exv4w2



 




Exhibit 4.2




CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND

PREFERENCES

OF THE

SERIES D CONVERTIBLE PREFERRED STOCK

OF

ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.




     The undersigned, the Chief Executive Officer of Advanced Environmental Recycling Technologies,
Inc., a Delaware corporation (the “Company”), in accordance with the provisions of the Delaware
General Corporation Law, does hereby certify that, pursuant to the authority conferred upon the
Board of Directors by the Certificate of Incorporation of the Company, the following resolution
creating a series of preferred stock, designated as Series D Convertible Preferred Stock, was duly
adopted on October 29, 2007, as follows:



     RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of
Directors of the Company by provisions of the Certificate of Incorporation of the Company (the
“Certificate of Incorporation”), there hereby is created out of the shares of the Company’s
preferred stock, par value $0.01 per share, authorized in Article IV of the Certificate of
Incorporation, a series of preferred stock of the Company, to be named “Series D Convertible
Preferred Stock,” consisting of Seven Hundred Eighty-Eight Thousand One Hundred and Eighty-Two
(788,182) shares, which series shall have the following designations, powers, preferences and
relative and other special rights and the following qualifications, limitations and restrictions:



     1. Designation and Rank. The designation of such series of the Preferred Stock shall
be the Series D Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”).
Each share of Preferred Stock shall have a stated value of $13.20 (the “Stated Value”). The
maximum number of shares of Preferred Stock shall be Seven Hundred Eighty-Eight Thousand One
Hundred and Eighty-Two( 788,182) shares. The Preferred Stock shall rank senior to the Company’s
Class A and Class B common stock, par value $0.01 per share (the “Common Stock”), and to all other
classes and series of equity securities of the Company which by their terms do not rank senior to
the Preferred Stock (“Junior Stock”). The Preferred Stock shall be subordinate to and rank junior
to all indebtedness of the Company now or hereafter outstanding. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in the Series D Convertible
Preferred Stock Purchase Agreement (the “Purchase Agreement”) among the Company and the initial
holders of the Preferred Stock.



     2. Dividends.



          (a) Payment of Dividends. Commencing on the date of the initial issuance (the
“Issuance Date”) of the Preferred Stock, the holders of record of shares of Preferred Stock shall
be entitled to receive dividends at the rate of eight percent (8%) of the Stated Value per share
per annum (the “Dividend Payment”), and no more, payable quarterly on each three month anniversary
following the Issuance Date. Dividends are payable at the option of the Company in cash or,
subject to the Equity Conditions (as defined below) and receiving Shareholder Approval (as defined
below) if required by the Nasdaq Capital Market, in registered shares of Common Stock. If the
Company elects to pay any dividend in registered shares of Common Stock, the number of shares of
Common Stock to be issued to the holder shall be an amount equal to ninety percent (90%) of the
quotient of (i) the Dividend Payment divided by (ii) the average of the




 









 




VWAP (as defined below) for the twenty (20) trading days immediately preceding the date the
Dividend Payment is due. If the Company elects to pay any dividend in registered shares of Common
Stock, the Company will give the holders of record of shares of Preferred Stock twenty (20) trading
days notice prior to the date of the applicable Dividend Payment. Notwithstanding the foregoing to
the contrary, until the earlier of (A) the effective date of the registration statement providing
for the resale of all of the shares of Preferred Stock and (B) six (6) months following the
Issuance Date, dividends shall be payable solely in additional shares of Preferred Stock. In the
case of shares of Preferred Stock outstanding for less than a full year, dividends shall be pro
rated based on the portion of each year during which such shares are outstanding. Dividends on the
Preferred Stock shall be cumulative, shall accrue and be payable semi-annually. Dividends on the
Preferred Stock are prior and in preference to any declaration or payment of any distribution (as
defined below) on any outstanding shares of Junior Stock. Such dividends shall accrue on each
share of Preferred Stock from day to day whether or not earned or declared so that if such
dividends with respect to any previous dividend period at the rate provided for herein have not
been paid on, or declared and set apart for, all shares of Preferred Stock at the time outstanding,
the deficiency shall be fully paid on, or declared and set apart for, such shares on a pro rata
basis with all other equity securities of the Company ranking pari passu with the Preferred Stock
as to the payment of dividends before any distribution shall be paid on, or declared and set apart
for Junior Stock.




