Document:

Exhibit
10.4

 

AGREEMENT
AND PLAN OF MERGER

 

This AGREEMENT
AND PLAN OF MERGER (hereinafter called this “Agreement”), dated as of October 4, 2004, is
entered into between Reva, Inc., a public company incorporated in the State of
Colorado (the “Company”)
and Blue Wireless & Data, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company (“Blue”).

 

RECITALS

 

WHEREAS, the
board of directors of each of the Company and Blue deems it advisable, upon the
terms and subject to the conditions herein stated, that the Company be merged
with and into Blue, and that Blue be the surviving corporation (the “Reincorporation Merger”); and

 

WHEREAS, the
Company will submit this Agreement for approval by separate vote of the holders
of shares of common stock, $0.01 par value, of the Company (“common stock”),

 

NOW,
THEREFORE, in consideration of the premises and of the agreements of the
parties hereto contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

THE
REINCORPORATION MERGER; EFFECTIVE TIME

 

1.1.    The Reincorporation Merger.    Upon
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time (as defined in Section 1.2), the Company shall be merged
with and into Blue whereupon the separate existence of the Company shall cease.
Blue shall be the surviving corporation (sometimes hereinafter referred to as
the “Surviving Corporation”)
in the Reincorporation Merger and shall continue to be governed by the laws of
the State of Delaware. The Reincorporation Merger shall have the effects
specified in the General Corporation Law of the State of Delaware, as amended
(the “DGCL”) and in the
Colorado Business Corporation Act, as amended (the “CBCA”) and the Surviving Corporation
shall succeed, without other transfer, to all of the assets and property
(whether real, personal or mixed), rights, privileges, franchises, immunities
and powers of the Company, and shall assume and be subject to all of the
duties, liabilities, obligations and restrictions of every kind and description
of the Company, including, without limitation, all outstanding indebtedness of
the Company.

 

1.2.    Effective Time.    Provided
that the condition set forth in Section 5.1 has been fulfilled or waived
in accordance with this Agreement and that this Agreement has not been
terminated or abandoned pursuant to Section 6.1, on the date of the
closing of the Reincorporation Merger, the Company and Blue shall cause
Articles of Merger to be executed and filed with the Secretary of State of
Colorado (the “Colorado Articles of

 

 

Merger”)
and a Certificate of Merger to be executed and filed with the Secretary of
State of Delaware (the “Delaware
Certificate of Merger”). The Reincorporation Merger shall become
effective upon the date and time specified in the Colorado Articles of Merger
and the Delaware Certificate of Merger (the “Effective Time”).

 

ARTICLE II

 

CHARTER AND
BYLAWS OF THE SURVIVING CORPORATION

 

2.1.    The Certificate of
Incorporation.    The certificate of
incorporation of Blue in effect at the Effective Time shall be the certificate
of incorporation of the Surviving Corporation, until amended in accordance with
the provisions provided therein or applicable law.

 

2.2.    The Bylaws.    The
bylaws of Blue in effect at the Effective Time shall be the bylaws of the
Surviving Corporation, until amended in accordance with the provisions provided
therein or applicable law.

 

ARTICLE III

 

OFFICERS AND
DIRECTORS OF THE SURVIVING CORPORATION

 

3.1.    Officers.    The
officers of the Company at the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal.

 

3.2.    Directors.    The
directors of the Company at the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal.

 

ARTICLE IV

 

EFFECT OF
MERGER ON CAPITAL STOCK

 

4.1.    Effect of Merger on Capital
Stock.    At the Effective Time, as a result of
the Reincorporation Merger and without any action on the part of the Company,
Blue or the shareholders of the Company:

 

(a)   Each share of common
stock (other than shares (“Dissenting
Shares”) that are owned by shareholders (“Dissenting Shareholders”) exercising
dissenters’ rights pursuant to Article 113 of the CBCA), issued and outstanding immediately prior to the Effective
Time shall be converted (without the surrender of stock certificates or any
other action) into one fully paid and non-assessable share of common stock, par
value $0.01, of Blue (“Delaware common
stock”), with the

 

 

same rights, powers and privileges as the shares so converted and all
shares of common stock shall be cancelled and retired and shall cease to exist.

