EXHIBIT 10.80

GLOBAL MED TECHNOLOGIES, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS LIMITATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 7-106-101 OF THE COLORADO BUSINESS CORPORATION ACT

     The undersigned, Michael I. Ruxin and Kim Geist, do hereby certify that:

     1.   They are the President and Secretary, respectively, of Global Med
Technologies, Inc., a Colorado corporation (the “Corporation”).

     2.   The Corporation is authorized to issue 10,000,000 shares of preferred
stock, 3,500,000 of which have been issued.

     3.   The following resolutions were duly adopted by the Board of Directors:

     WHEREAS, the Certificate of Incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, comprised of 10,000,000
shares, $0.01 par value, issuable from time to time in one or more series;

     WHEREAS, the Board of Directors of the Corporation is authorized to fix the
dividend rights, dividend rate, voting rights, conversion rights, rights and
terms of redemption and liquidation preferences of any wholly unissued series of
preferred stock and the number of shares constituting any series and the
designation thereof, of any of them; and

     WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the preferred stock,
which shall consist of, except as otherwise set forth in the Purchase Agreement,
up to 9,975 shares of the preferred stock which the corporation has the
authority to issue, as follows:

     NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or exchange of
other securities, rights or property and does hereby fix and determine the
rights, preferences, restrictions and other matters relating to such series of
preferred stock as follows:

--------------------------------------------------------------------------------

TERMS OF PREFERRED STOCK

     Section 1. Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. For the purposes hereof, the following
terms shall have the following meanings:

 

     “Alternate Consideration” shall have the meaning set forth in Section 7(e).

 

     “Bankruptcy Event” means any of the following events: (a) the Corporation
or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Corporation or any Significant Subsidiary thereof; (b) there is
commenced against the Corporation or any Significant Subsidiary thereof any such
case or proceeding that is not dismissed within 60 days after commencement; (c)
the Corporation or any Significant Subsidiary thereof is adjudicated insolvent
or bankrupt or any order of relief or other order approving any such case or
proceeding is entered; (d) the Corporation or any Significant Subsidiary thereof
suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 days; (e) the
Corporation or any Significant Subsidiary thereof makes a general assignment for
the benefit of creditors; (f) the Corporation or any Significant Subsidiary
thereof calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or (g) the Corporation or any
Significant Subsidiary thereof, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the foregoing or
takes any corporate or other action for the purpose of effecting any of the
foregoing.

 

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

 

     “Buy-In” shall have the meaning set forth in Section 6(e)(iii).

 

     “Change of Control Redemption Amount” for each share of Preferred Stock
means 125% of the Stated Value.

 

     “Change of Control Transaction” means the occurrence after the date hereof
of any of (i) an acquisition after the date hereof by an individual or legal
entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Corporation, by contract or otherwise) of in
excess of 40% of the voting securities of the Corporation, which such
acquisition is accomplished with the consent of the Corporation or its Board of
Directors, or (ii) the Corporation merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Corporation and,
after giving effect to such transaction, the stockholders of the Corporation
immediately prior to such transaction own less than 60% of the aggregate voting
power of the Corporation or the successor entity of such transaction, or (iii)
the Corporation sells or transfers its assets, as an entirety or substantially
as an entirety, to another Person and the stockholders of the Corporation
immediately prior to such transaction own less than 50% of the aggregate voting
power of the acquiring entity immediately after the transaction, (iv) a
replacement at one time or within a one year period of more than one-half of the
members of the Corporation’s board of directors which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), or (v) the execution by the Corporation of an agreement to which the
Corporation is a party or by which it is bound, providing for any of the events
set forth above in (i) through (iv).

2

--------------------------------------------------------------------------------

 

     “Closing Date” means the Trading Day when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Holders’ obligations to pay the Subscription
Amount and (ii) the Corporation’s obligations to deliver the Securities have
been satisfied or waived.

 

     “Commission” means the Securities and Exchange Commission.

 

     “Common Stock” means the Corporation’s common stock, par value $.01 per
share, and stock of any other class of securities into which such securities may
hereafter have been reclassified or changed into.

 

     “Common Stock Equivalents” means any securities of the Corporation or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

     “Conversion Amount” means the sum of the Stated Value at issue.

 

     “Conversion Date” shall have the meaning set forth in Section 6(a).

 

     “Conversion Price” shall have the meaning set forth in Section 6(b).

 

     “Conversion Shares” means, collectively, the shares of Common Stock into
which the shares of Preferred Stock are convertible in accordance with the terms
hereof.

 

     “Conversion Shares Registration Statement” means a registration statement
that meets the requirements of the Registration Rights Agreement and registers
the resale of all Conversion Shares by the Holder, who shall be named as a
“selling stockholder” thereunder, all as provided in the Registration Rights
Agreement.

 

     “Dilutive Issuance” shall have the meaning set forth in Section 7(b).

 

     “Dilutive Issuance Notice” shall have the meaning set forth in Section
7(b).

3

--------------------------------------------------------------------------------

 

     “Effective Date” means the date that the Conversion Shares Registration
Statement is declared effective by the Commission.