          (b) For purposes hereof, “Equity Conditions” means (i) the registration statement providing
for the resale of shares of the Common Stock issuable upon conversion of the Preferred Stock, and
any dividends accrued thereon, is effective and has been effective, without lapse or suspension of
any kind, for a period thirty (30) consecutive calendar days, or the shares of Common Stock into
which the Preferred Stock can be converted or paid as dividends may be offered for sale to the
public pursuant to Rule 144(k) (“Rule 144(k)”) under the Securities Act of 1933, as amended, (ii)
trading in the Common Stock shall not have been suspended by the Securities and Exchange Commission
or the Trading Market (as defined below), (iii) the Company is in material compliance with the
terms and conditions of this Certificate of Designation and the other Transaction Documents and has
honored all prior conversions of Preferred Stock pursuant to the terms hereof; (iv) there is a
sufficient number of authorized and unissued shares of Common Stock available to satisfy all
conversions pursuant to the terms hereof; and (v) the holder of Preferred Stock is not in
possession of any material non-public information.




          (c) For purposes hereof, “Shareholder Approval” means such approval as may be required by the
applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) for
companies listed thereon (whether or not the Company is then listed thereon) from the shareholders
of the Company with respect to the transactions contemplated by the Transaction Documents,
including the issuance of all of the shares of Common Stock issued and issuable upon conversion of
the Preferred Stock, upon exercise of the Warrants and issued and issuable in lieu of the cash
payment of dividends on the Preferred Stock in accordance with the terms hereof to the extent in
excess of 19.99% of the issued and outstanding Common Stock on the Issuance Date.




          (d) For purposes hereof, “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




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date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time); (b)  if the OTC Bulletin Board is not a Trading
Market, 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 quoted for trading
on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets”
published by 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 Holders of a majority of the Preferred Stock then
outstanding and reasonably acceptable to the Company.




          (e) For purposes hereof, “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 American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board.




          (f) So long as any shares of Preferred Stock are outstanding, the Company shall not declare,
pay or set apart for payment any dividend or make any distribution on any Junior Stock (other than
dividends or distributions payable in additional shares of Junior Stock), unless at the time of
such dividend or distribution the Company shall have paid all accrued and unpaid dividends on the
outstanding shares of Preferred Stock.




          (g) In the event of a dissolution, liquidation or winding up of the Company pursuant to
Section 4 hereof, all accrued and unpaid dividends on the Preferred Stock shall be payable on the
date of payment of the preferential amount to the holders of Preferred Stock. In the event of (i) a
mandatory redemption pursuant to Section 9 hereof or (ii) a redemption upon the occurrence of a
Major Transaction (as defined in Section 8(c) hereof) or a Triggering Event (as defined in Section
8(d) hereof), all accrued and unpaid dividends on the Preferred Stock shall be payable on the date
of such redemption. In the event of a voluntary conversion pursuant to Section 5(a) hereof, all
accrued and unpaid dividends on the Preferred Stock being converted shall be payable on the
Voluntary Conversion Date (as defined in Section 5(b)(i) hereof).




          (h) For purposes hereof, unless the context otherwise requires, “distribution” shall mean the
transfer of cash or property without consideration, whether by way of dividend or otherwise,
payable other than in shares of Common Stock or other equity securities of the Company, or the
purchase or redemption of shares of the Company (other than redemptions set forth in Section 8
below or repurchases of Common Stock held by employees or consultants of the Company upon
termination of their employment or services pursuant to agreements providing for such repurchase or
upon the cashless exercise of options held by employees or consultants) for cash or property.