 

(b)   Each option, warrant or
other security of the Company issued and outstanding immediately prior to the
Effective Time shall be (i) converted into and shall be an identical
security of Blue, and (ii) in the case of securities to acquire common
stock, converted into the right to acquire the same number of shares of
Delaware common stock as the number of shares of common stock that were
acquirable pursuant to such option, warrant or other security. The same number
of shares of Delaware common stock shall be reserved for purposes of the
exercise of such options, warrants or other securities as is equal to the
number of shares of the common stock so reserved as of the Effective Time.

 

(d)   Each share of Delaware
common stock owned by the Company shall no longer be outstanding and shall be
cancelled and retired and shall cease to exist.

 

4.2.    Certificates.    At
and after the Effective Time, all of the outstanding certificates which
immediately prior thereto represented shares of common stock (other than
Dissenting Shares), options, warrants or other securities of the Company shall
be deemed for all purposes to evidence ownership of and to represent the shares
of the respective Delaware common stock, options, warrants or other securities
of Blue, as the case may be, into which the shares of common stock, options,
warrants or other securities of the Company represented by such certificates
have been converted as herein provided and shall be so registered on the books
and records of the Surviving Corporation or its transfer agent. The registered
owner of any such outstanding certificate shall, until such certificate shall
have been surrendered for transfer or otherwise accounted for to the Surviving
Corporation or its transfer agent, have and be entitled to exercise any voting
and other rights with respect to, and to receive any dividends and other
distributions upon, the shares of Delaware common stock, options, warrants or
other securities of Blue, as the case may be, evidenced by such outstanding
certificate, as above provided.

 

4.3    Dissenters’ Rights.    No
Dissenting Shareholder shall be entitled to shares of Delaware common stock
under this Article IV unless and until the holder thereof shall have
failed to perfect or shall have effectively withdrawn or lost such holder’s
right to dissent from the Reincorporation Merger under the CBCA, and any
Dissenting Shareholder shall be entitled to receive only the payment provided
by Article 113 of the CBCA with respect to Dissenting Shares owned by such
Dissenting Shareholder. If any person or entity who otherwise would be deemed a
Dissenting Shareholder shall have failed to properly perfect or shall have
effectively withdrawn or lost the right to dissent with respect to any shares
which would be Dissenting Shares but for that failure to perfect or withdrawal
or loss of the right to dissent, such Dissenting Shares shall thereupon be
treated as though such Dissenting Shares had been converted into shares of
Delaware common stock pursuant to Section 4.1 hereof.

 

 

ARTICLE V

 

CONDITION

 

5.1.    Condition to Each Party’s
Obligation to Effect the Reincorporation Merger.    The
respective obligation of each party hereto to effect the Reincorporation Merger
is subject to receipt prior to the Effective Time of the requisite approval of
this Agreement and the transactions contemplated hereby by the holders of
common stock pursuant to the CBCA and the Articles of Incorporation of the
Company.

 

ARTICLE VI

 

TERMINATION

 

6.1.    Termination.    This
Agreement may be terminated, and the Reincorporation Merger may be abandoned,
at any time prior to the Effective Time, whether before or after approval of
this Agreement by the shareholders of the Company, if the board of directors of
the Company determines for any reason, in its sole judgment and discretion,
that the consummation of the Reincorporation Merger would be inadvisable or not
in the best interests of the Company and its shareholders. In the event of the
termination and abandonment of this Agreement, this Agreement shall become null
and void and have no effect, without any liability on the part of either the
Company or Blue, or any of their respective shareholders, directors or officers.