 

     “Equity Conditions” shall mean, during the period in question, (i) the
Corporation shall have duly honored all conversions scheduled to occur or
occurring by virtue of one or more Notices of Conversion of the Holder, if any,
(ii) all liquidated damages and other amounts owing to the Holder in respect of
the Preferred Stock shall have been paid, (iii) there is an effective Conversion
Shares Registration Statement pursuant to which the Holder is permitted to
utilize the prospectus thereunder to resell all of the shares issuable pursuant
to the Transaction Documents (and the Corporation believes, in good faith, that
such effectiveness will continue uninterrupted for the foreseeable future), (iv)
the Common Stock is trading on the Trading Market and all of the shares issuable
pursuant to the Transaction Documents are listed for trading on a Trading Market
(and the Corporation believes, in good faith, that trading of the Common Stock
on a Trading Market will continue uninterrupted for the foreseeable future), (v)
there is a sufficient number of authorized but unissued and otherwise unreserved
shares of Common Stock for the issuance of all of the shares issuable pursuant
to the Transaction Documents, (vi) there is then existing no Triggering Event or
event which, with the passage of time or the giving of notice, would constitute
a Triggering Event, (vii) the issuance of the shares in question to the Holder
would not violate the limitations set forth in Section 6(c) and (viii) no public
announcement of a pending or proposed Fundamental Transaction, Change of Control
Transaction or acquisition transaction has occurred that has not been
consummated.

 

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

     “Exempt Issuance” means the issuance of (a) shares of Common Stock or
options to employees, officers or directors of the Corporation pursuant to any
stock or option plan duly adopted by a majority of the members of the Board of
Directors of the Corporation or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise of or conversion of any securities issued hereunder, convertible
securities, options or warrants issued and outstanding on the date of the
Purchase Agreement, provided that such securities have not been amended since
the date of the Purchase Agreement to increase the number of such securities or
to decrease the exercise or conversion price of any such securities, and (c)
securities issued pursuant to acquisitions or strategic transactions, provided
any such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Corporation and in which the Corporation receives benefits in addition to
the investment of funds, but shall not include a transaction in which the
Corporation is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities.

 

     “Forced Conversion Amount” shall mean (i) 100% of the aggregate Stated
Value then outstanding, (ii) accrued but unpaid dividends and (iii) all
liquidated damages and other amounts due in respect of the Preferred Stock.

4

--------------------------------------------------------------------------------

 

     “Forced Conversion Date” shall have the meaning set forth in Section 8(a).

 

     “Forced Conversion Notice” shall have the meaning set forth in Section
8(a).

 

     “Forced Conversion Notice Date” shall have the meaning set forth in Section
8(a).

 

     “Fundamental Transaction” shall have the meaning set forth in Section 7(e).

 

     “Holder” shall have the meaning given such term in Section 2.

 

     “Junior Securities” means the Common Stock and all other equity or equity
equivalent securities of the Corporation other than those securities which are
explicitly senior or pari passu in rights or liquidation preference to the
Preferred Stock.

 

     “Liquidation” shall have the meaning given such term in Section 5.

 

     “New York Courts” shall have the meaning given such term in Section 11(d).

 

     “Notice of Conversion” shall have the meaning given such term in Section
6(a).

 

     “Original Issue Date” shall mean the date of the first issuance of any
shares of the Preferred Stock regardless of the number of transfers of any
particular shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred Stock.

 

     “Permitted Indebtedness” shall mean (a) the Indebtedness existing on the
Original Issue Date and set forth on Schedule 3.1(gg) attached to the Purchase
Agreement and (b) lease obligations and purchase money Indebtedness of up to
$500,000, in the aggregate, incurred in connection with the acquisition of
capital assets and lease obligations with respect to newly acquired or leased
assets and trade payables and debt incurred in the ordinary course of business
(other than debt incurred to borrow money).

 

     “Permitted Lien” shall mean the individual and collective reference to the
following: (a) Liens for taxes, assessments and other governmental charges or
levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Company) have been established in accordance with GAAP, (b) Liens imposed by law
which were incurred in the ordinary course of business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of business, and (x) which do not
individually or in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of the
business of the Company and its consolidated Subsidiaries or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or asset subject to
such Lien and (c) Liens incurred in connection with Permitted Indebtedness under
clause (b) thereunder provided that such Liens are not secured by assets of the
Company or its Subsidiaries other than the assets so acquired or leased.

5

--------------------------------------------------------------------------------

 

     “Person” means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

 

     “Preferred Stock” shall have the meaning given such term in Section 2.

 

     “Purchase Agreement” means the Securities Purchase Agreement, dated as of
the Original Issue Date, to which the Corporation and the original Holders are
parties, as amended, modified or supplemented from time to time in accordance
with its terms.

 

     “Registration Rights Agreement” means the Registration Rights Agreement,
dated as of the date of the Purchase Agreement, to which the Corporation and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.

 

     “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

 

     “Share Delivery Date” shall have the meaning given such term in Section
6(e).

 

     “Stated Value” shall have the meaning given such term in Section 2.

 

     “Subscription Amount” shall mean, as to each Purchaser, the amount to be
paid for the Preferred Stock purchased pursuant to the Purchase Agreement as
specified below such Purchaser’s name on the signature page of the Purchase
Agreement and next to the heading “Subscription Amount”, in United States
Dollars and in immediately available funds.