     3. Voting Rights.



          (a) Class Voting Rights. The Preferred Stock shall have the following class voting
rights (in addition to the voting rights set forth in Section 3(b) hereof). So long as any shares
of the Preferred Stock remain outstanding, the Company shall not, without the affirmative vote or
consent of the holders of at least a majority of the shares of the Preferred Stock




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outstanding at the time, given in person or by proxy, either in writing or at a meeting, in
which the holders of the Preferred Stock vote separately as a class: (i) authorize, create, issue
or increase the authorized or issued amount of any class or series of stock (other than any class
or series of Junior Stock), including but not limited to the issuance of any more shares of
Preferred Stock, ranking senior to the Preferred Stock, with respect to the distribution of assets
on liquidation, dissolution or winding up; (ii) amend, alter or repeal the provisions of the
Preferred Stock, whether by merger, consolidation or otherwise, so as to adversely affect any
right, preference, privilege or voting power of the Preferred Stock; provided,
however, that any creation and issuance of another series of Junior Stock shall not be
deemed to adversely affect such rights, preferences, privileges or voting powers; (iii) repurchase,
redeem or pay dividends on, shares of Common Stock or any other shares of the Company’s Junior
Stock (other than repurchases from employees of the Company not to exceed $100,000 in the aggregate
amount per fiscal year, or provided that all dividends have been paid upon the Preferred Stock,
repurchases pursuant to Rule 10b-18 under the Exchange Act or otherwise of up to $500,000 per
fiscal year, and any contractual redemption obligations existing as of the date hereof as disclosed
in the Company’s public filings with the Securities and Exchange Commission); (iv) amend the
Certificate of Incorporation or By-Laws of the Company so as to affect materially and adversely any
right, preference, privilege or voting power of the Preferred Stock; provided,
however, that any creation and issuance of another series of Junior Stock shall not be
deemed to adversely affect such rights, preferences, privileges or voting powers; (v) effect any
distribution with respect to Junior Stock other than as permitted hereby; (vi) reclassify the
Company’s outstanding securities; (vii) voluntarily file for bankruptcy, liquidate the Company’s
assets or make an assignment for the benefit of the Company’s creditors; (viii) change the nature
of the Company’s business; or (ix) enter into any agreement with respect to the foregoing.




          (b) General Voting Rights. The holder of each share of Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock into which such share
of Preferred Stock could be converted for purposes of determining the shares entitled to vote at
any regular, annual or special meeting of stockholders of the Company, and shall have voting rights
and powers equal to the voting rights and powers of the Common Stock (except as otherwise expressly
provided herein or as required by law, voting together with the Common Stock as a single class) and
shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the
Company. Fractional votes shall not, however, be permitted and any fractional voting rights
resulting from the above formula (after aggregating all shares into which shares of Preferred Stock
held by each holder could be converted) shall be rounded to the nearest whole number (with one-half
being rounded upward).




     4. Liquidation Preference.



          (a) In the event of the liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, the holders of shares of Preferred Stock then outstanding shall
be entitled to receive, out of the assets of the Company available for distribution to its
stockholders, an amount equal to two hundred percent (200%) of the Stated Value per share (the
“Liquidation Preference Amount”) of the Preferred Stock plus any accrued and unpaid dividends and
liquidated damages owed under the Transaction Documents before any payment shall be made or any
assets distributed to the holders of the Common Stock or any other Junior Stock. If the assets of
the Company are not sufficient to pay in full the Liquidation Preference Amount plus any accrued
and unpaid dividends payable to the holders of outstanding




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shares of the Preferred Stock and any series of Preferred Stock or any other class of stock
ranking pari passu, as to rights on liquidation, dissolution or winding up, with the Preferred
Stock, then all of said assets will be distributed among the holders of the Preferred Stock and the
other classes of stock ranking pari passu with the Preferred Stock, if any, ratably in accordance
with the respective amounts that would be payable on such shares if all amounts payable thereon
were paid in full. The liquidation payment with respect to each outstanding fractional share of
Preferred Stock shall be equal to a ratably proportionate amount of the liquidation payment with
respect to each outstanding share of Preferred Stock. All payments for which this Section 4(a)
provides shall be in cash, property (valued at its fair market value as determined by an
independent appraiser reasonably acceptable to the holders of a majority of the Preferred Stock) or
a combination thereof; provided, however, that no cash shall be paid to holders of
Junior Stock unless each holder of the outstanding shares of Preferred Stock has been paid in cash
the full Liquidation Preference Amount plus any accrued and unpaid dividends to which such holder
is entitled as provided herein. After payment of the full Liquidation Preference Amount plus any
accrued and unpaid dividends to which each holder is entitled, such holders of shares of Preferred
Stock will not be entitled to any further participation as such in any distribution of the assets
of the Company.




