Document:

Exhibit 10.7

 

WARRANT AGREEMENT

 

THIS
AGREEMENT is made and entered into as of the                     day
of
                     ,
2001, by and between NEW SOUTHERN BANK, a
Georgia banking corporation (the “Bank”), and                              
(the “Warrant Holder”).

 

 

WITNESSETH

 

 

WHEREAS, the Warrant
Holder has served as an organizer in the formation and establishment of the
Bank; and

 

WHEREAS,
the Warrant Holder has purchased
                                          
shares of the Bank’s common stock, $5.00 par value per share (the “Common
Stock”), at a price of $10.00 per share; and

 

WHEREAS, the Warrant
Holder will provide services to the Bank as a director of the Bank; and

 

WHEREAS, the Bank, in
recognition of the financial risk undertaken by the Warrant Holder in
organizing the Bank and in order to encourage the Warrant Holder’s continued involvement in the
successful operation of the Bank, desires to issue to the Warrant Holder the right to acquire
additional shares of the Bank’s Common Stock.

 

NOW, THEREFORE, in consideration of these
premises and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement agree as
follows:

 

1.      Grant of Warrant. Subject to the terms, restrictions, limitations and conditions stated in
this Agreement, the Bank hereby grants to the Warrant Holder the right (the “Warrant”)
to purchase all or any part of an
aggregate of
                                   
shares of the Common Stock, subject to adjustment
in accordance with Section 7 of this Agreement.

 

2.      Term; Vesting; Required Exercise.

 

(a) The term for the exercise
of the Warrant begins at 9:00 a.m., Eastern Time, on the first anniversary of
the date that the Bank first issues its common stock (the “Issue Date”). The term for
the exercise of the Warrant ends at 5:00 p.m., Eastern Time (the “Expiration Time”) on
the earlier of the following:

 

(i) the tenth anniversary of the Issue Date, or

 

(ii) 90 days after the Warrant
Holder ceases to serve as a director of the Bank, except  that
if the Warrant Holder ceases to be a director because he or she

 

 

becomes disabled, retires or dies, then the Warrant
Holder (or his or her estate) will have until the tenth anniversary of the
Issue Date to exercise the Warrant.

 

(b)      The Warrant will vest in annual one-third (1/3)
increments over a period of three years, beginning on the first anniversary of the
Issue Date. The vested portion of the Warrant may be exercised in whole, or from time to
time in part, at any time prior to the Expiration Time.

 

(c)       Notwithstanding any other provision of this
Agreement, if the Bank’s capital falls below the minimum requirements as determined by the
primary federal or state regulator of the Bank (the “Regulator”), the Regulator
may direct the Bank to require the Warrant Holder to exercise or forfeit his or her
Warrant. The Bank will notify the Warrant Holder within 45 days from the date the Regulator
notifies the Bank in writing that the Warrant Holder must exercise or forfeit his
or her Warrant. The Bank will cancel the Warrant if it is not exercised within
21 days of the Bank’s notification to the Warrant Holder. The Bank agrees
to comply with any Regulator’s request that the Bank invoke its right to require the
Warrant Holder to exercise or forfeit his or her Warrant under the circumstances stated
above.

 

3.         Purchase Price. The price per share to
be paid by the Warrant Holder for the shares of Common Stock subject to the
Warrant shall be $10.00, subject to adjustment as set forth in Section 6 of
this Agreement (the price as it may be adjusted is called the “Purchase Price”).

 

4.         Exercise of Warrant. The Warrant Holder
may exercise the Warrant by delivering the following to the Bank:

 

(a)       Written notice of exercise specifying the number
of shares of Common Stock with respect to which the Warrant is being exercised; and

 

(b)      A cashier’s or certified check payable to the
Bank for the full amount of the aggregate Purchase Price for the number of shares as to
which the Warrant is being exercised.

 

The Warrant Holder must deliver the notice to exercise
and the cashier’s or certified check to the address of the Bank as
set forth in Section 10(a) of this Agreement or any other address that the Bank requests.

