Exhibit 10.2

 

CERTIFICATE OF DESIGNATIONS

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF

 

 

OF

 

 

SERIES D CONVERTIBLE
PREFERRED STOCK

 

 

OF

 

ELECTRIC CITY CORP.

 

 

PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

 

Electric City Corp., a Delaware corporation (the “Corporation”), certifies that
pursuant to the authority contained in Article 4 of its Amended and Restated
Certificate of Incorporation (the “Certificate of Incorporation”) and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation by unanimous
written consent dated June 26, 2003 adopted the following resolution, which
remains in full force and effect on the date hereof:

 

RESOLVED, that there is hereby established a series of authorized preferred
stock having a par value of $.01 per share, which series shall be designated as
“Series D Convertible Preferred Stock,” shall consist of 253,000 shares and
shall have the following voting powers, preferences and relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions thereof as follows:

 

1.             Definitions.  The following terms when used herein shall, except
where the context otherwise requires, have the following meanings, such meanings
to be equally applicable to the singular and plural forms thereof:

 

“Board” means Board of Directors of the Corporation.

 

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“Business Day” means a day other than a Saturday or Sunday, or other day on
which commercial banks in the City of New York are authorized or required by law
or executive order to close.

 

“By-laws” means the by-laws of the Corporation.

 

“Change of Control Transaction” means a transaction which results in the
occurrence of any of the following events: (i) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (the “Exchange Act”)) is or becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have “beneficial ownership” of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 40% of the total
outstanding voting stock of the Corporation; (ii) the Corporation consolidates
with or merges with or into another person or conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any person, or
any person consolidates with or merges with or into the Corporation, in any such
event, pursuant to a transaction in which the outstanding voting stock of the
Corporation is converted into or exchanged for cash, securities or other
property; (iii) any person consolidates with or merges with or into a subsidiary
of the Corporation and such consolidation or merger results in the transfer of
fifty percent (50%) or more of the outstanding voting power of the Corporation
or results in the holders of the outstanding voting securities of this
Corporation immediately prior to such transaction holding less than a majority
of the voting securities of this Corporation or the surviving entity immediately
thereafter; or (iv) the Corporation is liquidated or dissolved or a special
resolution is passed by the stockholders of the Corporation approving the plan
of liquidation or dissolution.

 

“Closing Price” means the closing price of the Common Stock as reported on The
American Stock Exchange (or, if not traded on the American Stock Exchange, any
national security exchange or automated quotation services on which the Common
Stock is then listed for trading).

 

“Common Stock” means the Corporation’s authorized common stock, par value $.0001
per share.

 

“Conversion Date” shall have the meaning set forth in Section 7(c) hereof.

 

“Conversion Price” shall have the meaning set forth in Section 7(a) hereof.

 

“Conversion Shares” shall have the meaning set forth in Section 7(a) hereof.

 

“Convertible Securities” shall have the meaning set forth in Section 7(e)(i)
hereof.

 

“Dividend Payment Date” shall have the meaning set forth in Section 3(a) hereof.

 

“Dividend Rate” shall have the meaning set forth in Section 3(a) hereof.

 

“Dividend Record Date” shall have the meaning set forth in Section 3(a) hereof.

 

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“Junior Stock” shall have the meaning set forth in Section 3(b) hereof.

 

“Liquidation Amount” means the higher of (i) 200% of the Stated Value plus any
accrued but unpaid dividends, and (ii) the Market Price of the number of shares
of Common Stock into which one (1) share of Series D Preferred Stock is
convertible.

 

“Market Price” shall have the meaning set forth in Section 7(e)(vi) hereof.

 

“Notice of Redemption” shall have the meaning set forth in Section 5(c) hereof.

 

“Parity Stock” means the Company’s Series A Preferred Stock, the Company’s
Series C Preferred Stock and any class or series of stock of the Corporation
authorized after the date of issuance of the Series D Preferred Stock in
accordance with Section 6(b) hereof ranking on a parity with the Series D
Preferred Stock in respect of the right to receive dividends or the right to
participate in any distribution upon liquidation.

 

“Person” means an individual, a corporation, a limited liability company, an
association, a partnership, a trust or estate, a government or any department or
agency thereof.

 

“Purchase Rights” shall have the meaning set forth in Section 7(f)(ii) hereof.

 

“Redemption Date” shall have the meaning set forth in Section 5(c) hereof.

 

“Redemption Price” shall have the meaning set forth in Section 5(b) hereof.

 

“Securities Purchase Agreement” means that certain Securities Purchase Agreement
dated as of June 20, 2003 by and among the Corporation and certain investors
party thereto, as the same may be amended from time to time.

 

“Senior Stock” means any class or series of stock of the Corporation authorized
after the date of issuance of the Series D Preferred Stock in accordance with
Section 6(e) hereof ranking senior to the Series D Preferred Stock in respect of
the right to receive dividends or the right to participate in any distribution
upon liquidation.

 

“Series A Preferred Stock” means the Corporation’s Series A Convertible
Preferred Stock, par value $0.01 per share.

 

“Series A Certificate of Designations” means the Certificate of Designations,
Preferences And Relative, Participating, Optional And Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof of the
Corporation filed with the Secretary of State of Delaware on or about September
7, 2001.

 

“Series C Preferred Stock” means the Corporation’s Series C Convertible
Preferred Stock, par value $0.01 per share.

 

“Series C Certificate of Designations” means the Certificate of Designations,
Preferences And Relative, Participating, Optional And Other Special Rights of
Preferred

 

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Stock and Qualifications, Limitations and Restrictions Thereof of the
Corporation filed with the Secretary of State of Delaware on or about June 3,
2002.

 

“Series D Preferred Stock” shall have the meaning set forth in Section 2 hereof.

 

“Series D Preferred Stock Issue Date” means the date of the initial Closing (as
defined therein) under the Securities Purchase Agreement.

 

“Stated Value” shall have the meaning set forth in Section 2 hereof.

 

2.             Designation and Amount.  The designation of the series of the
Preferred Stock shall be “Series D Convertible Preferred Stock,” par value $.01
per share (the “Series D Preferred Stock”).  The number of shares of Series D
Preferred Stock shall be 253,000.  The Series D Preferred Stock shall be
assigned a stated value of $10.00 per share (as adjusted for stock splits, stock
combinations, recapitalizations and the like, the “Stated Value”).

 

3.             Dividends.

 

(a)           Rate, etc.  The holders of shares of Series D Preferred Stock
shall be entitled to receive, when and if declared by the Board of Directors out
of funds legally available therefor, cumulative dividends from the date of issue
thereof, on the Stated Value plus any accrued but unpaid dividends, at an annual
rate equal to ten percent (10%) (the “Dividend Rate”) through and including the
first Dividend Payment Date following the third anniversary of the Series D
Preferred Stock Issue Date, after which the Dividend Rate shall increase by
one-half of one percent (0.5%) every six months up to a maximum rate of fifteen
percent (15%) per annum.  Dividends hereunder shall be calculated on the basis
of a 360-day year consisting of twelve 30-day months, accruing and payable
quarterly, in arrears, on the last day in June, September, December and March of
each year (each a “Dividend Payment Date”), commencing on June 30, 2003 until
such time as the Series D Preferred Stock is retired in full.  If any Dividend
Payment Date occurs on a day that is not a Business Day, any accrued dividends
otherwise payable on such Dividend Payment Date shall be paid on the next
succeeding Business Day with the same effect as though made on such Dividend
Payment Date.  Through and including the first Dividend Payment Date following
the third anniversary of the Series D Preferred Stock Issue Date, dividends on
the Series D Preferred Stock may be paid in cash or additional shares of Series
D Preferred Stock at the sole discretion of the Board.  The cash equivalent of a
share of Series D Preferred Stock shall be the Stated Value.  After the first
Dividend Payment Date following the third anniversary of the Series D Preferred
Stock Issue Date, dividends on the Series D Preferred Stock shall be paid by the
Corporation in cash only.  Dividends shall accrue and be cumulative with respect
to each share of Series D Preferred Stock from the date of original issuance
whether or not earned or declared.  Except as otherwise required by law, the
“Dividend Record Date” with respect to the next succeeding Dividend Payment Date
shall be the date ten (10) Business Days prior to such Dividend Payment Date. 
Upon conversion of any shares of Series D Preferred Stock, dividends shall be
paid as provided in Section 7 hereof.

 

(b)           Rank, etc.  Unless full dividends, if applicable, on all
outstanding shares of Series D Preferred Stock that have previously become due
and payable, have been paid or are contemporaneously declared and paid (or
declared and a sum sufficient for the payment thereof

 

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is set apart for such payment), the Corporation shall not (i) declare or pay any
dividend on (A) the Series D Preferred Stock, except if such dividend is
allocated pro rata on a share-by-share basis among all shares of Series D
Preferred Stock at that time outstanding, (B) any other class of Parity Stock,
except if such dividend is allocated pro rata on a share-by-share basis among
all shares of Series D Preferred Stock and any other class of Parity Stock at
that time outstanding taken together as a class, (C) the Common Stock or (D) on
any other class or series of stock ranking junior to the Series D Preferred
Stock as to dividends or upon liquidation (the Common Stock and any such junior
class or series being the “Junior Stock”) or make any payment on account of, or
set apart money for, a sinking or other analogous fund for the purchase,
redemption or other retirement of, any Parity Stock or Junior Stock or make any
distribution in respect thereof, either directly or indirectly and whether in
cash or property or in obligations or shares of the Corporation, or (ii)
purchase or redeem any of the shares of Series D Preferred Stock, unless such
purchase or redemption is pursuant to Section 5 or Section 6(b)(i)(4), or
purchase or redeem any shares of Parity Stock or Junior Stock then outstanding,
unless such purchase or redemption is approved in accordance with Section 6(b)
hereof.  If any dividend is paid on the Common Stock, the holders of shares of
Series D Preferred Stock shall be entitled to receive, in addition to dividends
as provided in Section 3(a) hereof, additional dividends to the extent necessary
so that the aggregate dividends paid on Series D Preferred Stock from the issue
date thereof shall not be less than the aggregate dividends paid on Common Stock
during the corresponding period.