 

     “Subsidiary” shall have the meaning given to such term in the Purchase
Agreement.

 

     “Threshold Period” shall have the meaning set forth in Section 8(a).

 

     “Trading Day” means a day on which the Common Stock is traded on a Trading
Market.

 

     “Trading Market” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the Nasdaq
SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the OTC Bulletin Board.

6

--------------------------------------------------------------------------------

 

     “Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

 

     “Triggering Event” shall have the meaning set forth in Section 9(a).

 

     “Triggering Redemption Amount” for each share of Preferred Stock means the
sum of (i) the greater of (A) 130% of the Stated Value and (B) the product of
(a) the VWAP on the Trading Day immediately preceding the date of the Triggering
Event and (b) the Stated Value divided by the then Conversion Price, (ii) all
accrued but unpaid dividends thereon and (iii) all liquidated damages and other
amounts due in respect of the Preferred Stock.

 

     “Triggering Redemption Payment Date” shall have the meaning set forth in
Section 9(b).

 

     “VWAP” means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg Financial L.P.
(based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time);
(b) if the Common Stock is not then listed or quoted on a Trading Market and if
prices for the Common Stock are then quoted on the OTC Bulletin Board, the
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
listed or quoted on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by the Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Purchasers and
reasonably acceptable to the Corporation.

     Section 2. Designation, Amount and Par Value. The series of preferred stock
shall be designated as its Series A Convertible Preferred Stock (the “Preferred
Stock”) and the number of shares so designated shall be up to 9,975 (which shall
not be subject to increase without the consent of all of the holders of the
Preferred Stock (each, a “Holder” and collectively, the “Holders”)). Each share
of Preferred Stock shall have a par value of $0.01 per share and a stated value
equal to $1,000 (the “Stated Value”). Capitalized terms not otherwise defined
herein shall have the meaning given such terms in Section 1 hereof.

7

--------------------------------------------------------------------------------

     Section 3. Dividends.

a)  

So long as any Preferred Stock shall remain outstanding, neither the Corporation
nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly
or indirectly any Junior Securities. So long as any Preferred Stock shall remain
outstanding, neither the Corporation nor any Subsidiary thereof shall directly
or indirectly pay or declare any dividend or make any distribution upon, nor
shall any distribution be made in respect of, any securities of the Company
unless a proportional amount is paid to the holders of the Preferred Stock on an
as converted basis, nor shall any monies be set aside for or applied to the
purchase or redemption (through a sinking fund or otherwise) of any Junior
Securities or shares pari passu with the Preferred Stock.

b)  

The Corporation acknowledges and agrees that the capital of the Corporation (as
such term is used in Section 7-106-101 of the Colorado Business Corporation Act)
in respect of the Preferred Stock and any future issuances of the Corporation’s
capital stock shall be equal to the aggregate par value of such Preferred Stock
or capital stock, as the case may be, and that, on or after the date of the
Purchase Agreement, it shall not increase the capital of the Corporation with
respect to any shares of the Corporation’s capital stock issued and outstanding
on such date without prior written consent of a majority in interest of the
Holders. The Corporation also acknowledges and agrees that it shall not create
any special reserves under the Colorado Business Corporation Act without the
prior written consent of each Holder.

     Section 4. Voting Rights. Except as otherwise provided herein and as
otherwise required by law, the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote of the Holders of the shares
of the Preferred Stock then outstanding, (a) alter or change adversely the
powers, preferences or rights given to the Preferred Stock or alter or amend
this Certificate of Designation, (b) authorize or create any class of stock
ranking as to dividends, redemption or distribution of assets upon a Liquidation
(as defined in Section 5) senior to or otherwise pari passu with the Preferred
Stock, (c) amend its certificate of incorporation or other charter documents so
as to affect adversely any rights of the Holders, (d) increase the authorized
number of shares of Preferred Stock, or (e) enter into any agreement with
respect to the foregoing.

     Section 5. Liquidation. Upon any liquidation, dissolution or winding-up of
the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders
shall be entitled to receive out of the assets of the Corporation, whether such
assets are capital or surplus, for each share of Preferred Stock an amount equal
to the Stated Value per share plus any accrued and unpaid dividends thereon and
any other fees or liquidated damages owing thereon before any distribution or
payment shall be made to the holders of any Junior Securities, and if the assets
of the Corporation shall be insufficient to pay in full such amounts, then the
entire assets to be distributed to the Holders shall be distributed among the
Holders ratably in accordance with the respective amounts that would be payable
on such shares if all amounts payable thereon were paid in full. A Fundamental
Transaction or Change of Control Transaction shall not be treated as a
Liquidation. The Corporation shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated therein, to each record
Holder.