 

5.      Issuance of Shares. Upon receipt of the items set forth in Section
4, and subject to the terms of this Agreement, the Bank shall deliver stock
certificates to the Warrant Holder for the number of shares specified in the
notice to exercise and shall register the share or shares in the name of the Warrant Holder. In no event, however,
shall the Bank be required to issue or deliver any certificate for shares of Common Stock purchased upon the exercise
of the Warrant or any portion of the Warrant prior to the fulfillment of the
following conditions:

 

(a)   The admission of such shares for listing on
all stock exchanges on which the Common Stock is then listed;

 

2

 

(b)      The completion of any registration or other
qualification of such shares which the Bank shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;

 

(c)       The obtaining of any approval or other clearance
from any federal or state governmental agency or body, which the Bank shall
determine to be necessary or advisable, which may include federal and state
regulatory approval, if the exercise of the Warrant will result in the Warrant Holder
beneficially owning more than 10% of the outstanding common stock of the Bank;
and

 

(d)      The lapse of such reasonable period of time
following the exercise of the Warrant as the Bank may from time to time establish for
reasons of administrative convenience.

 

The Bank shall have no obligation to obtain the
fulfillment of these conditions; provided, however, that the
Warrant Holder shall have one full calendar year after these conditions have
been fulfilled to exercise his or her Warrant, notwithstanding any other
provision in this Agreement.

 

6.     Antidilution, Etc.

 

(a)      If, prior to the Expiration Time, the Bank shall
subdivide its outstanding shares of Common Stock into a greater number of
shares, or declare and pay a dividend of its Common Stock payable in additional shares of
its Common Stock, the Purchase Price as then in effect shall be proportionately reduced,
and the Bank shall proportionately increase the number of shares of Common Stock then
subject to exercise under the Warrant (and not previously exercised).

 

(b)      If, prior to the Expiration Time, the Bank shall
combine its outstanding shares of the Common Stock into a smaller number of shares, the
Purchase Price, as then in effect, shall be proportionately increased, and the
Bank shall proportionately reduce the number of shares of Common Stock then subject to
exercise under the Warrant (and not previously exercised).

 

7.     Reorganization, Reclassification, Consolidation or Merger. If, prior to the Expiration Time, there shall be any reorganization or
reclassification of the Common Stock (other than a subdivision or combination
of shares provided for in Section 6 hereof), or any consolidation or merger of
the Bank with another entity, the Warrant Holder shall be entitled to receive,
during the remainder of the term of
this Agreement and upon payment of the Purchase Price, the number of shares of stock or other securities or
property of the Bank or of the successor entity (or its parent company)
resulting from such consolidation or merger, as the case may be, to which a holder of the Common Stock, deliverable
upon the exercise of this Warrant, would have been entitled upon such reorganization, reclassification, consolidation
or merger; and in any case, the Bank shall make appropriate adjustments (as
determined by the Board of Directors of the Bank in its sole discretion) in the
application of these provisions with respect to the rights and interests of the Warrant Holder so that the
provisions set forth in this Agreement (including

 

3

 

the
adjustment of the Purchase Price and the number of shares issuable upon the
exercise of this Warrant) shall be applicable, as nearly as may reasonably be
practicable, to any shares or other property thereafter deliverable upon the exercise
of the Warrant.

 

8.        Notice of Adjustments. Within thirty (30)
days following any adjustment provided for in Section 6 or Section 7 of this Agreement,
the Bank shall give written notice of the adjustment to the Warrant Holder at
the address set forth in Section 10(a) of this Agreement or such other address as
the Warrant Holder may request. The notice shall state the Warrant Purchase Price as
adjusted and the increased or decreased number of shares purchasable upon the exercise
of the Warrant and shall set forth in reasonable detail the method of
calculation of each.

 

9.        Transfer and Assignment.

 

(a)       During the Warrant Holder’s lifetime, the Warrant
and any rights under this Agreement shall be exercisable only by the Warrant
Holder (or by the Warrant Holder’s guardian or legal representative, should one be
appointed). Except assignments or transfers made by will or under the laws of descent and
distribution, the Warrant or any rights under this Agreement may not be assigned,
transferred, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of
the Warrant except as provided for in this Section 9 shall be null and void and without
legal effect.