 

4.             Liquidation.

 

(a)           Preference Upon Liquidation, Dissolution or Winding Up.  In the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation (any or all of such events, a “liquidation”), whether voluntary or
involuntary, subject to the prior preferences and other rights of any Senior
Stock, if any, as to liquidation preferences, the holders of shares of Series D
Preferred Stock then outstanding shall be entitled first as if members of a
single class of securities with the holders of any Parity Stock, if any, to be
paid out of the assets of the Corporation, before any payment shall be made to
the holders of the Junior Stock, the Liquidation Amount per outstanding share. 
Except as provided in this Section 4(a), holders of Series D Preferred Stock
shall not be entitled to any distribution in the event of a liquidation.

 

(b)           Insufficient Assets.  If, upon any liquidation pursuant to Section
4(a), the assets of the Corporation are insufficient to pay the holders of
shares of the Series D Preferred Stock and any Parity Stock, if any, then
outstanding the full amount to which they shall be entitled, such assets shall
be distributed to each holder of the Series D Preferred Stock and Parity Stock,
if any, pro-rata based on the number of shares of Series D Preferred Stock and
Parity Stock, if any, held by each.

 

(c)           Rights of Other Holders.  In the event of any liquidation pursuant
to Section 4(a), after payment shall have been made to the holders of the Series
D Preferred Stock and Parity Stock, if any, of all preferential amounts to which
they shall be entitled, the holders of shares of Junior Stock shall receive such
amounts as to which they are entitled by the terms thereof.

 

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5.             Redemption.

 

(a)           Mandatory Redemption.  The Series D Preferred Stock shall not be
subject to mandatory redemption by the Corporation.

 

(B)           OPTIONAL REDEMPTION.  THROUGH AND INCLUDING THE THIRD ANNIVERSARY
OF THE SERIES D PREFERRED STOCK ISSUE DATE, THE SHARES OF SERIES D PREFERRED
STOCK MAY NOT BE REDEEMED BY THE CORPORATION.   AT ANY TIME AFTER THE THIRD
ANNIVERSARY OF THE SERIES D PREFERRED STOCK ISSUE DATE, ALL, BUT NOT LESS THAN
ALL, OF THE OUTSTANDING SHARES OF SERIES D PREFERRED STOCK MAY BE REDEEMED, AT
THE OPTION OF THE CORPORATION, AT A PRICE PER SHARE EQUAL TO AND IN THE FORM OF
CASH IN AN AMOUNT EQUAL TO THE STATED VALUE PLUS ANY ACCRUED BUT UNPAID
DIVIDENDS (THE “REDEMPTION PRICE”) IF (A) THE CLOSING PRICE EXCEEDS $7.50 PER
SHARE (AS ADJUSTED FOR STOCK SPLITS, STOCK COMBINATIONS, RECAPITALIZATIONS AND
THE LIKE) FOR AT LEAST THE TWENTY (20) CONSECUTIVE TRADING DAYS IMMEDIATELY
PRECEDING THE DATE THE CORPORATION SENDS A NOTICE OF REDEMPTION TO ALL HOLDERS
OF RECORD OF THE SERIES D PREFERRED STOCK AND (B) THE AVERAGE DAILY TRADING
VOLUME FOR SUCH TWENTY (20) TRADING DAY PERIOD (AS ADJUSTED TO EXCLUDE THE
HIGHEST AND LOWEST VOLUME TRADING DAYS DURING SUCH PERIOD) EXCEEDS 500,000
SHARES.

 

(C)           MECHANICS OF REDEMPTION.  A NOTICE OF REDEMPTION (“NOTICE OF
REDEMPTION”) SHALL BE SENT BY OR ON BEHALF OF THE CORPORATION NOT LESS THAN
FIFTEEN (15) BUSINESS DAYS NOR MORE THAN THIRTY (30) DAYS PRIOR TO THE DATE
SPECIFIED FOR REDEMPTION IN SUCH NOTICE (THE “REDEMPTION DATE”), BY FIRST CLASS
MAIL, POSTAGE PREPAID, TO ALL HOLDERS OF RECORD OF THE SERIES D PREFERRED STOCK
AT THEIR LAST ADDRESSES AS THEY SHALL APPEAR ON THE BOOKS OF THE CORPORATION;
PROVIDED, HOWEVER, THAT NO FAILURE TO GIVE SUCH NOTICE OR ANY DEFECT THEREIN OR
IN THE MAILING THEREOF SHALL AFFECT THE VALIDITY OF THE PROCEEDINGS FOR THE
REDEMPTION OF ANY SHARES OF SERIES D PREFERRED STOCK EXCEPT AS TO THE HOLDER TO
WHOM THE CORPORATION HAS FAILED TO GIVE NOTICE OR EXCEPT AS TO THE HOLDER TO
WHOM NOTICE WAS DEFECTIVE.  IN ADDITION TO ANY INFORMATION REQUIRED BY LAW OR BY
THE APPLICABLE RULES OF ANY EXCHANGE UPON WHICH THE SERIES D PREFERRED STOCK OR
THE COMMON STOCK MAY BE LISTED OR ADMITTED TO TRADING, SUCH NOTICE SHALL STATE:
(I) THAT SUCH REDEMPTION IS BEING MADE PURSUANT TO THE OPTIONAL REDEMPTION
PROVISIONS HEREOF; (II) THE REDEMPTION DATE; (III) A CALCULATION OF THE
REDEMPTION PRICE AS OF THE DATE OF THE NOTICE OF REDEMPTION; (IV) THAT ALL THE
OUTSTANDING SHARES OF SERIES D PREFERRED STOCK ARE TO BE REDEEMED; (V) THE PLACE
OR PLACES WHERE CERTIFICATES FOR SUCH SHARES ARE TO BE SURRENDERED FOR PAYMENT
OF THE REDEMPTION PRICE; AND (VI) THAT DIVIDENDS ON THE SHARES OF SERIES D
PREFERRED STOCK WILL CEASE TO ACCUMULATE ON THE REDEMPTION DATE.  UPON THE
MAILING OF ANY SUCH NOTICE OF REDEMPTION, THE CORPORATION SHALL BECOME OBLIGATED
TO REDEEM AT THE TIME OF REDEMPTION SPECIFIED THEREIN ALL SHARES OF SERIES D
PREFERRED STOCK.

 

(D)           IF A NOTICE OF REDEMPTION HAS BEEN MAILED IN ACCORDANCE WITH
SECTION 5(C) ABOVE AND IF ALL FUNDS AND SHARES OF COMMON STOCK NECESSARY FOR
SUCH REDEMPTION SHALL HAVE BEEN SET ASIDE BY THE CORPORATION ON OR BEFORE THE
REDEMPTION DATE, SEPARATE AND APART FROM ITS OTHER FUNDS IN TRUST FOR THE
BENEFIT OF THE HOLDERS OF THE OUTSTANDING SHARES OF SERIES D PREFERRED STOCK, SO
AS TO BE, AND TO CONTINUE TO BE AVAILABLE THEREFOR, THEN DIVIDENDS ON THE SHARES
OF THE SERIES D PREFERRED STOCK SO CALLED FOR REDEMPTION SHALL CEASE TO ACCRUE
OR ACCUMULATE ON THE REDEMPTION DATE, AND SUCH SHARES SHALL NO LONGER BE DEEMED
TO BE OUTSTANDING AND SHALL NOT HAVE THE STATUS OF SHARES OF SERIES D PREFERRED
STOCK ON THE REDEMPTION DATE, AND ALL RIGHTS OF THE HOLDERS THEREOF AS
STOCKHOLDERS OF THE CORPORATION (EXCEPT THE RIGHT TO RECEIVE FROM THE
CORPORATION THE REDEMPTION PRICE) SHALL CEASE ON THE REDEMPTION DATE.  UPON
SURRENDER, IN ACCORDANCE WITH SUCH NOTICE OF REDEMPTION, OF THE CERTIFICATES FOR
ANY SHARES OF SERIES D

 

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PREFERRED STOCK SO REDEEMED (PROPERLY ENDORSED OR ASSIGNED FOR TRANSFER, IF THE
CORPORATION SHALL SO REQUIRE AND THE NOTICE SHALL SO STATE), SUCH SHARES OF
SERIES D PREFERRED STOCK SHALL BE REDEEMED BY THE CORPORATION AT THE REDEMPTION
PRICE.

 

(E)           OPTION TO CONVERT.  NOTWITHSTANDING THE DELIVERY BY THE
CORPORATION OF A NOTICE OF REDEMPTION, EACH HOLDER OF SERIES D PREFERRED STOCK
MAY CONVERT ALL OR ANY PORTION OF HIS, HER OR ITS SHARES OF SERIES D PREFERRED
STOCK INTO SHARES OF COMMON STOCK IN ACCORDANCE WITH SECTION 7(A) AND SECTION
7(C) HEREOF UNTIL THE CLOSE OF BUSINESS ON THE DAY PRIOR TO THE REDEMPTION DATE.