          (b) A consolidation or merger of the Company with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the Company, or the
effectuation by the Company of a transaction or series of related transactions in which more than
50% of the voting shares of the Company is disposed of or conveyed, shall not be deemed to be a
liquidation, dissolution, or winding up within the meaning of this Section 4. In the event of the
merger or consolidation of the Company with or into another corporation, the Preferred Stock shall
maintain its relative powers, designations and preferences provided for herein and no merger shall
result which is inconsistent therewith.




          (c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, stating a payment date and the place where the distributable amounts
shall be payable, shall be given by mail, postage prepaid, no less than forty-five (45) days prior
to the payment date stated therein, to the holders of record of the Preferred Stock at their
respective addresses as the same shall appear on the books of the Company.




     5. Conversion. The holder of Preferred Stock shall have the following conversion
rights (the “Conversion Rights”):



          (a) Right to Convert. At any time on or after the Issuance Date, the holder of any
such shares of Preferred Stock may, at such holder’s option, subject to the limitations set forth
in Section 7 herein, elect to convert (a “Voluntary Conversion”) all or any portion of the shares
of Preferred Stock held by such person into a number of fully paid and nonassessable shares of
Common Stock equal to the quotient of (i) the Stated Value of the shares of Preferred Stock being
converted, divided by (ii) the Conversion Price (as defined in Section 5(d) below) then in effect
as of the date of the delivery by such holder of its notice of election to convert. In the event
of a notice of redemption of any shares of Preferred Stock pursuant to Section 8 hereof, the
Conversion Rights of the shares designated for redemption shall terminate at the close of business
on the last full day preceding the date fixed for redemption, unless the redemption price is not
paid on such redemption date, in which case the Conversion Rights for such shares shall




5









 




continue until such price is paid in full. In the event of a liquidation, dissolution or
winding up of the Company, the Conversion Rights shall terminate at the close of business on the
last full day preceding the date fixed for the payment of any such amounts distributable on such
event to the holders of Preferred Stock. In the event of such a redemption or liquidation,
dissolution or winding up, the Company shall provide to each holder of shares of Preferred Stock
notice of such redemption or liquidation, dissolution or winding up, which notice shall (i) be sent
at least fifteen (15) days prior to the termination of the Conversion Rights (or, if the Company
obtains lesser notice thereof, then as promptly as possible after the date that it has obtained
notice thereof) and (ii) state the amount per share of Preferred Stock that will be paid or
distributed on such redemption or liquidation, dissolution or winding up, as the case may be.




          (b) Mechanics of Voluntary Conversion. The Voluntary Conversion of Preferred Stock
shall be conducted in the following manner:




               (i) Holder’s Delivery Requirements. To convert Preferred Stock into full shares of
Common Stock on any date (the “ Voluntary Conversion Date”), the holder thereof shall (A) transmit
by facsimile (or otherwise deliver), for receipt on or prior to 5:00 p.m., New York time on such
date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit
I (the “Conversion Notice”), to the Company at (479) 756-7410, Attention: Chief Financial
Officer, and (B) surrender to a common carrier for delivery to the Company as soon as practicable
following such Voluntary Conversion Date the original certificates representing the shares of
Preferred Stock being converted (or an indemnification undertaking with respect to such shares in
the case of their loss, theft or destruction) (the “Preferred Stock Certificates”) and the
originally executed Conversion Notice.



               (ii) Company’s Response. Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a confirmation of receipt of
such Conversion Notice to such holder. Upon receipt by the Company of a copy of the fully executed
Conversion Notice, the Company or its designated transfer agent (the “Transfer Agent”), as
applicable, shall, within three (3) business days following the date of receipt by the Company of
the fully executed Conversion Notice, issue and deliver to the Depository Trust Company (“DTC”)
account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) as
specified in the Conversion Notice, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be entitled. Notwithstanding the
foregoing to the contrary, the Company or its Transfer Agent shall only be obligated to issue and
deliver the shares to the DTC on a holder’s behalf via DWAC if such conversion is in connection
with a sale and the Company and the Transfer Agent are participating in DTC through the DWAC
system. If the number of shares of Preferred Stock represented by the Preferred Stock
Certificate(s) submitted for conversion is greater than the number of shares of Preferred Stock
being converted, then the Company shall, as soon as practicable and in no event later than three
(3) business days after receipt of the Preferred Stock Certificate(s) and at the Company’s expense,
issue and deliver to the holder a new Preferred Stock Certificate representing the number of shares
of Preferred Stock not converted.