 

(b)      Shares of Common Stock acquired by exercise of
the Warrant granted in this Agreement may not be transferred or sold unless the
transfer is exempt from further regulatory approval or otherwise permissible
under applicable law, including state and federal securities laws, and will
bear a legend to this effect.

 

10.    Miscellaneous.

 

(a)   All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, telegram or facsimile
transmission, or if mailed, by postage prepaid first class mail, on the third business
day after mailing, to the following address (or at such other address as a party may notify the
other hereunder):

 

 

To the Bank:

 

New Southern Bank 

4077 Forsyth Road 

Macon, Georgia

 

4

 

To the
Warrant Holder:

 

 

 

 

(b)   The Bank covenants that
it has reserved and will keep available, solely for the purpose of issue upon
the exercise of the Warrant, a sufficient number of shares of Common Stock to permit
the exercise of the Warrant in full.

 

(c)       No holder of the
Warrant, as such, shall be entitled to vote or receive dividends with respect
to the shares of Common Stock subject to the Warrant or be deemed to be a
shareholder of the Bank for any purpose until such Common Stock has been
issued.

 

(d)      This Agreement shall
constitute the entire agreement contemplated by the Bank and the Warrant Holder
and may be amended only by an instrument in writing executed by the party
against whom enforcement of the amendment is sought.

 

(e)       This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

 

(f)        This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia.

 

 

[The remainder of this
page is intentionally left blank.]

 

5

 

IN WITNESS WHEREOF, the Bank has caused this Agreement
to be signed by its duly authorized officers and its corporate seal to be affixed
hereto, and the Warrant Holder has executed this Agreement under seal, all as
of the day and year first above written.

 

 

	
   

  	
  NEW SOUTHERN BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  

 

 

	
   

  	
  WARRANT HOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (SEAL)

  
	
   

  	
  Print Name:

  

 

6CERTIFICATE OF DESIGNATION OF
                      SERIES A CONVERTIBLE PREFERRED STOCK
                          (PAR VALUE $0.0001 PER SHARE)

                                       OF

                          NANOPIERCE TECHNOLOGIES, INC.

                                   ----------

            Pursuant to Section 78.195 of the Nevada Revised Statutes

                                   ----------

It is hereby certified that:

     1.   The  name  of  the  company is NanoPierce Technologies, Inc., a Nevada
corporation  (the  "Company").

     2.   The  Articles  of Incorporation of the Company authorizes the issuance
of  Five  Million (5,000,000) shares of preferred stock ("Preferred Stock"), par
value  $0.0001  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  the  Series  A  Preferred  Stock:

     RESOLVED,  that  two  hundred  thousand  (200,000)  of  the  five  million
(5,000,000)  authorized  shares  of  Preferred  Stock  of  the  Company shall be
designated  Series  A  Convertible  Preferred Stock, par value $0.0001 per share
("Series  A  Preferred Stock"), and shall possess the rights and preferences set
forth  below:

     SECTION 1.  DESIGNATION AND AMOUNT.  The shares of such series shall have a
par  value  of  $0.0001  per share and shall be designated as Series A Preferred
Stock  and  the number of shares constituting the Series A Preferred Stock shall
be  two  hundred  thousand (200,000).  The Series A Preferred Stock shall have a
deemed  par  value  (the  "Deemed  Par  Value") of seven dollars and fifty cents
($7.50)  per  share.

     SECTION 2.  RANK.  Except  for  the  voting  rights  specifically  granted
herein,  the  Series A Preferred Stock shall rank: (i) junior to any other class
or  series  of  outstanding  Preferred  Stock  or series of capital stock of the
Company hereafter created specifically ranking by its terms senior to the Series
A  Preferred Stock (collectively, the "Senior Securities"); (ii) prior to all of
the  Company's common stock, par value $0.0001 per share ("Common Stock"); (iii)
prior  to  any

<PAGE>
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
the  existing 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.  Each  share  of  Series A Preferred Stock shall be
paid  a  dividend  (or other distributions deemed dividends for purposes hereof)
equal  to  eight  percent (8%) per annum of the Deemed Par Value.  The dividends
shall be cumulative from the date of issuance (the "Commencement Date"). If such
dividend  is  not declared and paid, for any reason, the Deemed Par Value of the
Series  A Preferred Stock shall be increased by such accrued dividend and shall,
at the option of the holder or holders of record (the "Holders") of the Series A
Preferred  Stock,  be  convertible into Common Stock of the Company or otherwise
redeemed  pursuant  to  the  terms  hereof.