 

ARTICLE VII

 

MISCELLANEOUS
AND GENERAL

 

7.1.    Modification or Amendment.    Subject
to the provisions of applicable law, at any time prior to the Effective Time,
the parties hereto may modify or amend this Agreement; provided, however, that
an amendment made subsequent to the approval of this Agreement by the holders
of common stock shall not (i) alter or change the amount or kind of shares
and/or rights to be received in exchange for or on conversion of all or any of
the shares or any class or series thereof of such corporation, (ii) alter
or change any provision of the certificate of incorporation of the Surviving
Corporation to be effected by the Reincorporation Merger, or (iii) alter
or change any of the terms or conditions of this Agreement it such alteration
or change would adversely affect the holders of any class or series of capital
stock of any of the parties hereto.

 

7.2.    Counterparts.    This
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.

 

7.3.    GOVERNING LAW.    THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE

 

 

OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.

 

7.4.    Entire Agreement.    This
Agreement constitutes the entire agreement and supercedes all other prior
agreements, understandings, representations and warranties, both written and
oral, among the parties, with respect to the subject matter hereof.

 

7.5.    No Third Party Beneficiaries.    This
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.

 

7.6.    Severability.    The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision of this Agreement,
or the application thereof to any person or any circumstance, is determined by
any court or other authority of competent jurisdiction to be invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.

 

7.7.    Headings.    The
headings therein are for convenience of reference only, do not constitute part
of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, this Agreement has been
duly executed and delivered by the duly authorized officers of the parties
hereto as of the date first written above. 

 

	
   

  	
  Reva, Inc.
a Colorado corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dennis
  G. McLaughlin, III

  	
   

  
	
   

  	
   

  	
  Name: Dennis G. McLaughlin, III

  
	
   

  	
   

  	
  Title: Chairman and Chief Executive

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Blue Wireless & Data, Inc.
a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John
  Mills

  	
   

  
	
   

  	
   

  	
  Name: John Mills

  
	
   

  	
   

  	
  Title: Chief Operating Officer, Vice

  President and DirectorEXHIBIT 10.17

              CERTIFICATE TO SET FORTH DESIGNATIONS, VOTING POWERS,
              PREFERENCES, LIMITATIONS, RESTRICTIONS, AND RELATIVE
                  RIGHTS OF SERIES A 8% CUMULATIVE CONVERTIBLE
                   PREFERRED STOCK, $.001 PAR VALUE PER SHARE

         It is hereby certified that:

         I. The name of the corporation is Universal Communication Systems, Inc.
(the "Corporation"), a Nevada corporation.

         II. Set forth hereinafter is a statement of the voting powers,
preferences, limitations, restrictions, and relative rights of shares of Series
A 8% Cumulative Convertible Preferred Stock hereinafter designated as contained
in a resolution of the Board of Directors of the Corporation pursuant to a
provision of the Articles of Incorporation of the Corporation permitting the
issuance of said Series A 8% Cumulative Convertible Preferred Stock by
resolution of the Board of Directors:

         Series A 8% Cumulative Convertible Preferred Stock, $.001 par value.

         1. Designation: Number of Shares. The designation of said series of
Preferred Stock shall be Series A 8% Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"). The number of shares of Series A Preferred Stock
shall be 36,000. Each share of Series A Preferred Stock shall have a stated
value equal to $10 (as adjusted for any stock dividends, combinations or splits
with respect to such shares) (the "Stated Value"), and $.001 par value.

         2. Dividends.

                  (a) The Holders of outstanding shares of Series A Preferred
Stock shall be entitled to receive preferential dividends in cash out of any
funds of the Corporation legally available at the time for declaration of
dividends before any dividend or other distribution will be paid or declared and
set apart for payment on any shares of any Common Stock, or other class of stock
presently authorized or to be authorized (the Common Stock, and such other stock
being hereinafter collectively the "Junior Stock") at the rate of 8% simple
interest per annum on the Stated Value per share payable commencing with the
period ending December 31, 2004 and semi-annually thereafter. At the Holder's
option, however, that dividend payments may be made in additional fully paid and
non assessable shares of Series A Preferred Stock at a rate of one share of
Series A Preferred Stock for each $10 of such dividend not paid in cash. The
issuance of such additional shares shall constitute full payment of such
dividends.