8

--------------------------------------------------------------------------------

     Section 6. Conversion.

a)  

Conversions at Option of Holder. Each share of Preferred Stock shall be
convertible into that number of shares of Common Stock (subject to the
limitations set forth in Section 6(c)) determined by dividing the Stated Value
of such share of Preferred Stock by the Conversion Price, at the option of the
Holder, at any time and from time to time from and after the Original Issue
Date. Holders shall effect conversions by providing the Corporation with the
form of conversion notice attached hereto as Annex A (a “Notice of Conversion”).
Each Notice of Conversion shall specify the number of shares of Preferred Stock
to be converted, the number of shares of Preferred Stock owned prior to the
conversion at issue, the number of shares of Preferred Stock owned subsequent to
the conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date that is at least 72 hours after the time
that the Holder delivers such Notice of Conversion to the Corporation by
facsimile (the “Conversion Date”). If no Conversion Date is specified in a
Notice of Conversion, the Conversion Date shall be the date that such Notice of
Conversion to the Corporation is deemed delivered hereunder. The calculations
and entries set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error. To effect conversions of shares of Preferred
Stock, a Holder shall not be required to surrender the certificate(s)
representing such shares of Preferred Stock to the Corporation unless all of the
shares of Preferred Stock represented thereby are so converted, in which case
the Holder shall deliver the certificate representing such share of Preferred
Stock promptly following the Conversion Date at issue. Shares of Preferred Stock
converted into Common Stock or redeemed in accordance with the terms hereof
shall be canceled and may not be reissued.

b)  

Conversion Price. The conversion price for the Preferred Stock shall equal $.72
(the “Conversion Price”), subject to adjustment herein.

c)  

Beneficial Ownership Limitation. The Corporation shall not effect any conversion
of the Preferred Stock, and a Holder shall not have the right to convert any
portion of the Preferred Stock to the extent that after giving effect to such
conversion, such Holder (together with such Holder’s Affiliates, and any other
person or entity acting as a group together with such Holder or any of such
Holder’s Affiliates), as set forth on the applicable Notice of Conversion, would
beneficially own in excess of 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to such conversion.  For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon conversion of the Preferred Stock with respect to which the
determination of such sentence is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (A) conversion of the
remaining, nonconverted Stated Value of Preferred Stock beneficially owned by
such Holder or any of its Affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Corporation
(including the Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by such Holder
or any of its Affiliates.  Except as set forth in the preceding sentence, for
purposes of this Section 6(c), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained in this
Section 6(c) applies, the determination of whether the Preferred Stock is
convertible (in relation to other securities owned by such Holder together with
any Affiliates) and of which shares of Preferred Stock are convertible shall be
in the sole discretion of such Holder, and the submission of a Notice of
Conversion shall be deemed to be such Holder’s determination of whether the
shares of Preferred Stock may be converted (in relation to other securities
owned by such Holder) and which shares of the Preferred Stock is convertible, in
each case subject to such aggregate percentage limitations. To ensure compliance
with this restriction, each Holder will be deemed to represent to the
Corporation each time it delivers a Notice of Conversion that such Notice of
Conversion has not violated the restrictions set forth in this paragraph and the
Corporation shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 6(c), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in the most recent of the following: (A) the Corporation’s most recent
Form 10-QSB or Form 10-KSB, as the case may be, (B) a

9

--------------------------------------------------------------------------------

 

more recent public announcement by the Corporation or (C) any other notice by
the Corporation or the Corporation’s transfer agent setting forth the number of
shares of Common Stock outstanding.  Upon the written or oral request of a
Holder, the Corporation shall within two Trading Days confirm orally and in
writing to such Holder the number of shares of Common Stock then outstanding. 
In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of
the Corporation, including the Preferred Stock, by such Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported. The provisions of this Section 6(c) may be waived by such Holder, at
the election of such Holder, upon not less than 61 days’ prior notice to the
Corporation, and the provisions of this Section 6(c) shall continue to apply
until such 61st day (or such later date, as determined by such Holder, as may be
specified in such notice of waiver). The provisions of this paragraph shall be
implemented in a manner otherwise than in strict conformity with the terms of
this Section 6(c) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended 4.99% beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such 4.99% limitation. The provisions of
this paragraph are intended to comply with Section 13(d) of the Exchange Act and
will be so interpreted and applied consistent with Section 13(d) of the Exchange
Act (i) whether or not this Certificate of Designation specifically so provides
and (ii) notwithstanding anything to the contrary in the Transaction Documents.
The limitations contained in this paragraph shall apply to a successor holder of
Preferred Stock. The holders of Common Stock of the Company shall be third party
beneficiaries of this Section 6(c) and the Company may not waive this Section
6(c) without the consent of holders of a majority of its Common Stock.

d)  

[RESERVED]

10

--------------------------------------------------------------------------------

e)  

Mechanics of Conversion

 

     i. Delivery of Certificate Upon Conversion. Not later than 5 Trading Days
after each Conversion Date (the “Share Delivery Date”), the Corporation shall
deliver or cause to be delivered to the Holder (A) a certificate or certificates
which, after the Effective Date, shall be free of restrictive legends and
trading restrictions (other than those required by the Purchase Agreement)
representing the number of shares of Common Stock being acquired upon the
conversion of shares of Preferred Stock and (B) a bank check in the amount of
accrued and unpaid dividends. After the Effective Date, the Corporation shall,
upon request of the Holder, deliver any certificate or certificates required to
be delivered by the Corporation under this Section electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions. If in the case of any Notice of Conversion such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the fifth Trading Day after the Conversion Date, the Holder
shall be entitled to elect by written notice to the Corporation at any time on
or before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Corporation shall immediately return the
certificates representing the shares of Preferred Stock tendered for conversion.