     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 any
     distributions  to  Senior  Securities required by the Company's Articles 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
     Deemed Par Value for each outstanding share of Series A Preferred Stock and
     (ii)  an  amount  equal  to the accrued but unpaid dividends for the period
     that  has  passed  since  the Commencement Date 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
     Articles  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  Articles  of
     Incorporation including any duly adopted certificate(s) of designation.

                                        2
<PAGE>
          (c)  After  the payment to the Holders of the Series A Preferred Stock
     of  the full preferential amounts provided for in this Section, the Holders
     of  Series A Preferred Stock as such shall have no right or claim to any of
     the  remaining  assets  of  the  Company.

     SECTION 5.  CONVERSION RIGHTS.  The Holders of the Series A Preferred Stock
shall  have  conversion  rights  as  follows  (the  "Conversion  Rights"):

          (a)  RIGHT  TO  CONVERT.  Subject to the Company's right of redemption
     set  forth  in  Section  6(a)  and  the  restrictions  on the timing of any
     conversions  specified  in  Section 5(b), each Holder of Series A Preferred
     Stock  shall be entitled (in the amounts set forth below), at the principal
     office  of  the  Company  or  any transfer agent for the Series A Preferred
     Stock (the "Transfer Agent"), to convert shares of Series A Preferred Stock
     into  shares  of  Common  Stock  (in  multiples  of  one  share of Series A
     Preferred  Stock)  at  the Conversion Ratio defined in Section 5(c) herein.

          (b)  RESTRICTION  ON  TIMING  OF  CONVERSION RIGHTS.  No conversion of
     shares of Series A Preferred Stock into Common Stock shall occur until such
     time  as the number of authorized shares of Common Stock of the Company has
     been  increased  to an amount approved by Holders of the Series A Preferred
     Stock  and  the  Common Stock voting as one class sufficient to provide for
     the  conversion  or  exercise  of  all of the outstanding securities of the
     Company  and  the amendment to the Articles of Incorporation of the Company
     evidencing  the  same  is filed with the Secretary of State of the State of
     Nevada  and  is  effective.

          (c)  CONVERSION  RATIO.  Each  share  of  Series  A Preferred Stock is
     convertible  into  one thousand five hundred (1,500) shares of Common Stock
     of the Company (the "Conversion Ratio"), subject to adjustment as set forth
     below  in  Section  5(f) and timing restrictions set forth in Section 5(b).

          (d)  MECHANICS  OF  CONVERSION.  In  order  to exercise the Conversion
     Rights  and  convert shares of Series A Preferred Stock into full shares of
     Common  Stock,  the  Holder  shall:

          (1)  fax, on or prior to 11:59 p.m., Denver, Colorado time on the Date
     of  Conversion  (as  defined below), a copy of the fully executed notice of
     conversion  ("Notice of Conversion") to the Company at the principal office
     of  the Company or its designated 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  and  the Conversion Ratio (together with a copy of the front
     page  of  each  certificate  to  be  converted);  and

          (2)  surrender  to  a  common  courier  for  delivery to the principal
     office  of  the  Company  or  the Transfer Agent, the original certificates
     representing  the  shares  of 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  ("Common  Stock  Certificates")
     issuable  upon

                                        3
<PAGE>
     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 the Company of a facsimile copy of
     a  Notice of Conversion, the 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. In the case of a
     dispute as to the calculation of the number of shares of Common Stock to be
     issued  to  the  Holder pursuant to the Conversion Ratio, the Company shall
     promptly  issue to the Holder the number of shares of Common Stock that are
     not  disputed  and  shall  submit  the disputed calculations to its outside
     accountant  via  facsimile within three (3) days of receipt of the Holder's
     Notice of Conversion. The Company shall cause the accountant to perform the
     calculations  and  to  notify  the Company and the Holder of the results no
     later  than  forty-eight  (48) hours from the time it receives the disputed
     calculations.  The calculation of the accountant shall be deemed conclusive
     absent  manifest  error.