 

6.             VOTING RIGHTS.

 

(A)           GENERAL.  EXCEPT AS TO THE ELECTION OF DIRECTORS AND AS TO ANY
SPECIAL APPROVALS REQUIRED UNDER SECTION 6(B), AS TO WHICH SECTION 6(B) AND (C)
SHALL APPLY TO THE EXCLUSION OF ANY VOTING RIGHTS UNDER THIS SECTION 6(A), THE
HOLDER OF RECORD OF EACH SHARE OF SERIES D PREFERRED STOCK SHALL HAVE THE RIGHT
TO ONE VOTE FOR EACH SHARE OF COMMON STOCK INTO WHICH SUCH SHARE OF SERIES D
PREFERRED STOCK COULD THEN BE CONVERTED, AND WITH RESPECT TO SUCH VOTE, SUCH
HOLDER OF RECORD SHALL HAVE FULL VOTING RIGHTS AND POWERS EQUAL TO THE VOTING
RIGHTS AND POWERS OF THE HOLDERS OF COMMON STOCK, AND SHALL BE ENTITLED TO
NOTICE OF ANY STOCKHOLDERS’ MEETING IN ACCORDANCE WITH THE BYLAWS OF THE
CORPORATION, AND SHALL BE ENTITLED TO VOTE TOGETHER WITH THE HOLDERS OF COMMON
STOCK AS A SINGLE CLASS, WITH RESPECT TO ANY QUESTION UPON WHICH HOLDERS OF
RECORD OF COMMON STOCK HAVE THE RIGHT TO VOTE, EXCEPT AS OTHERWISE REQUIRED BY
APPLICABLE LAW.  FRACTIONAL VOTES SHALL NOT, HOWEVER, BE PERMITTED AND ANY
FRACTIONAL VOTING RIGHTS AVAILABLE ON AN AS-CONVERTED BASIS (AFTER AGGREGATING
ALL SHARES INTO WHICH SHARES OF SERIES D PREFERRED STOCK HELD BY EACH HOLDER OF
RECORD COULD BE CONVERTED) SHALL BE ROUNDED TO THE NEAREST WHOLE NUMBER (WITH
ONE-HALF BEING ROUNDED UPWARD).

 

(b)           Special Approval Rights.

 

(i)            For so long as any shares of Series D Preferred Stock remain
issued and outstanding, the Corporation shall not, without the affirmative
written consent or approval of the holders of record representing 51% or more of
the aggregate number of shares of Series D Preferred Stock then outstanding
(such consent or approval to be given by written consent in lieu of a meeting if
allowable under the Corporation’s Certificate of Incorporation or by vote at a
meeting called for such purpose for which notice shall have been given to the
holders of the Series D Preferred Stock):

 

(A)          enter into any agreement that would restrict the Corporation’s
ability to perform under the Securities Purchase Agreement;

 

(B)           amend its Certificate of Incorporation (including this resolution)
or Bylaws in any way that could adversely affect, alter or change the rights,
powers or preferences of the Series D Preferred Stock; or

 

(C)           engage in any transaction that would impair or reduce the rights,
powers or preferences of the Series D Preferred Stock as a class.

 

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(ii)           For so long as at least 800,000 shares in the aggregate of Series
A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock remain
issued and outstanding (as adjusted for stock splits, stock combinations,
recapitalizations and the like), the Corporation shall not, without the
affirmative written consent or approval of the holders of record of shares
representing 66-2/3% of the aggregate number of shares of Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock then outstanding,
voting as a single class to the exclusion of all other classes of the
Corporation’s capital stock (such consent or approval to be given by written
consent in lieu of a meeting if allowable under the Corporation’s Certificate of
Incorporation or by vote at a meeting called for such purpose for which notice
shall have been given to the holders of the Series A Preferred Stock, the
holders of the Series C Preferred Stock and to the holders of the Series D
Preferred Stock):

 

(A)          authorize or issue any Senior Stock or Parity Stock or any
securities convertible, exercisable or exchangeable into such securities, other
than:

 

(1)           Series A Preferred Stock issued as payment in kind of any accrued
but unpaid dividends on the Series A Preferred Stock;

 

(2)           Series C Preferred Stock issued as payment in kind of any accrued
but unpaid dividends on the Series C Preferred Stock;

 

(3)           Series D Preferred Stock issued at closing under the Securities
Purchase Agreement;

 

(4)           Series D Preferred Stock issued upon exercise of the Series D
Preferred Stock Warrants issued pursuant to the Securities Purchase Agreement;
or

 

(5)           Series D Preferred Stock issued as payment in kind of any accrued
but unpaid dividends on the Series D Preferred Stock;

 

(B)           purchase, redeem, or otherwise acquire any of the Corporation’s
capital stock, other than (x) the redemption of the Series A Preferred Stock
pursuant to section 5 or section 6(e)(i)(D) of the Series A Certificate of
Designations, or (y) the redemption of the Series C Preferred Stock pursuant to
section 5 or section 6(b)(i)(4) of the Series C Certificate of Designations; or

 

(C)           declare or pay any cash dividends or make any distributions on any
of its capital stock, other than on the Series A Preferred Stock, the Series C
Preferred Stock and the Series D Preferred Stock.

 

Notwithstanding any other provision in this Certificate of Designations, (I)
upon the consent or approval of the holders of record of the required numbers of
shares of Series D Preferred Stock (or, where applicable, holders of Series A
Preferred Stock, holders of Series C Preferred Stock and holders of Series D
Preferred Stock), with respect to Section 6(b)(i) and Section 6(b)(ii), and (II)
with such other votes or consents as may be required by Delaware law, the rules
and regulations of the Securities and Exchange Commission, the regulations of
the American Stock Exchange or other securities exchange applicable to the
Corporation or pursuant to the

 

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Corporation’s Certificate of Incorporation, the Corporation may take any such
action referenced in this Section 6(b).

 

7.             Conversion Rights.

 

(a)           Optional Conversion of Series D Preferred Stock.  The holder of
any shares of Series D Preferred Stock shall have the right, at such holder’s
option, at any time or from time to time after sixty (60) days from the Series D
Preferred Stock Issue Date to convert any or all of such holder’s shares of
Series D Preferred Stock into such number of fully paid and nonassessable shares
of Common Stock (the “Conversion Shares”) as determined for each share of Series
D Preferred Stock by dividing the Stated Value by the “Conversion Price” in
effect at the time of such conversion.  The initial “Conversion Price” shall be
$1.00 (One Dollar).  The Conversion Shares and the Conversion Price are subject
to certain adjustments as set forth herein, and the terms Conversion Shares and
Conversion Price as used herein shall as of any time be deemed to include all
such adjustments to be given effect as of such time in accordance with the terms
hereof; provided, that under no circumstances shall the Conversion Price be
reduced to a level that is less than the par value of the Common Stock.

 

Upon the exercise of the option of the holder of any shares of Series D
Preferred Stock to convert Series D Preferred Stock into Common Stock, the
holder of such shares of Series D Preferred Stock to be converted shall
surrender the certificates representing the shares of Series D Preferred Stock
so to be converted in the manner provided in Section 7(c) hereof.  Immediately
following such conversion, the rights of the holders of converted Series D
Preferred Stock (other than the right to receive dividends accrued to the date
of such conversion) shall cease and the persons entitled to receive the Common
Stock upon the conversion of Series D Preferred Stock shall be treated for all
purposes (other than the right to receive dividends accrued to the date of such
conversion) as having become the owners of such Common Stock.

 

(B)           AUTOMATIC CONVERSION.  EACH SHARE OF SERIES D PREFERRED STOCK
SHALL BE AUTOMATICALLY CONVERTED INTO SUCH NUMBER OF FULLY PAID AND
NONASSESSABLE SHARES OF COMMON STOCK AS DETERMINED BY DIVIDING THE STATED VALUE
BY THE CONVERSION PRICE IN EFFECT AT THE TIME OF SUCH CONVERSION:  (I) AT SUCH
TIME AS THE CLOSING PRICE EXCEEDS $12.00 PER SHARE (AS ADJUSTED APPROPRIATELY
FOR STOCK SPLITS, STOCK COMBINATIONS, RECAPITALIZATIONS AND THE LIKE) FOR TWENTY
(20) CONSECUTIVE TRADING DAYS AND THE AVERAGE DAILY TRADING VOLUME FOR SUCH
TWENTY (20) TRADING DAY PERIOD (AS ADJUSTED TO EXCLUDE THE HIGHEST AND LOWEST
VOLUME TRADING DAYS DURING SUCH PERIOD) EXCEEDS 500,000 SHARES; OR (II) IN THE
EVENT OF THE CONSUMMATION OF A FIRMLY UNDERWRITTEN PRIMARY PUBLIC OFFERING OF
COMMON STOCK BY THE CORPORATION THAT RESULTS IN AGGREGATE GROSS PROCEEDS OF NOT
LESS THAN $35 MILLION, AT A PRICE PER SHARE OF NOT LESS THAN $5.00 (AS ADJUSTED
APPROPRIATELY FOR STOCK SPLITS, STOCK COMBINATIONS, RECAPITALIZATIONS AND THE
LIKE).  ALL ACCRUED BUT UNPAID DIVIDENDS SHALL BE PAYABLE IMMEDIATELY PRIOR TO
CONVERSION, EITHER IN CASH OR, AT THE OPTION OF THE CORPORATION IF SUCH
CONVERSION OCCURS PRIOR TO THE THIRD ANNIVERSARY OF THE SERIES D PREFERRED STOCK
ISSUE DATE, IN ADDITIONAL SHARES OF SERIES D PREFERRED STOCK.