                  (b) The dividends on the Series A Preferred Stock at the rates
provided above shall be cumulative whether or not earned so that, if at any time
full cumulative dividends at the rate aforesaid on all shares of the Series A
Preferred Stock then outstanding from the date from and after which dividends
thereon are cumulative to the end of the quarterly dividend period next
preceding such time shall not have been paid or declared and set apart for
payment, or if the full dividend on all such outstanding Series A Preferred
Stock for the then current dividend period shall not have been paid or declared
and set apart for payment, the amount of the deficiency shall be paid or
declared and set apart for payment (but without interest thereon) before any sum
shall be set apart for or applied by the Corporation or a subsidiary of the
Corporation to the purchase, redemption or other acquisition of the Series A
Preferred Stock or any shares of any other class of stock ranking on a parity
with the Series A Preferred Stock ("Parity Stock") and before any dividend or

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<PAGE>

other distribution shall be paid or declared and set apart for payment on any
Junior Stock and before any sum shall be set aside for or applied to the
purchase, redemption or other acquisition of Junior Stock.

                  (c) Dividends on all shares of the Series A Preferred Stock
shall begin to accrue and be cumulative from and after the date of issuance
thereof. A dividend period shall be deemed to commence on the day following a
dividend payment date herein specified and to end on the next succeeding
dividend payment date herein specified.

         3. Liquidation Rights.

                  (a) Upon the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, the Holders of the Series A
Preferred Stock shall be entitled to receive before any payment or distribution
shall be made on the Junior Stock, out of the assets of the Corporation
available for distribution to stockholders, the Stated Value per share of Series
A Preferred Stock and all accrued and unpaid dividends to and including the date
of payment thereof. Upon the payment in full of all amounts due to Holders of
the Series A Preferred Stock the Holders of the Common Stock of the Corporation
and any other class of Junior Stock shall receive all remaining assets of the
Corporation legally available for distribution. If the assets of the Corporation
available for distribution to the Holders of the Series A Preferred Stock shall
be insufficient to permit payment in full of the amounts payable as aforesaid to
the Holders of Series A Preferred Stock upon such liquidation, dissolution or
winding-up, whether voluntary or involuntary, then all such assets of the
Corporation shall be distributed to the exclusion of the Holders of shares of
Junior Stock ratably among the Holders of the Series A Preferred Stock.

                  (b) The purchase or the redemption by the Corporation of all
or substantially all the shares of any class of stock, the merger or
consolidation of the Corporation with or into any other corporation or
corporations or the sale or transfer by the Corporation of all or substantially
all of its assets shall be deemed to be a liquidation, dissolution or winding-up
of the Corporation for the purposes of this paragraph 3.

         4. Conversion into Common Stock. Shares of Series A Preferred Stock
shall have the following conversion rights and obligations:

                  (a) Subject to the further provisions of this paragraph 4 each
Holder of shares of Series A Preferred Stock shall have the right at any time
commencing after the issuance to the Holder of Series A Preferred Stock, to
convert such shares into fully paid and non-assessable shares of Common Stock of
the Corporation (as defined in paragraph 4(i) below) determined in accordance
with the Conversion Price provided in paragraph 4(b) below (the "Conversion
Price"). All issued or accrued but unpaid dividends may be converted at the
election of the Holder simultaneously with the conversion of principal amount of
Stated Value of Series A Preferred Stock being converted.

                  (b) The number of shares of Common Stock issuable upon
conversion of each share of Series A Preferred Stock shall equal (i) the sum of
(A) the Stated Value per share and (B) at the Holder's election accrued and
unpaid dividends on such share, divided by (ii) the Conversion Price. The
Conversion Price shall be $0.033.