 

     ii. Obligation Absolute; Partial Liquidated Damages. The Corporation’s
obligations to issue and deliver the Conversion Shares upon conversion of
Preferred Stock in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Corporation or any violation or alleged violation of law by the Holder or
any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to the Holder in connection
with the issuance of such Conversion Shares. In the event a Holder shall elect
to convert any or all of the Stated Value of its Preferred Stock, the
Corporation may not refuse conversion based on any claim that such Holder or any
one associated or affiliated with the Holder has been engaged in any violation
of law, agreement or for any other reason, unless an injunction from a court, on
notice, restraining and/or enjoining conversion of all or part of this Preferred
Stock shall have been sought and obtained and the Corporation posts a surety
bond for the benefit of the Holder in the amount of 150% of the Stated Value of
Preferred Stock outstanding, which is subject to the injunction, which bond
shall remain in effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such Holder to the extent
it obtains judgment. In the absence of an injunction precluding the same, the
Corporation shall issue Conversion Shares or, if applicable, cash, upon a
properly noticed conversion. If the Corporation fails to deliver to the Holder
such certificate or certificates pursuant to Section 6(e)(i) by the Share
Delivery Date applicable to such conversion, then, on the day immediately
following such Share Delivery Date and on each monthly anniversary thereof, the
Corporation shall pay to such Holder an amount in cash, as liquidated damages
and not as a penalty, equal to 5% of the aggregate purchase price paid by such
Holder pursuant to the Purchase Agreement for only the Preferred Stock being
converted by such Holder, which the Corporation fails to deliver the
certificates. Nothing herein shall limit a Holder’s right to pursue actual
damages for the Corporation’s failure to deliver certificates representing
shares of Common Stock upon conversion within the period specified herein and
such Holder shall have the right to pursue all remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure by the Corporation of its failure to
deliver certificates.

11

--------------------------------------------------------------------------------

 

     iii.  Compensation for Buy-In on Failure to Timely Deliver Certificates
Upon Conversion. If the Corporation fails to deliver to the Holder such
certificate or certificates pursuant to Section 6(e)(i) by the Share Delivery
Date, and if after such Share Delivery Date the Holder purchases (in an open
market transaction or otherwise) Common Stock to deliver in satisfaction of a
sale by such Holder of the Conversion Shares which the Holder was entitled to
receive upon the conversion relating to such Share Delivery Date (a “Buy-In”),
then the Corporation shall pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive from the
conversion at issue multiplied by (2) the price at which the sell order giving
rise to such purchase obligation was executed. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of Preferred Stock with
respect to which the aggregate sale price giving rise to such purchase
obligation is $10,000, under clause (A) of the immediately preceding sentence
the Corporation shall be required to pay the Holder $1,000. The Holder shall
provide the Corporation written notice indicating the amounts payable to the
Holder in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Corporation. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Corporation’s failure
to timely deliver certificates representing shares of Common Stock upon
conversion of the shares of Preferred Stock as required pursuant to the terms
hereof.

 

     iv. Reservation of Shares Issuable Upon Conversion. The Corporation
covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Preferred Stock, each as herein provided, free
from preemptive rights or any other actual contingent purchase rights of persons
other than the Holder (and the other Holders of the Preferred Stock), not less
than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Corporation as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 7) upon the conversion of all
outstanding shares of Preferred Stock. The Corporation covenants that all shares
of Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and, if the Conversion Shares
Registration Statement is then effective under the Securities Act, registered
for public sale in accordance with such Conversion Shares Registration
Statement.

 

     v. Fractional Shares. Upon a conversion hereunder, the Corporation shall
not be required to issue stock certificates representing fractions of shares of
the Common Stock, but may if otherwise permitted, make a cash payment in respect
of any final fraction of a share based on the VWAP at such time. If the
Corporation elects not, or is unable, to make such a cash payment, the Holder
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.

12

--------------------------------------------------------------------------------

 

     vi. Transfer Taxes. The issuance of certificates for shares of the Common
Stock on conversion of this Preferred Stock shall be made without charge to the
Holder hereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that 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 any such certificate
upon conversion in a name other than that of the Holder of such shares of
Preferred Stock so converted and the Corporation shall not be required to issue
or deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Corporation the amount of such tax
or shall have established to the satisfaction of the Corporation that such tax
has been paid.

 

     Section 7. Certain Adjustments.