               (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, the Company shall not
          be  obligated  to  re-issue  such  lost  or  stolen  Preferred  Stock
          Certificates  if  the  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 third (3rd) business day after receipt by the Company
          or  the  Transfer  Agent of a facsimile copy of a Notice of Conversion
          and  receipt  by  the  Company  or the Transfer Agent of all necessary
          documentation  duly  executed  and  in  proper  form  required  for
          conversion,  including 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

                                        4
<PAGE>
          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 (A) 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 (B) 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 Holder or Holders of such shares of
          Common  Stock  on  the  Date  of  Conversion.

               (v)  Issuance  of  Preferred  Stock  Certificates.  To the extent
          that  the  Preferred  Stock  Certificates  surrendered  to the Company
          exceed  the  number  of  shares  of Series A Preferred Stock that were
          converted  in  accordance with this Section, the Company shall execute
          and deliver new Preferred Stock Certificate(s) evidencing those shares
          of  Series  A  Preferred  Stock.

          (e)  RESERVATION OF STOCK ISSUABLE UPON CONVERSION.  The Company shall
     take  reasonable  efforts  to  reserve  and  keep  available  or shall take
     reasonable  efforts  to  increase,  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.

          (f)  ADJUSTMENT  TO  CONVERSION  RATIO.

               (i)  Conversion  Ratio  In the Case of Stock Split, Reverse 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  Conversion  Ratio shall be proportionately reduced, or if
          the  number  of  outstanding  shares of Common Stock is decreased by a
          reverse  stock  split, combination, subdivision or reclassification of
          shares,  or  other  similar  event,  the  Conversion  Ratio  shall  be
          proportionately  increased.

               (ii)  Adjustment Due to Merger, Consolidation, Etc.  If, prior to
          the  conversion  of  all  Series A Preferred Stock, there shall be any
          merger,

                                        5
<PAGE>
          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 Ratio 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  Conversion  Required.  No adjustment of the Conversion
          Ratio  will  be  required  to be made until the cumulative adjustments
          (whether  or  not made) amount to 1.0% or more of the Conversion Ratio
          as  last  adjusted.  The  Company  reserves  the  right  to  make such
          reductions  in  the  Conversion Ratio in addition to those required in
          the  foregoing provisions as the Corporation considers to be advisable
          in  order  that any event treated for Federal income tax purposes as a
          dividend  of  stock  or  stock  rights  will  not  be  taxable  to the
          recipients.  In  the event the Company elects to make such a reduction
          in the Conversion Ratio, the Company will comply with the requirements
          of  securities  laws  and  regulations thereunder if and to the extent
          that  such  laws and regulations are applicable in connection with the
          reduction  of  the  Conversion  Ratio.

               (iv)  No Fractional Shares.  If any adjustment under this Section
          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  THE  COMPANY.

          (a)  COMPANY'S  RIGHT  TO  REDEEM  AT ITS ELECTION.  On or after seven
     years after the Commencement Date, the Company shall have the right, in its
     sole discretion, to redeem ("Redemption"), from time to time, any or all of
     the  Series  A  Preferred  Stock;  provided the Company shall first provide
     prior  written  notice  as  provided in subparagraph 6(a)(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.

                                        6
<PAGE>
               (i)  Redemption Price.  The "Redemption Price" for redeeming each
          share  of  Series  A Preferred Stock shall mean the 130% of Deemed Par
          Value  (as  defined  in Section 1) of the shares of Series A Preferred
          Stock  being  redeemed  pursuant  to  this  Section, together with the
          accrued  but  unpaid  dividends  on  the  Deemed  Par  Value.