                  (c) Holder will give notice of its decision to exercise its
right to convert the Preferred Stock or part thereof by telecopying an executed
and completed Notice of Conversion (a form of which is annexed as EXHIBIT A to
the Certificate of Designation) to the Corporation via confirmed telecopier

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<PAGE>

transmission or otherwise pursuant to Section 13(a) of the subscription
agreement entered into between Holder and the Corporation ("Subscription
Agreement"). The Holder will not be required to surrender the Preferred Stock
certificate until the Preferred Stock has been fully converted. Each date on
which a Notice of Conversion is telecopied to the Corporation in accordance with
the provisions hereof shall be deemed a Conversion Date. The Corporation will
itself or cause the Corporation's transfer agent to transmit the Corporation's
Common Stock certificates representing the Common Stock issuable upon conversion
of the Preferred Stock to the Holder via express courier for receipt by such
Holder within five (5) business days after receipt by the Corporation of the
Notice of Conversion (the "Delivery Date"). In the event the Common Stock is
electronically transferable, then delivery of the Common Stock must be made by
electronic transfer provided request for such electronic transfer has been made
by the Holder. A Preferred Stock certificate representing the balance of the
Preferred Stock not so converted will be provided by the Corporation to the
Holder if requested by Holder, provided the Holder has delivered an original
Preferred Stock certificate to the Corporation. To the extent that a Holder
elects not to surrender Preferred Stock for reissuance upon partial payment or
conversion, the Holder hereby indemnifies the Corporation against any and all
loss or damage attributable to a third-party claim in an amount in excess of the
actual amount of the Stated Value of the Preferred Stock then owned by the
Holder.

                  In the case of the exercise of the conversion rights set forth
in paragraph 4(a) the conversion privilege shall be deemed to have been
exercised and the shares of Common Stock issuable upon such conversion shall be
deemed to have been issued upon the date of receipt by the Corporation of the
Notice of Conversion. The person or entity entitled to receive Common Stock
issuable upon such conversion shall, on the date such conversion privilege is
deemed to have been exercised and thereafter, be treated for all purposes as the
recordholder of such Common Stock and shall on the same date cease to be treated
for any purpose as the record Holder of such shares of Series A Preferred Stock
so converted.

                  Upon the conversion of any shares of Series A Preferred Stock
no adjustment or payment shall be made with respect to such converted shares on
account of any dividend on the Common Stock, except that the Holder of such
converted shares shall be entitled to be paid any dividends declared on shares
of Common Stock after conversion thereof.

                  The Corporation shall not be required, in connection with any
conversion of Series A Preferred Stock, and payment of dividends on Series A
Preferred Stock to issue a fraction of a share of its Series A Preferred Stock
and shall instead deliver a stock certificate representing the next whole
number.

                  The Corporation and Holder may not convert that amount of the
Series A Preferred Stock on a Conversion Date in amounts inconsistent with the
limitations set forth in the subscription agreement entered into by the
Corporation and Holder (or Holder's predecessor) relating to the issuance of the
Series A Preferred Stock ("Subscription Agreement") or that would result in the
Holder having a beneficial ownership of Common Stock which would be in excess of
the sum of (i) the number of shares of Common Stock beneficially owned by the
Holder and its affiliates on such Conversion Date, and (ii) the number of shares
of Common Stock issuable upon the conversion of the Series A Preferred Stock
with respect to which the determination of this proviso is being made on such
Conversion Date, which would result in beneficial ownership by the Holder and
its affiliates of more than 9.99% of the outstanding shares of Common Stock of
the Corporation. For the purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Holder shall not be limited to
successive exercises which would result in the aggregate issuance of more than
9.99%. The Holder may revoke the conversion limitation described in this
Paragraph upon 61 days prior notice to the Corporation. The Holder may allocate
which of the equity of the Corporation deemed beneficially owned by the Holder
shall be included in the 9.99% amount described above and which shall be
allocated to the excess above 9.99%.