 

     a)  Stock Dividends and Stock Splits. If the Corporation, at any time while
this Preferred Stock is outstanding: (A) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Corporation pursuant to this Preferred Stock), (B) subdivides outstanding
shares of Common Stock into a larger number of shares, (C) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (D) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Corporation, then the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section 7(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

 

     b)  Subsequent Equity Sales. If the Corporation or any Subsidiary thereof,
as applicable, at any time while this Preferred Stock is outstanding, shall
offer, sell, grant any option to purchase or offer, sell or grant any right to
reprice its securities, or otherwise dispose of or issue (or announce any offer,
sale, grant or any option to purchase or other disposition) any Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of Common Stock,
at an effective price per share less than the then Conversion Price (such lower
price, the “Base Conversion Price” and such issuances collectively, a “Dilutive
Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common
Stock Equivalents so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which is
issued in connection with such issuance, be entitled to receive shares of Common
Stock at an effective price per share which is less than the Conversion Price,
such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be
reduced to equal the Base Conversion Price. Notwithstanding the foregoing, no
adjustment will be made under this Section 7(b) in respect of an Exempt
Issuance. The Corporation shall notify the Holder in writing, no later than the
Business Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of
clarification, whether or not the Corporation provides a Dilutive Issuance
Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive
Issuance, after the date of such Dilutive Issuance the Holder is entitled to
receive a number of Conversion Shares based upon the Base Conversion Price
regardless of whether the Holder accurately refers to the Base Conversion Price
in the Notice of Conversion.

 

     c)  Subsequent Rights Offerings. If the Corporation, at any time while the
Preferred Stock is outstanding, shall issue rights, options or warrants to all
holders of Common Stock (and not to Holders) entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the VWAP at the
record date mentioned below, then the Conversion Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered (assuming receipt by the Corporation in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such VWAP. Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights,
options or warrants.

13

--------------------------------------------------------------------------------

 

     d)  Pro Rata Distributions. If the Corporation, at any time while Preferred
Stock is outstanding, shall distribute to all holders of Common Stock (and not
to Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security, then
in each such case the Conversion Price shall be adjusted by multiplying such
Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in
good faith. In either case the adjustments shall be described in a statement
provided to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

 

     e)  Fundamental Transaction. If, at any time while this Preferred Stock is
outstanding, (A) the Corporation effects any merger or consolidation of the
Corporation with or into another Person, (B) the Corporation effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by the Corporation
or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (D) the Corporation effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental Transaction”), then upon any subsequent
conversion of this Preferred Stock, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction, the same
kind and amount of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of one share of
Common Stock (the “Alternate Consideration”). For purposes of any such
conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Corporation shall apportion the Conversion
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any
conversion of this Preferred Stock following such Fundamental Transaction. To
the extent necessary to effectuate the foregoing provisions, any successor to
the Corporation or surviving entity in such Fundamental Transaction shall file a
new Certificate of Designation with the same terms and conditions and issue to
the Holder new preferred stock consistent with the foregoing provisions and
evidencing the Holder’s right to convert such preferred stock into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 7(e) and insuring
that this Preferred Stock (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

14

--------------------------------------------------------------------------------

 

     f)  Calculations. All calculations under this Section 7 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 7, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.

 

     g)  Notice to Holders.

 

     i.  Adjustment to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any of this Section 7, the Corporation shall promptly mail
to each Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.

 

     ii.  Notice to Allow Conversion by Holder. If (A) the Corporation shall
declare a dividend (or any other distribution) on the Common Stock; (B) the
Corporation shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the Corporation shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Corporation shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or substantially
all of the assets of the Corporation, of any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property; (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation; then, in each case,
the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Preferred Stock, and shall cause to be mailed
to the Holder at its last address as its shall appear upon the stock books of
the Corporation, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. The Holder is
entitled to convert the Conversion Amount of this Preferred Stock (or any part
hereof) during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.

15

--------------------------------------------------------------------------------

 

     Section 8. Forced Conversion.

 

     a)  Notwithstanding anything herein to the contrary, if after the Effective
Date (i) the VWAP for each of any 20 consecutive Trading Days (“Threshold
Period”), which 20 consecutive Trading Days period shall have commenced only
after the Effective Date, exceeds $3.50 (subject to adjustment for any
subsequent stock splits or similar capital adjustments) and (ii) the average
daily volume for any Threshold Period, which Threshold Period shall have
commenced only after the Effective Date, exceeds 150,000 shares of Common Stock
per Trading Day, the Corporation may, within 1 Trading Day after any such
Threshold Period, deliver a written notice to all Holders (a “Forced Conversion
Notice” and the date such notice is received by the Holders, the “Forced
Conversion Notice Date”) to cause each Holder to immediately convert all or part
of such Holder’s Preferred Stock plus all accrued but unpaid dividends thereon
and all liquidated damages and other amounts due in respect of the Preferred
Stock pursuant to Section 6, it being understood that the “Conversion Date” for
purposes of Section 6 shall be deemed to occur on the third Trading Day
following the Forced Conversion Notice Date (such third Trading Day being
referred to as the “Forced Conversion Date”). The Corporation may not deliver a
Forced Conversion Notice, and any Forced Conversion Notice delivered by the
Corporation shall not be effective, unless all of the Equity Conditions have
been met on each Trading Day occurring during the Threshold Period through and
including the later of the Forced Conversion Date and the date that the
Conversion Shares issuable pursuant to such conversion are delivered to the
Holder pursuant to the Forced Conversion Notice. Any Forced Conversion Notices
shall be applied ratably to all of the Holders in proportion to each Holder’s
initial purchases of Preferred Stock hereunder, provided that any voluntary
conversions by a Holder shall be applied against such Holder’s pro-rata
allocation thereby decreasing the aggregate amount forcibly converted hereunder.
The Corporation’s right to force conversion hereunder shall be subject to
compliance with the limitations on beneficial ownership set forth in Section
6(c).