               (iii) Dispute Resolution. In the case of a dispute as to the arithmetic calculation
of the number of shares of Common Stock to be issued upon conversion, the Company shall cause its
Transfer Agent to promptly issue to the holder the number of shares of Common Stock that is not
disputed and shall submit the arithmetic calculations to the holder via



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facsimile as soon as possible, but in no event later than two (2) business days after receipt
of such holder’s Conversion Notice. If such holder and the Company are unable to agree upon the
arithmetic calculation of the number of shares of Common Stock to be issued upon such conversion
within one (1) business day of such disputed arithmetic calculation being submitted to the holder,
then the Company shall within one (1) business day submit via facsimile the disputed arithmetic
calculation of the number of shares of Common Stock to be issued upon such conversion to the
Company’s independent, outside accountant. The Company shall cause the accountant to perform the
calculations and notify the Company and the holder of the results no later than seventy-two (72)
hours from the time it receives the disputed calculations. Such accountant’s calculation shall be
binding upon all parties absent manifest error. The reasonable expenses of such accountant in
making such determination shall be paid by the Company, in the event the holder’s calculation was
correct, or by the holder, in the event the Company’s calculation was correct, or equally by the
Company and the holder in the event that neither the Company’s or the holder’s calculation was
correct. The period of time in which the Company is required to effect conversions or redemptions
under this Certificate of Designation shall be tolled with respect to the subject conversion or
redemption pending resolution of any dispute by the Company made in good faith and in accordance
with this Section 5(b)(iii).




               (iv) Record Holder. The person or persons entitled to receive the shares of Common
Stock issuable upon a conversion of the Preferred Stock shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on the Conversion Date.



               (v) Company’s Failure to Timely Convert. If within three (3) business days of the
Company’s receipt of an executed copy of the Conversion Notice (so long as the applicable Preferred
Stock Certificates and original Conversion Notice are received by the Company on or before such
third business day) (the “Delivery Date”) the Transfer Agent shall fail to issue and deliver to a
holder the number of shares of Common Stock to which such holder is entitled upon such holder’s
conversion of the Preferred Stock or to issue a new Preferred Stock Certificate representing the
number of shares of Preferred Stock to which such holder is entitled pursuant to Section 5(b)(ii)
(a “Conversion Failure”), in addition to all other available remedies which such holder may pursue
hereunder and under the Purchase Agreement (including indemnification pursuant to Section 6
thereof), the Company shall pay additional damages to such holder on each business day after such
third (3rd) business day that such conversion is not timely effected in an amount equal
0.5% of the product of (A) the sum of the number of shares of Common Stock not issued to the holder
on a timely basis pursuant to Section 5(b)(ii) and to which such holder is entitled and, in the
event the Company has failed to deliver a Preferred Stock Certificate to the holder on a timely
basis pursuant to Section 5(b)(ii), the number of shares of Common Stock issuable upon conversion
of the shares of Preferred Stock represented by such Preferred Stock Certificate, as of the last
possible date which the Company could have issued such Preferred Stock Certificate to such holder
without violating Section 5(b)(ii) and (B) the Closing Bid Price (as defined below) of the Common
Stock on the last possible date which the Company could have issued such Common Stock and such
Preferred Stock Certificate, as the case may be, to such holder without violating Section 5(b)(ii).
If the Company fails to pay the additional damages set forth in this Section 5(b)(v) within five
(5) business days of the date incurred, then such payment shall bear interest at the rate of 2.0%
per month (pro rated for partial months) until such payments are made. The term “Closing Bid
Price” shall mean (a) the closing bid price per share of the Common Stock on such date on the
Nasdaq Capital Market or another



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Trading Market on which the Common Stock is then listed, or if there is no such price on such
date, then the closing bid price on such exchange or quotation system on the date nearest preceding
such date, or (b) if the Common Stock is not listed then on the Nasdaq Capital Market or any
registered national stock exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of reporting prices) at
the close of business on such date, or (c) if the Common Stock is not then reported by the OTC
Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for
the five days preceding such date of determination, or (d) if the Common Stock is not then publicly
traded the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the he holders of a majority of the outstanding shares of Preferred
Stock.