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<PAGE>

                  (d) The Conversion Price determined pursuant to Paragraph 4(b)
shall be subject to adjustment from time to time as follows:

                           (i) In case the Corporation shall at any time (A)
declare any dividend or distribution on its Common Stock or other securities of
the Corporation other than the Series A Preferred Stock, (B) split or subdivide
the outstanding Common Stock, (C) combine the outstanding Common Stock into a
smaller number of shares, or (D) issue by reclassification of its Common Stock
any shares or other securities of the Corporation, then in each such event the
Conversion Price shall be adjusted proportionately so that the Holders of Series
A Preferred Stock shall be entitled to receive the kind and number of shares or
other securities of the Corporation which such Holders would have owned or have
been entitled to receive after the happening of any of the events described
above had such shares of Series A Preferred Stock been converted immediately
prior to the happening of such event (or any record date with respect thereto).
Such adjustment shall be made whenever any of the events listed above shall
occur. An adjustment made to the Conversion Price pursuant to this paragraph
4(d)(i) shall become effective immediately after the effective date of the event
retroactive to the record date, if any, for the event.

                           (ii) For so long as Series A Preferred Stock is
outstanding, if the Corporation shall issue any Common Stock except for (i)
employee stock options or compensation plans, (ii) as full or partial
consideration in connection with any merger, consolidation or purchase of
substantially all of the securities or assets of any corporation or other
entity, (iii) as has been described in the reports publicly available at the
EDGAR website of the Securities and Exchange Commission prior to the first date
of issuance of any Series A Preferred Stock, or (iv) conversion of the Series A
Preferred Stock or exercise of Common Stock Purchase Warrants issued to the
Holder contemporaneously with the Series A Preferred Stock for consideration
less than the Conversion Price that would be in effect at the time of such
issuance, then, and thereafter successively upon each such issuance, the
Conversion Price shall be reduced to such other lower issuance price. For
purposes of this adjustment, the issuance of any security or debt instrument of
the Corporation carrying the right to convert such security or debt instrument
into Common Stock or of any warrant, right or option to purchase Common Stock
shall result in an adjustment to the Conversion Price upon the issuance of the
above-described security, debt instrument, warrant, right, or option. The
reduction of the Conversion Price described in this Section 4(d)(ii) is in
addition to any other rights granted or available to the Holder pursuant to
agreement with the Corporation, at law, equity or otherwise.

                  (e) (i) In case of any merger of the Corporation with or into
any other corporation (other than a merger in which the Corporation is the
surviving or continuing corporation and which does not result in any
reclassification, conversion, or change of the outstanding shares of Common
Stock) then unless the right to convert shares of Series A Preferred Stock shall
have terminated, as part of such merger lawful provision shall be made so that
Holders of Series A Preferred Stock shall thereafter have the right to convert
each share of Series A Preferred Stock into the kind and amount of shares of
stock and/or other securities or property receivable upon such merger by a
Holder of the number of shares of Common Stock into which such shares of Series
A Preferred Stock might have been converted immediately prior to such
consolidation or merger. Such provision shall also provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in paragraph (d) of this paragraph 4. The foregoing provisions of this
paragraph 4(e) shall similarly apply to successive mergers.

                           (ii) In case of any sale or conveyance to another
person or entity of the property of the Corporation as an entirety, or
substantially as an entirety, in connection with which shares or other
securities or cash or other property shall be issuable, distributable, payable,
or deliverable for outstanding shares of Common Stock, then, unless the right to

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<PAGE>

convert such shares shall have terminated, lawful provision shall be made so
that the Holders of Series A Preferred Stock shall thereafter have the right to
convert each share of the Series A Preferred Stock into the kind and amount of
shares of stock or other securities or property that shall be issuable,
distributable, payable, or deliverable upon such sale or conveyance with respect
to each share of Common Stock immediately prior to such conveyance.

                  (f) Whenever the number of shares to be issued upon conversion
of the Series A Preferred Stock is required to be adjusted as provided in this
paragraph 4, the Corporation shall forthwith compute the adjusted number of
shares to be so issued and prepare a certificate setting forth such adjusted
conversion amount and the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Transfer Agent for the Series A
Preferred Stock and the Common Stock; and the Corporation shall mail to each
Holder of record of Series A Preferred Stock notice of such adjusted conversion
price.