 

(C)           DELIVERY OF STOCK CERTIFICATES.  THE HOLDER OF ANY SHARES OF
SERIES D PREFERRED STOCK MAY EXERCISE THE OPTIONAL CONVERSION RIGHT PURSUANT TO
SECTION 7(A) BY DELIVERING TO THE CORPORATION DURING REGULAR BUSINESS HOURS THE
CERTIFICATE OR CERTIFICATES FOR THE SHARES TO BE CONVERTED, DULY ENDORSED OR
ASSIGNED EITHER IN BLANK OR TO THE CORPORATION (IF REQUIRED BY IT),

 

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accompanied by written notice stating that such holder elects to convert such
shares and shall provide a certificate to the Corporation as to the date of such
conversion.  Upon the occurrence of an automatic conversion pursuant to Section
7(b), the Corporation shall deliver notice to each holder of Series D Preferred
Stock and each holder of any shares of Series D Preferred Stock shall deliver to
the Corporation at the office of the Corporation the certificate or certificates
for all shares of Series D Preferred Stock then held by such holder, duly
endorsed or assigned either in blank or to the Corporation (if requested by
it).  Conversion shall be deemed to have been effected (i) in the case of an
optional conversion, on the date when the aforesaid delivery of stock
certificates accompanied by written notice of conversion is made if such day is
a Business Day and otherwise on the Business Day following the date of the
aforesaid delivery, and (ii) in the case of an automatic conversion pursuant to
Section 7(b), upon the date of the event triggering the automatic conversion. 
In each case, such date is referred to herein as the “Conversion Date.” As
promptly as practicable thereafter, the Corporation, through its transfer agent,
shall issue and deliver to or upon the written order of such holder, to the
place designated by such holder, a certificate or certificates for the number of
full shares of Common Stock to which such holder is entitled and a check or cash
in respect of any fractional interest in a share of Common Stock, as provided
below; provided, however, that in the case of a conversion in connection with
liquidation, no such certificates need be issued.  The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become the stockholder of record in respect of such Common Stock on the
applicable Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event such holder shall be deemed to have become
the stockholder of record in respect of such Common Stock on the next succeeding
date on which the transfer books are open, but the Conversion Price shall be
that in effect on the Conversion Date.  Upon conversion of only a portion of the
number of shares covered by a stock certificate representing shares of Series D
Preferred Stock surrendered for conversion, the Corporation shall issue and
deliver to or upon the written order of the holder of the stock certificate so
surrendered for conversion, at the expense of the Corporation, a new stock
certificate covering the number of shares of Series D Preferred Stock
representing the unconverted portion of the certificate so surrendered.  The
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of Common Stock or the
reissuance of the Series D Preferred Stock in a name other than that in which
the shares of Series D Preferred Stock so converted were registered, and no such
issuance or delivery shall be made unless and until the person requesting such
issuance has paid to the Corporation the amount of any such tax or has
established to the satisfaction of the Corporation that such tax, if any, has
been paid.

 

(d)           No Fractional Shares of Common Stock.

 

(I)            NO FRACTIONAL SHARES OF COMMON STOCK SHALL BE ISSUED UPON
CONVERSION OF SHARES OF SERIES D PREFERRED STOCK AND IN LIEU THEREOF, THE
CORPORATION SHALL PAY A CASH ADJUSTMENT IN RESPECT OF SUCH FRACTIONAL INTEREST
IN AN AMOUNT EQUAL TO THE THEN CURRENT MARKET PRICE (AS DEFINED IN SECTION
7(E)(VI) BELOW) OF A SHARE OF COMMON STOCK MULTIPLIED BY SUCH FRACTIONAL
INTEREST.  THE HOLDERS OF FRACTIONAL INTERESTS SHALL NOT BE ENTITLED TO ANY
RIGHTS AS STOCKHOLDERS OF THE CORPORATION IN RESPECT OF SUCH FRACTIONAL
INTERESTS.  IN DETERMINING THE NUMBER OF SHARES OF COMMON STOCK AND THE PAYMENT,
IF ANY, IN LIEU OF FRACTIONAL SHARES THAT A HOLDER OF SERIES D PREFERRED STOCK
SHALL RECEIVE, THE TOTAL NUMBER OF SHARES OF SERIES D PREFERRED STOCK
SURRENDERED FOR CONVERSION BY SUCH HOLDER SHALL BE AGGREGATED.

 

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(II)           ON THE FIRST DIVIDEND PAYMENT DATE ON WHICH ACCRUED DIVIDENDS ARE
PAID IN FULL TO HOLDERS OF SERIES D PREFERRED STOCK FOLLOWING THE OPTIONAL
CONVERSION PURSUANT TO SECTION 7(A) OF ALL OR ANY PORTION OF THE SERIES D
PREFERRED STOCK, THE CORPORATION SHALL PAY ANY DIVIDENDS ACCRUED ON SUCH
CONVERTED SERIES D PREFERRED STOCK TO THE DATE OF SUCH CONVERSION.  ACCRUED
DIVIDENDS WITH RESPECT TO ALL SHARES CONVERTED PURSUANT TO SECTION 7(B) HEREOF
SHALL BE PAID IN FULL ON THE CONVERSION DATE OUT OF FUNDS LEGALLY AVAILABLE
THEREFOR OR, AT THE OPTION OF THE CORPORATION IF SUCH CONVERSION OCCURS PRIOR TO
THE THIRD ANNIVERSARY OF THE SERIES D PREFERRED STOCK ISSUE DATE, IN ADDITIONAL
SHARES OF SERIES D PREFERRED STOCK.

 

(E)           ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF COMMON STOCK.  IF
AND WHENEVER AFTER THE SERIES D PREFERRED STOCK ISSUE DATE THE CORPORATION SHALL
ISSUE OR SELL ANY SHARES OF ITS COMMON STOCK FOR A PRICE PER SHARE LESS THAN,
UNDER CERTAIN CIRCUMSTANCES (INCLUDING, WITHOUT LIMITATION, THOSE CIRCUMSTANCES
DESCRIBED IN PARAGRAPHS (I) THROUGH (VII) BELOW), THE CONVERSION PRICE IN EFFECT
IMMEDIATELY PRIOR TO THE TIME OF SUCH ISSUE OR SALE, THEN IMMEDIATELY UPON SUCH
ISSUE OR SALE, THE CONVERSION PRICE THEN IN EFFECT SHALL BE REDUCED TO SUCH
LOWER PRICE PER SHARE.

 

For the purposes of this Section 7(e), the following paragraphs (i) through
(vii) shall also be applicable:

 

(I)            ISSUANCE OF RIGHTS OR OPTIONS.  IN CASE AT ANY TIME AFTER THE
DATE HEREOF THE CORPORATION SHALL IN ANY MANNER GRANT (WHETHER DIRECTLY OR BY
ASSUMPTION IN A MERGER OR OTHERWISE, EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN
SECTION 7(F) BELOW) ANY RIGHTS TO SUBSCRIBE FOR OR TO PURCHASE, OR ANY OPTIONS
OR WARRANTS FOR THE PURCHASE OF, COMMON STOCK OR ANY STOCK, NOTES OR SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR COMMON STOCK (SUCH CONVERTIBLE OR
EXCHANGEABLE STOCK, NOTES OR SECURITIES BEING HEREIN CALLED “CONVERTIBLE
SECURITIES”), WHETHER OR NOT SUCH RIGHTS, OPTIONS OR WARRANTS OR THE RIGHT TO
CONVERT OR EXCHANGE ANY SUCH CONVERTIBLE SECURITIES ARE IMMEDIATELY EXERCISABLE,
SUCH GRANT SHALL BE DEEMED A SALE BY THE CORPORATION OF ITS COMMON STOCK AND THE
PRICE PER SHARE FOR SUCH DEEMED SALE OF COMMON STOCK SHALL BE DETERMINED BY
DIVIDING (A) THE TOTAL AMOUNT, IF ANY, IN CASH OR PROPERTY RECEIVED OR
RECEIVABLE BY THE CORPORATION AS CONSIDERATION FOR THE GRANTING OF SUCH RIGHTS,
OPTIONS OR WARRANTS, PLUS THE MINIMUM AGGREGATE AMOUNT OF ADDITIONAL
CONSIDERATION, IF ANY, PAYABLE TO THE CORPORATION UPON THE EXERCISE OF SUCH
RIGHTS, OPTIONS OR WARRANTS, PLUS, IN THE CASE OF SUCH RIGHTS, OPTIONS OR
WARRANTS THAT RELATE TO CONVERTIBLE SECURITIES, THE MINIMUM AGGREGATE AMOUNT OF
ADDITIONAL CONSIDERATION, IF ANY, PAYABLE UPON THE ISSUE OR SALE OF SUCH
CONVERTIBLE SECURITIES AND UPON THE CONVERSION OR EXCHANGE THEREOF, BY (B) THE
TOTAL MAXIMUM NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF
SUCH RIGHTS, OPTIONS OR WARRANTS OR UPON THE CONVERSION OR EXCHANGE OF ALL SUCH
CONVERTIBLE SECURITIES ISSUABLE UPON THE EXERCISE OF SUCH RIGHTS, OPTIONS OR
WARRANTS.  EXCEPT AS PROVIDED IN SECTION 7(E)(III), NO FURTHER ADJUSTMENT OF THE
CONVERSION PRICE SHALL BE MADE UPON THE ACTUAL ISSUE OF SUCH COMMON STOCK OR OF
SUCH CONVERTIBLE SECURITIES UPON EXERCISE OF SUCH RIGHTS, OPTIONS OR WARRANTS OR
UPON THE ACTUAL ISSUE OF SUCH COMMON STOCK UPON CONVERSION OR EXCHANGE OF SUCH
CONVERTIBLE SECURITIES.