 

     Section 9. Redemption Upon Triggering Events.

 

     (a)  “Triggering Event” means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

16

--------------------------------------------------------------------------------

 

     i.  the failure of a Conversion Shares Registration Statement to be
declared effective by the Commission on or prior to the 240th day after the
Original Issue Date;

 

     ii.  if, during the Effectiveness Period, the effectiveness of the
Conversion Shares Registration Statement lapses for any reason for more than an
aggregate of 90 calendar days (which need not be consecutive days) during any 12
month period, or the Holder shall not be permitted to resell Registrable
Securities under the Conversion Shares Registration Statement for more than an
aggregate of 90 calendar days (which need not be consecutive days) during any 12
month period;

 

     iii.  the Corporation shall fail to deliver certificates representing
Conversion Shares issuable upon a conversion hereunder that comply with the
provisions hereof prior to the tenth Trading Day after such shares are required
to be delivered hereunder, or the Corporation shall provide written notice to
any Holder, including by way of public announcement, at any time, of its
intention not to comply with requests for conversion of any shares of Preferred
Stock in accordance with the terms hereof;

 

     iv.  one of the Events (as defined in the Registration Rights Agreement)
described in subsections (i), (ii) or (iii) of Section 2(b) of the Registration
Rights Agreement shall not have been cured to the satisfaction of the Holders
prior to the expiration of 30 days from the Event Date (as defined in the
Registration Rights Agreement) relating thereto (other than an Event resulting
from a failure of a Conversion Shares Registration Statement to be declared
effective by the Commission on or prior to the 240th day after the Original
Issue Date, which shall be covered by Section 9(a)(i)) AND the Corporation shall
have failed to timely pay liquidated damages in connection therewith;

 

     v.  the Corporation shall fail for any reason to pay in full the amount of
cash due pursuant to a Buy-In within ten days after notice therefor is delivered
hereunder or shall fail to pay all amounts owed on account of an Event within
fifteen days of the date due;

 

     vi.  the Corporation shall fail to have available a sufficient number of
authorized and unreserved shares of Common Stock to issue to such Holder upon a
conversion hereunder, unless a special or annual meeting of stockholders has
been duly noticed to be held within 45 calendar days of such event, on which is
an agenda item to rectify such situation;

 

     vii.  unless specifically addressed elsewhere in this Certificate of
Designation as a Triggering Event, the Corporation shall fail to observe or
perform any other material covenant, agreement or warranty contained in, or
otherwise commit any material breach of the Transaction Documents, and such
failure or breach shall not, if subject to the possibility of a cure by the
Corporation, have been remedied within 30 calendar days after the date on which
written notice of such failure or breach shall have been given;

17

--------------------------------------------------------------------------------

 

     viii.  the Corporation shall redeem more than a de minimis number of Junior
Securities;

 

     ix.  the Corporation shall be party to a Change of Control Transaction;

 

     x.  there shall have occurred a Bankruptcy Event; or

 

     xi.  the Common Stock shall fail to be listed or quoted for trading on a
Trading Market for more than fifteen Trading Days, which need not be consecutive
Trading Days.

 

     (b)  Upon the occurrence of a Triggering Event, each Holder shall (in
addition to all other rights it may have hereunder or under applicable law) have
the right, exercisable at the sole option of such Holder, to require the
Corporation to, (i) with respect to the Triggering Events set forth in Sections
9(a)(iii), (v), (vi), (vii), (viii) and (x)(as to voluntary filings only),
redeem all of the Preferred Stock then held by such Holder for a redemption
price, in cash, equal to the Triggering Redemption Amount; or (ii) at the option
of the Holder and with respect to the Triggering Events set forth in Sections
9(a)(i), (ii), (iv), (x)(as to involuntary filings only) and (xi), either (A)
redeem all of the Preferred Stock then held by such Holder for a redemption
price, in shares of Common Stock, equal to a number of shares of Common Stock
equal to the Triggering Redemption Amount divided by 75% of the average of the
10 VWAPs immediately prior to the date of election hereunder or (B) increase the
dividend on all of the outstanding Preferred Stock held by such Holder to equal
18% per annum thereafter; provided, that in no event shall the number of shares
of Common Stock to be issued under clause (A) above exceed the number of
authorized but unissued shares of Common Stock of the Corporation at the time of
such redemption, and as to any remaining unredeemed Preferred Stock, the
increased dividend of clause (B) above shall apply, until and unless the
Corporation shall increase the number of authorized but unissued shares of
Common Stock, at which time the Holder may re-elect to be redeemed for shares of
Common Stock under clause (A), up to, but not to exceed the number of shares of
authorized but unissued Common Stock at that time, valued at the date of such
election. With respect to the Triggering Event set forth in Section 9(a)(ix)
only, and with respect only to redemption price, the redemption price, in cash,
shall equal the Change of Control Redemption Amount. The Triggering Redemption
Amount, if in cash or in shares, shall be due and payable or issuable, as the
case may be, within five Trading Days of the date on which the notice for the
payment therefor is provided by a Holder (the “Triggering Redemption Payment
Date”). If the Corporation fails to pay the Triggering Redemption Amount
hereunder in full pursuant to this Section on the date such amount is due in
accordance with this Section (whether in cash or shares of Common Stock), the
Corporation will pay interest thereon at a rate of 18% per annum (or such lesser
amount permitted by applicable law), accruing daily from such date until the
Triggering Redemption Amount, plus all such interest thereon, is paid in full.
For purposes of this Section, a share of Preferred Stock is outstanding until
such date as the Holder shall have received Conversion Shares upon a conversion
(or attempted conversion) thereof that meets the requirements hereof or has been
paid the Triggering Redemption Amount plus all accrued but unpaid dividends and
all accrued but unpaid liquidated damages in cash.