                  (g) In case at any time the Corporation shall propose:

                           (i) to pay any dividend or distribution payable in
shares upon its Common Stock or make any distribution (other than cash
dividends) to the Holders of its Common Stock; or

                           (ii) to offer for subscription to the Holders of its
Common Stock any additional shares of any class or any other rights; or

                           (iii) any capital reorganization or reclassification
of its shares or the merger of the Corporation with another corporation (other
than a merger in which the Corporation is the surviving or continuing
corporation and which does not result in any reclassification, conversion, or
change of the outstanding shares of Common Stock); or

                           (iv) the voluntary dissolution, liquidation or
winding-up of the Corporation;

then, and in any one or more of said cases, the Corporation shall cause at least
fifteen (15) days prior notice of the date on which (A) the books of the
Corporation shall close or a record be taken for such stock dividend,
distribution, or subscription rights, or (B) such capital reorganization,
reclassification, merger, dissolution, liquidation or winding-up shall take
place, as the case may be, to be mailed to the Transfer Agent for the Series A
Preferred Stock and for the Common Stock and to the Holders of record of the
Series A Preferred Stock.

                  (h) So long as any shares of Series A Preferred Stock shall
remain outstanding and the Holders thereof shall have the right to convert the
same in accordance with provisions of this paragraph 4 the Corporation shall at
all times reserve from the authorized and unissued shares of its Common Stock a
sufficient number of shares to provide for such conversions.

                  (i) The term Common Stock as used in this paragraph 4 shall
mean the $.001 par value Common Stock of the Corporation as such stock is
constituted at the date of issuance thereof or as it may from time to time be
changed or shares of stock of any class or other securities and/or property into
which the shares of Series A Preferred Stock shall at any time become
convertible pursuant to the provisions of this paragraph 4.

                  (j) The Corporation shall pay the amount of any and all issue
taxes (but not income taxes) which may be imposed in respect of any issue or
delivery of stock upon the conversion of any shares of Series A Preferred Stock,
but all transfer taxes and income taxes that may be payable in respect of any
change of ownership of Series A Preferred Stock or any rights represented
thereby or of stock receivable upon conversion thereof shall be paid by the
person or persons surrendering such stock for conversion.

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<PAGE>

                  (k) In the event a Holder shall elect to convert any shares of
Series A Preferred Stock as provided herein, the Corporation may not refuse
conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, or for any
other reason unless, an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of said shares of Series A Preferred Stock
shall have been issued and the Corporation posts a surety bond for the benefit
of such Holder in the amount of 150% of the Stated Value of the Series A
Preferred Stock and dividends sought to be converted, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder in the event it obtains judgment.

                  (l) In addition to any other rights available to the Holder,
if the Corporation fails to deliver to the Holder such certificate or
certificates pursuant to Section 4(c) by the Delivery Date and if after the
Delivery Date the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Holder of
the Common Stock which the Holder anticipated receiving upon such conversion (a
"Buy-In"), then the Corporation shall pay in cash to the Holder (in addition to
any remedies available to or elected by the Holder) within five (5) business
days of written notice from the Holder, the amount by which (A) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate Stated Value of the shares
of Series A Preferred Stock for which such conversion was not timely honored,
together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if the Holder
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of $10,000 of Stated
Value of Series A Preferred Stock, the Corporation shall be required to pay the
Holder $1,000, plus interest. The Holder shall provide the Corporation written
notice indicating the amounts payable to the Holder in respect of the Buy-In.

         5. Voting Rights. The shares of Series A Preferred Stock shall not have
voting rights except as described in Section 6 hereof.

         6. Restrictions and Limitations.

                  (a) Amendments to Charter. The Corporation shall not amend its
certificate of incorporation without the approval by the holders of at least a
majority of the then outstanding shares of Series A Preferred Stock if such
amendment would:

                           (i) change the relative seniority rights of the
holders of Series A Preferred Stock as to the payment of dividends in relation
to the holders of any other capital stock of the Corporation, or create any
other class or series of capital stock entitled to seniority as to the payment
of dividends in relation to the holders of Series A Preferred Stock;

                           (ii) reduce the amount payable to the holders of
Series A Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, or change the relative seniority
of the liquidation preferences of the holders of Series A Preferred Stock to the
rights upon liquidation of the holders of other capital stock of the
Corporation, or change the dividend rights of the holders of Series A Preferred
Stock;

                           (iii) cancel or modify the conversion rights of the
holders of Series A Preferred Stock provided for in Section 4 herein; or

                           (iv) cancel or modify the rights of the holders of
the Series A Preferred Stock provided for in this Section 6.