 

(II)           ISSUANCE OF CONVERTIBLE SECURITIES.  IN CASE AT ANY TIME AFTER
THE DATE HEREOF THE CORPORATION SHALL IN ANY MANNER ISSUE (WHETHER DIRECTLY OR
BY ASSUMPTION IN A MERGER OR OTHERWISE) OR SELL ANY CONVERTIBLE SECURITIES,
WHETHER OR NOT THE RIGHTS TO EXCHANGE OR CONVERT THEREUNDER ARE IMMEDIATELY
EXERCISABLE, SUCH ISSUANCE OR SALE OF CONVERTIBLE SECURITIES SHALL BE

 

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deemed to be a sale by the Corporation of its Common Stock and the price per
share for such Common Stock shall be determined by dividing (A) the total amount
in cash or in property received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities; provided, however, that (I) except as otherwise
provided in Section 7(e)(iii), no further adjustment of the Conversion Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (II) if any such issue or sale of
such Convertible Securities is made upon exercise of any rights to subscribe for
or to purchase or any option to purchase any such Convertible Securities for
which adjustments of the Conversion Price have been or are to be made pursuant
to other provisions of this Section 7(e), no further adjustment of the
Conversion Price shall be made by reason of such issue or sale.

 

(III)          CHANGE IN OPTION PRICE OR CONVERSION PRICE.  IF THE PURCHASE
PRICE PROVIDED FOR IN ANY RIGHT OR OPTION REFERRED TO IN SECTION 7(E)(I), THE
ADDITIONAL CONSIDERATION, IF ANY, PAYABLE UPON THE CONVERSION OR EXCHANGE OF ANY
CONVERTIBLE SECURITIES REFERRED TO IN SECTION 7(E)(I) OR 7(E)(II), OR THE RATE
AT WHICH ANY CONVERTIBLE SECURITIES REFERRED TO IN SECTION 7(E)(I) OR 7(E)(II)
ARE CONVERTIBLE INTO OR EXCHANGEABLE FOR COMMON STOCK SHALL CHANGE (OTHER THAN
UNDER OR BY REASON OF PROVISIONS DESIGNED TO PROTECT AGAINST DILUTION), THE
CONVERSION PRICE THEN IN EFFECT HEREUNDER SHALL FORTHWITH BE READJUSTED
(INCREASED OR DECREASED, AS THE CASE MAY BE) TO THE CONVERSION PRICE THAT WOULD
HAVE BEEN IN EFFECT AT SUCH TIME HAD SUCH RIGHTS, OPTIONS OR CONVERTIBLE
SECURITIES STILL OUTSTANDING PROVIDED FOR SUCH CHANGED PURCHASE PRICE,
ADDITIONAL CONSIDERATION OR CONVERSION RATE, AS THE CASE MAY BE, AT THE TIME
INITIALLY GRANTED, ISSUED OR SOLD.  NO READJUSTMENT PURSUANT TO THE PRECEDING
SENTENCE SHALL HAVE THE EFFECT OF INCREASING THE CONVERSION PRICE BY AN AMOUNT
IN EXCESS OF THE AMOUNT OF THE ADJUSTMENT THEREOF ORIGINALLY MADE IN RESPECT OF
THE ISSUE, SALE, GRANT OR ASSUMPTION OF RIGHTS, OPTIONS OR CONVERTIBLE
SECURITIES.  ON THE EXPIRATION OF ANY SUCH OPTION OR RIGHT REFERRED TO IN
SECTION 7(E)(I) OR THE TERMINATION OF ANY SUCH RIGHT TO CONVERT OR EXCHANGE ANY
SUCH CONVERTIBLE SECURITIES REFERRED TO IN SECTION 7(E)(I) OR 7(E)(II), THE
CONVERSION PRICE THEN IN EFFECT HEREUNDER SHALL FORTHWITH BE READJUSTED
(INCREASED OR DECREASED, AS THE CASE MAY BE) TO THE CONVERSION PRICE THAT WOULD
HAVE BEEN IN EFFECT AT THE TIME OF SUCH EXPIRATION OR TERMINATION HAD SUCH
RIGHT, OPTION OR CONVERTIBLE SECURITIES, TO THE EXTENT OUTSTANDING IMMEDIATELY
PRIOR TO SUCH EXPIRATION OR TERMINATION, NEVER BEEN GRANTED, ISSUED OR SOLD.  IF
THE PURCHASE PRICE PROVIDED FOR IN ANY SUCH RIGHT OR OPTION REFERRED TO IN
SECTION 7(E)(I) OR THE RATE AT WHICH ANY CONVERTIBLE SECURITIES REFERRED TO IN
SECTION 7(E)(I) OR SECTION 7(E)(II) ARE CONVERTIBLE INTO OR EXCHANGEABLE FOR
COMMON STOCK SHALL BE REDUCED AT ANY TIME UNDER OR BY REASON OF PROVISIONS WITH
RESPECT THERETO DESIGNED TO PROTECT AGAINST DILUTION, THEN IN CASE OF THE
DELIVERY OF SHARES OF COMMON STOCK UPON THE EXERCISE OF ANY SUCH RIGHT OR OPTION
OR UPON CONVERSION OR EXCHANGE OF ANY SUCH CONVERTIBLE SECURITIES, THE
CONVERSION PRICE THEN IN EFFECT HEREUNDER SHALL, IF NOT ALREADY ADJUSTED,
FORTHWITH BE ADJUSTED TO SUCH AMOUNT AS WOULD HAVE OBTAINED HAD SUCH RIGHT,
OPTION OR CONVERTIBLE SECURITIES NEVER BEEN ISSUED AS TO SUCH SHARES OF COMMON
STOCK AND HAD ADJUSTMENTS BEEN MADE UPON THE ISSUANCE OF THE SHARES OF COMMON
STOCK DELIVERED AS AFORESAID, BUT ONLY IF AS A RESULT OF SUCH ADJUSTMENT THE
CONVERSION PRICE THEN IN EFFECT HEREUNDER IS THEREBY REDUCED.

 

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(IV)          CONSIDERATION FOR STOCK.  ANYTHING HEREIN TO THE CONTRARY
NOTWITHSTANDING, IN CASE AT ANY TIME ANY SHARES OF COMMON STOCK OR CONVERTIBLE
SECURITIES OR ANY RIGHTS, OPTIONS OR WARRANTS TO PURCHASE ANY SUCH COMMON STOCK
OR CONVERTIBLE SECURITIES SHALL BE ISSUED OR SOLD FOR CASH, THE CONSIDERATION
RECEIVED THEREFOR SHALL BE DEEMED TO BE THE AMOUNT RECEIVED BY THE CORPORATION
THEREFOR, WITHOUT DEDUCTION THEREFROM OF ANY EXPENSES INCURRED OR ANY
UNDERWRITING COMMISSIONS OR CONCESSIONS PAID OR ALLOWED BY THE CORPORATION IN
CONNECTION THEREWITH.

 

In case at any time any shares of Common Stock or Convertible Securities or any
rights, options or warrants to purchase any such shares of Common Stock or
Convertible Securities shall be issued or sold for a consideration other than
cash, in whole or in part, the amount of the consideration other than cash
received by the Corporation shall be deemed to be the fair value of such
consideration as determined reasonably and in good faith by the Board of
Directors of the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation in
connection therewith.  In case at any time any shares of Common Stock or
Convertible Securities or any rights, options or warrants to purchase such
shares of Common Stock or Convertible Securities shall be issued in connection
with any merger or consolidation in which the Corporation is the surviving
corporation, the amount of consideration received therefor shall be deemed to be
the fair value as determined reasonably and in good faith by the Board of
Directors of the Corporation of such portion of the assets and business of the
nonsurviving corporation as such Board may determine to be attributable to such
shares of Common Stock, Convertible Securities, rights, options or warrants, as
the case may be.  In case at any time any rights, options or warrants to
purchase any shares of Common Stock or Convertible Securities shall be issued in
connection with the issue and sale of other securities of the Corporation,
together comprising one integral transaction in which no consideration is
allocated to such rights, options or warrants by the parties thereto, such
rights, options or warrants shall be deemed to have been issued for an amount of
consideration equal to the fair value thereof as determined reasonably and in
good faith by the Board of Directors of the Corporation.

 

(V)           RECORD DATE.  IN CASE THE CORPORATION SHALL TAKE A RECORD OF THE
HOLDERS OF ITS COMMON STOCK FOR THE PURPOSE OF ENTITLING THEM TO SUBSCRIBE FOR
OR PURCHASE SHARES OF COMMON STOCK OR CONVERTIBLE SECURITIES, THEN SUCH RECORD
DATE SHALL BE DEEMED TO BE THE DATE OF THE ISSUE OR SALE OF THE SHARES OF COMMON
STOCK DEEMED TO HAVE BEEN ISSUED OR SOLD AS A RESULT OF THE GRANTING OF SUCH
RIGHT OF SUBSCRIPTION OR PURCHASE.

 

(VI)          DEFINITION OF MARKET PRICE.  UNLESS OTHERWISE SET FORTH IN THIS
RESOLUTION, “MARKET PRICE” SHALL MEAN THE LAST REPORTED SALE PRICE OF THE
APPLICABLE SECURITY AS REPORTED BY THE AMERICAN STOCK EXCHANGE, THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. AUTOMATIC QUOTATIONS SYSTEM, OR, IF THE
APPLICABLE SECURITY IS LISTED OR ADMITTED FOR TRADING ON ANOTHER SECURITIES
EXCHANGE, THE LAST REPORTED SALES PRICE OF THE APPLICABLE SECURITY ON THE
PRINCIPAL EXCHANGE ON WHICH THE APPLICABLE SECURITY IS LISTED OR ADMITTED FOR
TRADING (WHICH SHALL BE FOR CONSOLIDATED TRADING IF APPLICABLE TO SUCH
EXCHANGE), OR IF NEITHER SO REPORTED OR LISTED OR ADMITTED FOR TRADING, THE LAST
REPORTED BID PRICE OF THE APPLICABLE SECURITY IN THE OVER-THE-COUNTER MARKET. 
IN THE EVENT THAT THE MARKET PRICE CANNOT BE DETERMINED AS AFORESAID, THE BOARD
OF DIRECTORS OF THE CORPORATION SHALL DETERMINE THE MARKET PRICE ON THE BASIS OF
SUCH QUOTATIONS AS IT IN GOOD FAITH CONSIDERS APPROPRIATE, IN CONSULTATION WITH
A NATIONALLY RECOGNIZED INVESTMENT BANK.  THE MARKET PRICE SHALL BE SUCH PRICE
AVERAGED OVER A PERIOD OF TEN (10) CONSECUTIVE

 

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BUSINESS DAYS ENDING TWO (2) DAYS PRIOR TO THE DAY AS OF WHICH “MARKET PRICE” IS
BEING DETERMINED.