               (ii)  Mechanics  of  Redemption.  The  Company  shall effect each
          such  redemption  by  giving  at  least thirty (30) days prior written
          notice  ("Notice  of  Redemption")  to  the  Holders  of  the Series A
          Preferred  Stock selected for redemption, at the address and facsimile
          number  of  each  such  Holder  appearing  in  the  Company's Series A
          Preferred  Stock  register  and to the Transfer Agent, which Notice of
          Redemption  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. Such Notice of
          Redemption  shall  indicate  (A)  the  number  of  shares  of Series A
          Preferred  Stock  that have been selected for redemption; (B) the date
          which  such  redemption  is  to  become  effective  (the  "Date  of
          Redemption");  and  (C) the Redemption Price, 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 Notice of
     Redemption  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  the Company's
          securities  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.  Each  Holder  tendering Series A
     Preferred  Stock  being  redeemed  under  this  Section  shall  send  their
     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. 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).

                                        7
<PAGE>
          (d)  Blackout  Period.  Notwithstanding the foregoing, the Company may
     not  either send out a Notice of Redemption or effect a redemption pursuant
     to  Section  6(a)  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 securities of the Company 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.

     SECTION  7.  VOTING  RIGHTS.  The  Holders  of the Series A Preferred Stock
shall  have  the right to vote on any matter with Holders of Common Stock voting
together  as one class.  The Holder of a share of Series A Preferred Stock shall
have  one  thousand  two  hundred  (1,200) votes per share of Series A Preferred
Stock.  The  votes  cast  by  Holders  of  the Series A Preferred Stock shall be
identical  in  every  other respect to the votes cast by Holders of Common Stock
entitled  to  vote  at  any  regular  or  special  meeting  of  the  Holders.

     The  Holders  of the Series A Preferred Stock shall be entitled to the same
notice  of any regular or special meeting of the Shareholders as may or shall be
given  to  Holders  of  the  Common  Stock  entitled  to  vote at such meetings.

     For  purposes of determining a quorum for any regular or special meeting of
the Shareholders, each share of Series A Preferred Stock represents one thousand
two  hundred  (1,200)  votes.

     If,  prior  to  the  conversion of all of the Series A Preferred Stock, the
number of outstanding shares of Series A Preferred Stock is increased by a stock
split,  stock  dividend, or other similar event, the number of votes represented
by  each  share of Series A Preferred Stock shall be proportionately reduced, or
if  the number of outstanding shares of Series A Preferred Stock is decreased by
a  reverse  stock split, combination, subdivision or reclassification of shares,
or  other similar event, the number of votes represented by each share of Series
A  Preferred  Stock  shall  be  proportionately  increased.

     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  the Nevada Revised
Statutes)  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;  or

          (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 shares of
     Series  A  Preferred  Stock.

                                        8
<PAGE>
     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.

     SECTION 9.  STATUS OF CONVERTED OR REDEEMED STOCK.  In the event any shares
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  re-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 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.

                            [Signature Page Follows]

                                        9
<PAGE>
                                 SIGNATURE PAGE
      [CERTIFICATE OF DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK]

                                        By  /s/  Paul  H.  Metzinger
                                            ------------------------------------
                                            Paul  H.  Metzinger,
                                            President & Chief Executive Officer

                                        By  /s/  Kristi  J.  Kampmann
                                            ------------------------------------
                                            Kristi  J.  Kampmann,
                                            Secretary

Dated  January 17, 2006

STATE OF COLORADO  )

                           ) ss.

COUNTY OF DENVER  )

     I, the undersigned, a Notary Public, hereby certify that on the 17th day of
January  2006,  personally  appeared  before me, Paul H. Metzinger and Kristi J.
Kampmann who, being by me first duly sworn, declared that they are the President
&  Chief  Executive  Officer  and  Secretary,  respectively,  of  NanoPierce
Technologies,  Inc.,  that  they  signed the foregoing document as President and
Secretary  and  that  the  statements  therein  contained  are  true.

                                        /s/Kristin  L.  Arnold
                                        ----------------------------------------
                                        Notary  Public

My  Commission  Expires:

May  16,  2009
-----------------------------------------

                                        10

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