                                       6
<PAGE>

         7. Event of Default. The occurrence of any of the following events of
default ("Event of Default") shall, after the applicable period to cure the
Event of Default, cause the dividend rate of 8% described in paragraph 2 hereof
to become 15% from and after the occurrence of such event (except in connection
with Section 7(i) below) and the Holder shall have the option to require the
Corporation to redeem the Series A Preferred Stock held by such Holder by the
immediate payment to the Holder by the Corporation of a sum of money equal to
the number of shares that would be issuable upon conversion of an amount of
Stated Value and accrued dividends designated by the Holder multiplied by the
average of the closing ask prices and closing bid prices of the Corporation's
Common Stock as reported by Bloomberg L.P. for the principal trading market for
the Common Stock for the five trading days preceding the date notice is given by
the Holder to the Corporation:

                  (a) The Corporation fails to pay any dividend payment required
to be paid pursuant to the terms of paragraph 2 hereof or the failure to timely
pay any other sum of money due to the Holder from the Corporation and such
failure continues for a period of ten (10) days after written notice to the
Corporation from the Holder.

                  (b) The Corporation breaches any material covenant, term or
condition of the Subscription Agreement or in this Certificate of Designation,
and such breach continues for a period of seven (7) days after written notice to
the Corporation from the Holder.

                  (c) Any material representation or warranty of the Corporation
made in the Subscription Agreement pursuant to which the Series A Preferred
Stock is issued, or in any agreement, statement or certificate given in writing
pursuant thereto shall be false or misleading.

                  (d) The Corporation or any of its subsidiaries shall make an
assignment of a substantial part of its property or business for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for a substantial part of its property or business, or such a receiver
or trustee shall otherwise be appointed.

                  (e) Any money judgment, confession of judgment, writ or
similar process shall be entered against the Corporation, a subsidiary of the
Corporation, or their property or other assets for more than $50,000, and is not
vacated, satisfied, bonded or stayed within 45 days.

                  (f) Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Corporation or
any of its subsidiaries, and is not dismissed within 45 days.

                  (g) An order entered by a court of competent jurisdiction, or
by the Securities and Exchange Commission, or by the National Association of
Securities Dealers, preventing purchase and sale transactions in the
Corporation's Common Stock.

                  (h) The Corporation's failure to timely deliver Common Stock
or a replacement Preferred Stock certificate, if required, to the Holder
pursuant to paragraph 4 hereof or the Subscription Agreement.

                  (i) The occurrence of a Non-Registration Event as described in
Section 11.4 of the Subscription Agreement.

                                       7
<PAGE>

                  (j) Delisting of the Common Stock from the OTC Bulletin Board
("OTCBB") or such other principal exchange on which the Common Stock is listed
for trading; failure to comply with the requirements for continued listing on
the OTCBB for a period of three consecutive trading days; or notification from
the OTC Bulletin Board or any principal market that the Corporation is not in
compliance with the conditions for such continued listing on the OTCBB or other
principal market.

                  (k) The Corporation effectuates a reverse split of its common
stock without the prior written consent of the Holder.

                  (l) A default by the Corporation of a material term, covenant,
warranty or undertaking of any other agreement to which the Corporation and
Holder are parties, or the occurrence of a material event of default under any
such other agreement, in each case, which is not cured after any required notice
and/or cure period.

         8. Status of Converted or Redeemed Stock. In case any shares of Series
A Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the
shares so redeemed, converted, or reacquired shall resume the status of
authorized but unissued shares of Preferred Stock and shall no longer be
designated as Series A Preferred Stock.

Dated: April __, 2004

                                    UNIVERSAL COMMUNICATION SYSTEMS, INC.

                                    By:_____________________________________

                                       8

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