 

(VII)         ADJUSTMENT TO DETERMINATION OF CONVERSION PRICE.  WHEN MAKING THE
CALCULATIONS AND DETERMINATIONS DESCRIBED IN THIS SECTION 7(E), THERE SHALL NOT
BE TAKEN INTO ACCOUNT (A) THE ISSUANCE OF COMMON STOCK UPON THE EXERCISE OF
OUTSTANDING OPTIONS OR WARRANTS OUTSTANDING ON THE SERIES D PREFERRED STOCK
ISSUE DATE, (B) THE ISSUANCE OF COMMON STOCK UPON CONVERSION OF THE SERIES A
PREFERRED STOCK OR THE SERIES C PREFERRED STOCK OR THE SERIES D PREFERRED STOCK,
(C) THE ISSUANCE OF COMMON STOCK UPON EXERCISE OF ANY WARRANTS ISSUED PURSUANT
TO THE SECURITIES PURCHASE AGREEMENT, (D) THE ISSUANCE OF SERIES D PREFERRED
STOCK UPON EXERCISE OF THE SERIES D PREFERRED STOCK WARRANTS (AS DEFINED IN THE
SECURITIES PURCHASE AGREEMENT), AND (E) THE ISSUANCE OF 22,562 SHARES OF COMMON
STOCK PURSUANT TO THE SECURITIES PURCHASE AGREEMENT.

 

(F)            DIVIDENDS AND DISTRIBUTIONS; PURCHASE RIGHTS.

 

(i)            In case at any time after the date hereof the Corporation shall
declare a dividend or other distribution upon the shares of Common Stock of any
class payable otherwise than in shares of Common Stock or Convertible Securities
and otherwise than in the securities to which the provisions of Section 7(f)(ii)
hereof apply, the Corporation shall pay over to each holder of Series D
Preferred Stock, upon conversion thereof on or after the dividend payment date,
the securities and other property (including cash) that such holder would have
received (together with all distributions thereon) if such holder had converted
the Series D Preferred Stock held by it on the record date fixed in connection
with such dividend, and the Corporation shall take whatever steps are necessary
or appropriate to keep in trust for the holders of the Series D Preferred Stock
at all times such securities and other property as shall be required to fulfill
its obligations hereunder in respect of the shares issuable upon the exercise or
conversion of all the Series D Preferred Stock.

 

(II)           IF AT ANY TIME OR FROM TIME TO TIME ON OR AFTER THE SERIES D
PREFERRED STOCK ISSUE DATE, THE CORPORATION GRANTS, ISSUES OR SELLS ANY OPTIONS
OR RIGHTS (OTHER THAN CONVERTIBLE SECURITIES) TO PURCHASE STOCK, WARRANTS,
SECURITIES OR OTHER PROPERTY PRO RATA TO THE HOLDERS OF COMMON STOCK OF ALL
CLASSES (“PURCHASE RIGHTS”), AND IF THE HOLDER SHALL BE ENTITLED TO AN
ADJUSTMENT PURSUANT TO SECTION 7(E) ABOVE, THEN IN LIEU OF SUCH ADJUSTMENT, EACH
HOLDER OF SERIES D PREFERRED STOCK SHALL BE ENTITLED, AT SUCH HOLDER’S OPTION,
TO ACQUIRE (WHETHER OR NOT SUCH HOLDER’S SERIES D PREFERRED STOCK SHALL HAVE
BEEN CONVERTED), UPON THE TERMS APPLICABLE TO SUCH PURCHASE RIGHTS, THE
AGGREGATE PURCHASE RIGHTS THAT SUCH HOLDER COULD HAVE ACQUIRED IF SUCH HOLDER
HAD HELD THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
SERIES D PREFERRED STOCK IMMEDIATELY PRIOR TO THE TIME OR TIMES AT WHICH THE
CORPORATION GRANTED, ISSUED OR SOLD SUCH PURCHASE RIGHTS.

 

(G)           SUBDIVISION OR COMBINATION OF STOCK OR STOCK DIVIDENDS.  IN CASE
THE CORPORATION SHALL AT ANY TIME SUBDIVIDE ITS OUTSTANDING SHARES OF COMMON
STOCK INTO A GREATER NUMBER OF SHARES, BY SPLIT OR OTHERWISE, OR ISSUE
ADDITIONAL SHARES OF COMMON STOCK AS A DIVIDEND (OTHER THAN A DIVIDEND IN
ACCORDANCE WITH SECTION 3 HEREOF), OR MAKE ANY OTHER DISTRIBUTION UPON ANY CLASS
OR SERIES OF STOCK PAYABLE IN SHARES OF COMMON STOCK OR CONVERTIBLE SECURITIES,
THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH SUBDIVISION SHALL BE

 

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PROPORTIONATELY REDUCED AND, CONVERSELY, IN CASE THE OUTSTANDING SHARES OF
COMMON STOCK OF THE CORPORATION SHALL BE COMBINED INTO A SMALLER NUMBER OF
SHARES, THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH COMBINATION
SHALL BE PROPORTIONATELY INCREASED.

 

(H)           CHANGES IN COMMON STOCK.  IF ANY CAPITAL REORGANIZATION OR
RECLASSIFICATION OF THE CAPITAL STOCK OF THE CORPORATION, OR CONSOLIDATION OR
MERGER OF THE CORPORATION WITH OR INTO ANOTHER PERSON, OR THE SALE, TRANSFER OR
OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF ITS ASSETS TO ANOTHER
CORPORATION FOR CASH OR STOCK OF SUCH OTHER CORPORATION, SHALL BE EFFECTED,
THEN, AS A CONDITION OF SUCH REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER, SALE, TRANSFER OR OTHER DISPOSITION, LAWFUL AND ADEQUATE PROVISION SHALL
BE MADE WHEREBY EACH HOLDER OF SERIES D PREFERRED STOCK SHALL THEREAFTER HAVE
THE RIGHT TO PURCHASE AND RECEIVE UPON THE BASIS AND UPON THE TERMS AND
CONDITIONS HEREIN SPECIFIED AND IN LIEU OF THE SHARES OF THE COMMON STOCK OF THE
CORPORATION IMMEDIATELY THERETOFORE ISSUABLE UPON CONVERSION OF THE SERIES D
PREFERRED STOCK, SUCH KIND AND AMOUNT OF SHARES OF STOCK, SECURITIES (OF THE
CORPORATION OR ANOTHER ISSUER) OR PROPERTY OR CASH AS MAY BE ISSUABLE OR PAYABLE
WITH RESPECT TO OR IN EXCHANGE FOR A NUMBER OF OUTSTANDING SHARES OF SUCH COMMON
STOCK EQUAL TO THE NUMBER OF SHARES OF SUCH COMMON STOCK IMMEDIATELY THERETOFORE
ISSUABLE UPON CONVERSION OF THE SERIES D PREFERRED STOCK HAD SUCH
REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER, SALE, TRANSFER OR OTHER
DISPOSITION NOT TAKEN PLACE, AND IN ANY SUCH CASE APPROPRIATE PROVISIONS SHALL
BE MADE WITH RESPECT TO THE RIGHTS AND INTERESTS OF EACH HOLDER OF SERIES D
PREFERRED STOCK TO THE END THAT THE PROVISIONS HEREOF (INCLUDING WITHOUT
LIMITATION PROVISIONS FOR ADJUSTMENT OF THE CONVERSION PRICE) SHALL THEREAFTER
BE APPLICABLE, AS NEARLY EQUIVALENT AS MAY BE PRACTICABLE IN RELATION TO ANY
SHARES OF STOCK, SECURITIES OR PROPERTY OR CASH THEREAFTER DELIVERABLE UPON THE
CONVERSION THEREOF.  THE CORPORATION SHALL NOT EFFECT ANY SUCH REORGANIZATION,
RECLASSIFICATION, CONSOLIDATION, MERGER, SALE, TRANSFER OR OTHER DISPOSITION,
UNLESS PRIOR TO OR SIMULTANEOUSLY WITH THE CONSUMMATION THEREOF THE SUCCESSOR
CORPORATION (IF OTHER THAN THE CORPORATION) RESULTING FROM SUCH REORGANIZATION,
RECLASSIFICATION, CONSOLIDATION OR MERGER OR THE CORPORATION PURCHASING OR
OTHERWISE ACQUIRING SUCH PROPERTIES SHALL ASSUME, BY WRITTEN INSTRUMENT EXECUTED
AND MAILED OR DELIVERED TO THE HOLDERS OF SERIES D PREFERRED STOCK AT THE LAST
ADDRESS OF SUCH HOLDERS APPEARING ON THE BOOKS OF THE CORPORATION, THE
OBLIGATION TO DELIVER TO SUCH HOLDERS SUCH SHARES OF STOCK, SECURITIES OR
PROPERTIES OR CASH AS, IN ACCORDANCE WITH THE FOREGOING PROVISIONS, SUCH HOLDERS
MAY BE ENTITLED TO ACQUIRE.  THE ABOVE PROVISIONS OF THIS SUBPARAGRAPH SHALL
SIMILARLY APPLY TO SUCCESSIVE REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS, SALES, TRANSFERS OR OTHER DISPOSITIONS.

