has:
(i) the full amount of the redemption price in cash,
available in a demand or other immediately available account in a bank or
similar financial institution; or
(ii) immediately available credit facilities, in the full
amount of the redemption price with a bank or similar financial institution; or
(iii) an agreement with a standby underwriter willing to
purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not converted prior to
redemption; or
(iv) a combination of the items set forth in (i), (ii) and
(iii) above, aggregating the full amount of the redemption price.
(c) Payment of Redemption Price.
(i) Each Holder submitting Preferred Stock being redeemed
under this Section 6 shall send their Series A Preferred Stock Certificates so
redeemed to the Company or its Transfer Agent, and the Company shall pay the
applicable redemption price to that Holder within five (5) business days of the
Date of Redemption at Company's Election. The Company shall not be obligated to
deliver the redemption price unless the Preferred Stock Certificates so redeemed
are delivered to the Company or its Transfer Agent, or, in the event one (1) or
more certificates have been lost, stolen, mutilated or destroyed, unless the
Holder has complied with Section 5(b)(i).
(A) Blackout Period. Notwithstanding the foregoing, the Company
may not either send out a redemption notice or effect a redemption pursuant to
Section 6(b) above during a Blackout Period (defined as a period during which
the Company's officers or directors would not be entitled to buy or sell stock
because of their holding of material non-public information), unless the Company
shall first disclose the non-public information that resulted in the Blackout
Period; provided, however, that no redemption shall be effected until at least
ten (10) days after the Company shall have given the Holder written notice that
the Blackout Period has been lifted.
4.01-6
<PAGE>
Section 7. Voting Rights. The Holders of the Series A Preferred Stock
-------------
shall have voting power equal to Seven Million, Two Hundred and Fifty Thousand
(7,250,000) common shares with all the rights powers and privileges provided to
holders of common shares as provided by the Nevada Business Corporation Act
("Nevada Law").
To the extent that under Nevada Law the vote of the Holders of the Series A
Preferred Stock, voting separately as a class, is required to authorize a given
action of the Company, the affirmative vote or consent of the Holders of at
least a majority of the shares of the Series A Preferred Stock represented at a
duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series A Preferred Stock (except as otherwise may be
required under Nevada Law) shall constitute the approval of such action by the
class. To the extent that under Nevada Law the Holders of the Series A
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one (1) class, each share of Series A Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series A Preferred Stock also shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Company's by-
laws and applicable statutes.
Section 8. Protective Provision. So long as shares of Series A Preferred
--------------------
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by Nevada Law) of the Holders
of at least seventy-five percent (75%) of the then outstanding shares of Series
A Preferred Stock, and at least seventy-five percent (75%) of the then
outstanding Holders:
(a) alter or change the rights, preferences or privileges of the
Series A Preferred Stock so as to affect adversely the Series A Preferred Stock.
(b) create any new class or series of stock having a preference
over the Series A Preferred Stock with respect to Distributions (as defined in
Section 2 above) or increase the size of the authorized number of Series A
Preferred.
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series A Preferred Stock and at least seventy-five percent
(75%) of the then outstanding Holders agree to allow the Company to alter or
change the rights, preferences or privileges of the shares of Series A Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series A Preferred
Stock, then the Company will deliver notice of such approved change to the
Holders of the Series A Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and the Dissenting Holders shall have the
right for a period of thirty (30) business days to convert pursuant to the terms
of this Certificate of Designation as they exist prior to such alteration or
change or continue to hold their shares of Series A Preferred Stock.
4.01-7
<PAGE>
Section 9. Status of Converted or Redeemed Stock. In the event any shares
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of Series A Preferred Stock shall be converted or redeemed pursuant to Section 5
or Section 6 hereof, the shares so converted or redeemed shall be canceled,
shall return to the status of authorized but unissued Preferred Stock of no
designated series, and shall not be issuable by the Company as Series A
Preferred Stock.
Section 10. Preference Rights. Nothing contained herein shall be construed
-----------------
to prevent the Board of Directors of the Company from issuing one (1) or more
series of Preferred Stock with dividend and/or liquidation preferences junior to
the dividend and liquidation preferences of the Series A Preferred Stock.
Signed on March 10, 1998 NANOPIERCE TECHNOLOGIES, INC.
By: /s/ Paul H. Metzinger
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Paul H. Metzinger,
President & Chief Executive Officer
ATTEST: By: /s/ Kristi J. Kampmann
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Kristi J. Kampmann, Secretary
STATE OF COLORADO )
) SS.
COUNTY OF DENVER )
I, Caryl L. Septon, a Notary Public, hereby certify that on the 10/th/ day
of March, 1998, Paul H. Metzinger and Kristi J. Kampmann, the President and
Secretary of Nanopierce Technologies, Inc., respectively, personally appeared
before me, Kristi J. Kampmann, who being by me first duly sworn declared that he
is the person who signed the foregoing, and that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on the date
hereinbefore mentioned.
My commission expires 6/15/98
/s/ Caryl L. Septon
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Notary Public
4.01-8