18

--------------------------------------------------------------------------------

     Section 10. Negative Covenants. Except with the written consent of a
majority of the shares of Preferred Stock then outstanding, so long as any
shares of Preferred Stock are outstanding, the Corporation will not and will not
permit any of its Subsidiaries to directly or indirectly:

 

     a)  except for Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of any kind,
including but not limited to, a guarantee, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom;

 

     b)  except for Permitted Liens, enter into, create, incur, assume or suffer
to exist any liens of any kind, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom;

 

     c)  amend its certificate of incorporation, bylaws or other charter
documents so as to materially and adversely affect any rights of any Holder;

 

     d)  repay, repurchase or offer to repay, repurchase or otherwise acquire
more than a de minimis number of shares of its Common Stock or Common Stock
Equivalents (not to exceed one percent of the Corporation’s outstanding shares
of Common Stock) other than as to the Conversion Shares to the extent permitted
or required under the Transaction Documents or as otherwise permitted by the
Transaction Documents;

 

     e)  enter into any agreement with respect to any of the foregoing; or

 

     f)  pay cash dividends or distributions on any equity securities of the
Corporation.

     Section 11. Miscellaneous.

 

     a)  Notices. Any and all notices or other communications or deliveries to
be provided by the Holder hereunder, including, without limitation, any Notice
of Conversion, shall be in writing and delivered personally, by facsimile or
sent by a nationally recognized overnight courier service, addressed to the
Corporation, at the address set forth above, facsimile number (303) 238-3734,
Attn: Michael I. Ruxin or such other address or facsimile number as the
Corporation may specify for such purposes by notice to the Holders delivered in
accordance with this Section. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile telephone number or
address of such Holder appearing on the books of the Corporation, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

19

--------------------------------------------------------------------------------

 

     b)  Absolute Obligation. Except as expressly provided herein, no provision
of this Certificate of Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay the liquidated damages
(if any) on the shares of Preferred Stock at the time, place, and rate, and in
the coin or currency, herein prescribed.

 

     c)  Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation
shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such certificate, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Corporation. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.

 

     d)  Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Colorado, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by any
of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the City of New
York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or such
New York Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Certificate of Designation and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Certificate of Designation
or the transactions contemplated hereby. If either party shall commence an
action or proceeding to enforce any provisions of this Certificate of
Designation, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.

20

--------------------------------------------------------------------------------

 

     e)  Waiver. Any waiver by the Corporation or the Holder of a breach of any
provision of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation. The failure of the
Corporation or the Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Certificate of Designation. Any
waiver must be in writing.

 

     f)  Severability. If any provision of this Certificate of Designation is
invalid, illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest.

 

     g)  Next Business Day. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day.

 

     h)  Headings. The headings contained herein are for convenience only, do
not constitute a part of this Certificate of Designation and shall not be deemed
to limit or affect any of the provisions hereof.

 

     i)  Status of Converted or Redeemed Preferred Stock. Shares of Preferred
Stock may only be issued pursuant to the Purchase Agreement. In case any shares
of Preferred Stock shall be converted, redeemed or reacquired by the
Corporation, such shares shall resume the status of authorized but unissued
shares of preferred stock, but shall not be designated as Series A Preferred
Stock.

**********************

21

--------------------------------------------------------------------------------

RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and
the secretary or any assistant secretary, of the Corporation be and they hereby
are authorized and directed to prepare and file a Certificate of Designation of
Preferences, Rights and Limitations in accordance with the foregoing resolution
and the provisions of Colorado law.

     IN WITNESS WHEREOF, the undersigned have executed this Certificate this
16th day of December 2005.

/s/ Michael I. Ruxin

--------------------------------------------------------------------------------

Name:  Michael I. Ruxin   Name:   Title:  CEO  Title: 

22

--------------------------------------------------------------------------------

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED
STOCK)

The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, into shares of common stock, par
value $0.01 per share (the “Common Stock”), of Global Med Technologies, Inc., a
Colorado corporation (the “Corporation”), according to the conditions hereof, as
of the date written below. If shares are to be issued in the name of a person
other than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Corporation in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:

     Date to Effect Conversion: _____________________________________________

     Number of shares of Preferred Stock owned prior to Conversion:
_______________

     Number of shares of Preferred Stock to be Converted:
________________________

     Stated Value of shares of Preferred Stock to be Converted:
____________________

     Number of shares of Common Stock to be Issued: ___________________________

     Applicable Conversion Price:____________________________________________

     Number of shares of Preferred Stock subsequent to Conversion:
________________

 

[HOLDER]

By:___________________________________
Name:
Title:

23

--------------------------------------------------------------------------------