 

(I)            CERTAIN EVENTS.  IF ANY EVENT OCCURS AS TO WHICH IN THE
REASONABLE OPINION OF THE BOARD OF DIRECTORS OF THE CORPORATION, IN GOOD FAITH,
THE OTHER PROVISIONS OF THIS SECTION 7 ARE NOT STRICTLY APPLICABLE OR IF
STRICTLY APPLICABLE WOULD NOT FAIRLY PROTECT THE CONVERSION RIGHTS OF THE
HOLDERS OF THE SERIES D PREFERRED STOCK IN ACCORDANCE WITH THE ESSENTIAL INTENT
AND PRINCIPLES OF SUCH PROVISIONS, THEN SUCH BOARD OF DIRECTORS, ACTING BY A
VOTE OF AT LEAST A MAJORITY OF THE MEMBERS THEREOF, SHALL PROVIDE FOR THE
BENEFIT OF HOLDERS OF SHARES OF SERIES D PREFERRED STOCK AN ADJUSTMENT, IF ANY,
ON A BASIS CONSISTENT WITH SUCH ESSENTIAL INTENT AND PRINCIPLES, NECESSARY TO
PRESERVE, WITHOUT DILUTION, THE RIGHTS OF THE HOLDERS OF THE SERIES D PREFERRED
STOCK.  UPON SUCH VOTE BY THE BOARD OF DIRECTORS, THE CORPORATION SHALL
FORTHWITH MAKE THE ADJUSTMENTS DESCRIBED THEREIN; PROVIDED, HOWEVER, THAT NO
SUCH ADJUSTMENTS SHALL HAVE THE EFFECT OF INCREASING THE CONVERSION PRICE AS
OTHERWISE DETERMINED PURSUANT TO THIS SECTION 7 EXCEPT IN THE EVENT OF A

 

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COMBINATION OF SHARES OF THE TYPE CONTEMPLATED IN SECTION 7(G) AND THEN IN NO
EVENT TO AN AMOUNT LARGER THAN THE CONVERSION PRICE AS ADJUSTED PURSUANT TO
SECTION 7(G).

 

(J)            PROHIBITION OF CERTAIN ACTIONS.  THE CORPORATION WILL NOT TAKE
ANY ACTION THAT WOULD RESULT IN ANY ADJUSTMENT OF THE CONVERSION PRICE PURSUANT
TO THE TERMS HEREOF IF THE TOTAL NUMBER OF SHARES OF COMMON STOCK ISSUABLE AFTER
SUCH ACTION UPON CONVERSION OF ALL THE SERIES D PREFERRED STOCK WOULD EXCEED THE
TOTAL NUMBER OF SHARES OF COMMON STOCK THEN AUTHORIZED BY THE CORPORATION’S
CERTIFICATE OF INCORPORATION.

 

(K)           COMMON STOCK TO BE RESERVED.  THE CORPORATION WILL AT ALL TIMES
RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED COMMON STOCK, SOLELY FOR THE
PURPOSE OF ISSUE UPON THE CONVERSION OF SERIES D PREFERRED STOCK AS HEREIN
PROVIDED, SUCH NUMBER OF SHARES OF COMMON STOCK AS SHALL THEN BE ISSUABLE UPON
THE CONVERSION OF ALL OUTSTANDING SERIES D PREFERRED STOCK.  THE CORPORATION
COVENANTS THAT ALL SHARES OF COMMON STOCK THAT SHALL BE SO ISSUABLE SHALL, UPON
ISSUANCE, BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE
FROM PREEMPTIVE OR SIMILAR RIGHTS ON THE PART OF THE HOLDERS OF ANY SHARES OF
CAPITAL STOCK OR SECURITIES OF THE CORPORATION, AND FREE FROM ALL LIENS AND
CHARGES WITH RESPECT TO THE ISSUE THEREOF; AND WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, THE CORPORATION COVENANTS THAT IT WILL FROM TIME TO TIME TAKE
ALL SUCH ACTION AS MAY BE REQUISITE TO ASSURE THAT THE PAR VALUE, IF ANY, PER
SHARE OF THE COMMON STOCK IS AT ALL TIMES EQUAL TO OR LESS THAN THE THEN
EFFECTIVE CONVERSION PRICE.  THE CORPORATION WILL TAKE ALL SUCH ACTION AS MAY BE
NECESSARY TO ASSURE THAT SUCH SHARES OF COMMON STOCK MAY BE SO ISSUED WITHOUT
VIOLATION BY THE CORPORATION OF ANY APPLICABLE LAW OR REGULATION OR AGREEMENT,
OR OF ANY REQUIREMENTS OF ANY DOMESTIC SECURITIES EXCHANGE UPON WHICH THE SERIES
D PREFERRED STOCK OR COMMON STOCK MAY BE LISTED.  WITHOUT LIMITING THE
FOREGOING, THE CORPORATION WILL TAKE ALL SUCH ACTION AS MAY BE NECESSARY TO
ASSURE THAT, UPON CONVERSION OF ANY OF THE SERIES D PREFERRED STOCK, AN AMOUNT
EQUAL TO THE LESSER OF (I) THE PAR VALUE OF EACH SHARE OF COMMON STOCK
OUTSTANDING IMMEDIATELY PRIOR TO SUCH CONVERSION, OR (II) THE CONVERSION PRICE
SHALL BE CREDITED TO THE CORPORATION’S STATED CAPITAL ACCOUNT FOR EACH SHARE OF
COMMON STOCK ISSUED UPON SUCH CONVERSION, AND THAT, IF SECTION 7(K)(I) ABOVE IS
APPLICABLE, THE BALANCE OF THE CONVERSION PRICE OF SERIES D PREFERRED STOCK
CONVERTED SHALL BE CREDITED TO THE CORPORATION’S CAPITAL SURPLUS ACCOUNT.  IF AT
ANY TIME THE CORPORATION SHOULD NOT HAVE A SUFFICIENT NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK TO ISSUE UPON CONVERSION OF ALL THEN OUTSTANDING SHARES
OF SERIES D PREFERRED STOCK OR THE SHARES OF SERIES D PREFERRED STOCK ISSUABLE
UPON EXERCISE OF OUTSTANDING OPTIONS, RIGHTS OR WARRANTS TO PURCHASE SERIES D
PREFERRED STOCK, THE CORPORATION COVENANTS TO TAKE ALL STEPS NECESSARY TO AMEND
ITS CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED
COMMON STOCK TO THE EXTENT NECESSARY.

 

(L)            PREFERRED STOCK TO BE RESERVED.  THE CORPORATION WILL AT ALL
TIMES RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED SERIES D PREFERRED STOCK,
SOLELY FOR THE PURPOSE OF ISSUE UPON THE DECLARATION OF A DIVIDEND ON THE
OUTSTANDING SERIES D PREFERRED STOCK, SUCH NUMBER OF SHARES OF SERIES D
PREFERRED STOCK AS SHALL THEN BE ISSUABLE AS A DIVIDEND ON THE SERIES D
PREFERRED STOCK.  THE CORPORATION COVENANTS THAT ALL SHARES OF SERIES D
PREFERRED STOCK THAT SHALL BE ISSUED AS SUCH DIVIDENDS SHALL, UPON ISSUANCE, BE
DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE FROM
PREEMPTIVE OR SIMILAR RIGHTS ON THE PART OF THE HOLDERS OF ANY SHARES OF CAPITAL
STOCK OR SECURITIES OF THE CORPORATION, AND FREE FROM ALL LIENS AND CHARGES WITH
RESPECT TO THE ISSUE THEREOF.  THE CORPORATION WILL TAKE ALL SUCH ACTION AS MAY
BE NECESSARY TO ASSURE THAT SUCH SHARES OF SERIES D PREFERRED STOCK MAY BE SO
ISSUED WITHOUT VIOLATION BY THE CORPORATION OF

 

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ANY APPLICABLE LAW OR REGULATION OR AGREEMENT, OR OF ANY REQUIREMENTS OF ANY
DOMESTIC SECURITIES EXCHANGE UPON WHICH THE SERIES D PREFERRED STOCK OR THE
COMMON STOCK MAY BE LISTED.  IF AT ANY TIME THE CORPORATION SHOULD NOT HAVE A
SUFFICIENT NUMBER OF AUTHORIZED SHARES OF SERIES D PREFERRED STOCK TO ISSUE AS
DIVIDENDS ON THE THEN OUTSTANDING SHARES OF SERIES D PREFERRED STOCK, THE
CORPORATION COVENANTS TO AMEND THIS RESOLUTION TO INCREASE THE NUMBER OF SHARES
OF AUTHORIZED SERIES D PREFERRED STOCK TO THE EXTENT NECESSARY.

 

(M)          REGISTRATION AND LISTING OF COMMON STOCK.  IF ANY SHARES OF COMMON
STOCK REQUIRED HEREUNDER TO BE RESERVED FOR PURPOSES OF CONVERSION OF SERIES D
PREFERRED STOCK REQUIRE REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY UNDER ANY FEDERAL OR STATE LAW (OTHER THAN THE SECURITIES ACT) BEFORE
SUCH SHARES MAY BE ISSUED UPON CONVERSION, THE CORPORATION WILL, AT ITS EXPENSE
AND AS EXPEDITIOUSLY AS POSSIBLE, USE ITS BEST EFFORTS TO CAUSE SUCH SHARES TO
BE DULY REGISTERED OR APPROVED, AS THE CASE MAY BE.  IF AND SO LONG AS THE
COMMON STOCK IS LISTED ON ANY NATIONAL SECURITIES EXCHANGE, THE CORPORATION
WILL, AT ITS EXPENSE, OBTAIN PROMPTLY AND MAINTAIN THE APPROVAL FOR LISTING ON
EACH SUCH EXCHANGE UPON OFFICIAL NOTICE OF ISSUANCE, OF SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THE THEN OUTSTANDING SERIES D PREFERRED STOCK AND
THE SHARES OF SERIES D PREFERRED STOCK THEN ISSUABLE UPON THE EXERCISE OF
OPTIONS, RIGHTS OR WARRANTS TO PURCHASE SERIES D PREFERRED STOCK, AND MAINTAIN
THE LISTING OF SUCH SHARES AFTER THEIR ISSUANCE; AND THE CORPORATION WILL ALSO
LIST ON SUCH NATIONAL SECURITIES EXCHANGE, WILL REGISTER UNDER THE EXCHANGE ACT
AND WILL MAINTAIN SUCH LISTING OF, ANY OTHER SECURITIES THAT AT ANY TIME ARE
ISSUABLE UPON CONVERSION OF THE SERIES D PREFERRED STOCK, IF AND AT THE TIME
THAT ANY SECURITIES OF THE SAME CLASS SHALL BE LISTED ON SUCH NATIONAL
SECURITIES EXCHANGE BY THE CORPORATION.

 

(N)           CLOSING OF BOOKS.  THE CORPORATION WILL AT NO TIME CLOSE ITS
TRANSFER BOOKS AGAINST THE TRANSFER OF ANY SERIES D PREFERRED STOCK OR OF ANY
SHARES OF COMMON STOCK ISSUED OR ISSUABLE UPON THE CONVERSION OF ANY SERIES D
PREFERRED STOCK IN ANY MANNER THAT INTERFERES WITH THE TIMELY CONVERSION OF SUCH
SERIES D PREFERRED STOCK.

 

(O)           STATEMENT OF ADJUSTMENT OF CONVERSION PRICE.  WHENEVER THE
CONVERSION PRICE SHALL BE ADJUSTED AS PROVIDED IN SECTION 7(E), SECTION 7(G),
SECTION 7(H) OR SECTION 7(I) ABOVE, THE CORPORATION SHALL FORTHWITH FILE AT ITS
OFFICE A STATEMENT, SIGNED BY ITS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
SHOWING IN DETAIL THE FACTS REQUIRING SUCH ADJUSTMENT AND THE CONVERSION PRICE
THAT SHALL BE IN EFFECT AFTER SUCH ADJUSTMENT.  THE CORPORATION SHALL ALSO CAUSE
A COPY OF SUCH STATEMENT TO BE SENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
TO EACH HOLDER OF SHARES OF SERIES D PREFERRED STOCK TO SUCH HOLDER’S ADDRESS
APPEARING ON THE CORPORATION’S RECORDS.  WHEN APPROPRIATE, SUCH COPY MAY BE
GIVEN IN ADVANCE AND MAY BE INCLUDED AS PART OF A NOTICE REQUIRED TO BE MAILED
UNDER THE PROVISIONS OF SECTION 7(P) BELOW.

 

(P)           NOTICE.  IN THE EVENT THE CORPORATION SHALL PROPOSE TO TAKE ANY
ACTION OF THE TYPES DESCRIBED IN SECTION 7(E), SECTION 7(F), SECTION 7(G) OR
SECTION 7(H) ABOVE, THE CORPORATION SHALL GIVE NOTICE TO EACH HOLDER OF SHARES
OF SERIES D PREFERRED STOCK.  THE NOTICE SHALL SPECIFY THE RECORD DATE, IF ANY,
WITH RESPECT TO ANY SUCH ACTION AND THE DATE ON WHICH SUCH ACTION IS TO TAKE
PLACE.  SUCH NOTICE SHALL ALSO SET FORTH SUCH FACTS WITH RESPECT THERETO AS
SHALL BE REASONABLY NECESSARY TO INDICATE THE EFFECT OF SUCH ACTION (TO THE
EXTENT SUCH EFFECT MAY BE KNOWN AT THE DATE OF SUCH NOTICE) ON THE CONVERSION
PRICE AND THE NUMBER, KIND OR CLASS OF SHARES OR OTHER SECURITIES OR PROPERTY OR
CASH THAT SHALL BE DELIVERABLE OR PURCHASABLE UPON THE

 

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OCCURRENCE OF SUCH ACTION OR DELIVERABLE UPON CONVERSION OF SHARES OF SERIES D
PREFERRED STOCK.  IN THE CASE OF ANY ACTION THAT WOULD REQUIRE THE FIXING OF A
RECORD DATE, SUCH NOTICE SHALL BE GIVEN AT LEAST TWENTY (20) DAYS PRIOR TO THE
DATE SO FIXED, AND IN CASE OF ALL OTHER ACTION, SUCH NOTICE SHALL BE GIVEN AT
LEAST THIRTY (30) DAYS PRIOR TO THE TAKING OF SUCH PROPOSED ACTION.

 

(Q)           TAXES.  THE CORPORATION SHALL PAY ALL DOCUMENTARY, STAMP OR OTHER
TRANSACTIONAL TAXES ATTRIBUTABLE TO THE ISSUANCE OR DELIVERY OF SHARES OF
CAPITAL STOCK OF THE CORPORATION UPON CONVERSION OF ANY SHARES OF SERIES D
PREFERRED STOCK.  THE CORPORATION SHALL NOT, HOWEVER, BE REQUIRED TO PAY ANY TAX
THAT MAY BE PAYABLE IN RESPECT OF ANY TRANSFER INVOLVED IN THE ISSUANCE AND
DELIVERY OF COMMON STOCK OR THE REISSUANCE OF THE SERIES D PREFERRED STOCK IN A
NAME OTHER THAN THAT IN WHICH THE SHARES OF SERIES D PREFERRED STOCK SO
CONVERTED WERE REGISTERED, AND NO SUCH ISSUANCE OR DELIVERY SHALL BE MADE UNLESS
AND UNTIL THE PERSON REQUESTING SUCH ISSUANCE HAS PAID TO THE CORPORATION THE
AMOUNT OF ANY SUCH TAX OR HAS ESTABLISHED TO THE SATISFACTION OF THE CORPORATION
THAT SUCH TAX, IF ANY, HAS BEEN PAID.

 

8.             EXCLUSION OF OTHER RIGHTS.  EXCEPT AS MAY OTHERWISE BE REQUIRED
BY LAW, THE SHARES OF SERIES D PREFERRED STOCK SHALL NOT HAVE ANY VOTING POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, OTHER
THAN THOSE SPECIFICALLY SET FORTH IN THIS RESOLUTION AND IN THE CERTIFICATE OF
INCORPORATION.

 

9.             HEADINGS OF SUBDIVISIONS.  THE HEADINGS OF THE VARIOUS
SUBDIVISIONS HEREOF ARE FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT AFFECT
THE INTERPRETATION OF ANY OF THE PROVISIONS HEREOF.

 

10.           REISSUANCE OF PREFERRED STOCK.  SHARES OF SERIES D PREFERRED STOCK
THAT HAVE BEEN ISSUED AND REACQUIRED IN ANY MANNER, INCLUDING SHARES PURCHASED
OR EXCHANGED OR CONVERTED, SHALL (UPON COMPLIANCE WITH ANY APPLICABLE PROVISIONS
OF THE LAWS OF DELAWARE) HAVE THE STATUS OF AUTHORIZED BUT UNISSUED SHARES OF
PREFERRED STOCK OF THE CORPORATION UNDESIGNATED AS TO SERIES AND MAY BE
DESIGNATED OR REDESIGNATED AND ISSUED OR REISSUED, AS THE CASE MAY BE, AS PART
OF ANY SERIES OF PREFERRED STOCK OF THE CORPORATION, PROVIDED THAT ANY ISSUANCE
OF SUCH SHARES AS PREFERRED STOCK MUST BE IN COMPLIANCE WITH THE TERMS HEREOF.

 

11.           MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES.  IF ANY OF THE
SERIES D PREFERRED STOCK CERTIFICATES SHALL BE MUTILATED, LOST, STOLEN OR
DESTROYED, THE CORPORATION SHALL ISSUE, IN EXCHANGE AND IN SUBSTITUTION FOR AND
UPON CANCELLATION OF THE MUTILATED SERIES D PREFERRED STOCK CERTIFICATE, OR IN
LIEU OF AND SUBSTITUTION FOR THE SERIES D PREFERRED STOCK CERTIFICATE LOST,
STOLEN OR DESTROYED, A NEW SERIES D PREFERRED STOCK CERTIFICATE OF LIKE TENOR
AND REPRESENTING AN EQUIVALENT AMOUNT OF SHARES OF SERIES D PREFERRED STOCK, BUT
ONLY UPON RECEIPT OF EVIDENCE OF SUCH LOSS, THEFT OR DESTRUCTION OF SUCH SERIES
D PREFERRED STOCK CERTIFICATE AND INDEMNITY, IF REQUESTED, REASONABLY
SATISFACTORY TO THE CORPORATION AND THE TRANSFER AGENT (IF OTHER THAN THE
CORPORATION), OR, IN THE CASE OF MUTILATION, UPON SURRENDER AND CANCELLATION OF
SUCH MUTILATED CERTIFICATE.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Electric City Corp. has caused these presents to be signed
in its name and on its behalf by its Chief Financial Officer on June, 26, 2003.

 

 

 

ELECTRIC CITY CORP.

 

 

 

 

 

By

/s/ Jeffrey Mistarz

 

 

Name: Jeffrey Mistarz

 

Title:  Chief Financial Officer

 

 

[Signature Page To Certificate Of Designations]

 

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