               (vi) Buy-In Rights. In addition to any other rights available to the holders of
Preferred Stock, if the Company fails to cause its Transfer Agent to transmit to the holder a
certificate or certificates representing the shares of Common Stock issuable upon conversion of the
Preferred Stock on or before the Delivery Date, and if after such date the holder is required by
its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the holder of the shares of Common Stock issuable upon
conversion of Preferred Stock which the holder anticipated receiving upon such conversion (a
“Buy-In”), then the Company shall (1) pay in cash to the holder the amount by which (x) the
holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of
Common Stock issuable upon conversion of Preferred Stock that the Company was required to deliver
to the holder in connection with the conversion at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the option of the holder,
either reinstate the shares of Preferred Stock and equivalent number of shares of Common Stock for
which such conversion was not honored or deliver to the holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its conversion and delivery
obligations hereunder. 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 Common
Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause
(1) of the immediately preceding sentence the Company shall be required to pay to the holder
$1,000. The holder shall provide the Company 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 Company. 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 Company’s failure to
timely deliver certificates representing shares of Common Stock upon conversion of the Preferred
Stock as required pursuant to the terms hereof.



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          (c) Mandatory Conversion.




               (i) At any time following the date that is eighteen (18) months from the Issuance Date, and
provided that all of the Required Conditions (as defined below) have been satisfied, the Company
may, upon thirty (30) days prior written notice (a “Mandatory Conversion Notice”) to all holders of
the shares of Preferred Stock, cause the Preferred Stock to convert into Common Stock pursuant to
the applicable conversion procedures in Section 5(b).



               (ii) The “Required Conditions” shall consist of the following:



                    (1) the Closing Bid Price of the Common Stock for the twenty (20) consecutive trading days
prior to delivery of the Mandatory Conversion Notice equals or exceeds two hundred percent (200%)
of the Conversion Price then in effect (as adjusted for stock splits, stock dividends or similar
events);



                    (2) the average daily trading volume of the Common Stock for the twenty (20) consecutive
trading days prior to delivery of the Mandatory Conversion Notice has been at least 100,000 shares;



                    (3) the registration statement providing for the resale of shares of the Common Stock issuable
upon conversion of the Preferred Stock, and any dividends accrued thereon, is effective on the date
of the Mandatory Conversion and has been effective, without lapse or suspension of any kind, for a
period thirty (30) consecutive calendar days, or the shares of Common Stock into which the
Preferred Stock can be converted or paid as dividends may be offered for sale to the public
pursuant to Rule 144(k) under the Securities Act of 1933, as amended;



                    (4) trading in the Common Stock shall not have been suspended by the Securities and Exchange
Commission or the Trading Market;



                    (5) the Company is in material compliance with the terms and conditions of this Certificate of
Designation and the other Transaction Documents (as defined in the Securities Purchase Agreement);
and



                    (6) all shares of Common Stock issuable upon conversion of the Preferred Stock and exercise of
the Warrants are then (a) authorized and reserved for issuance, (b) registered under the Securities
Act for resale by the holders and (c) listed or traded on the Trading Market.



               (iii) In the event any holder of Preferred Stock is unable to convert all of the outstanding
Preferred Stock that it holds due to the limitations set forth in Section 7(a) hereof, such
unconverted Preferred Stock shall remain outstanding with all of the rights and privileges set
forth herein. Upon the Company’s written request, a holder of Preferred Stock shall advise the
Company in writing the number of shares of Common Stock that are beneficially owned by such holder,
not counting shares of Common Stock issuable upon conversion of any Preferred Stock held by such
holder. Beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. If the shares
of Common Stock beneficially owned by such holder (excluding shares of Common Stock issuable upon
conversion of the Series D Preferred Stock) amount to less than 4.99% of the shares of Common Stock
outstanding at such time, the Company may, at its option, compel such holder, by delivery of a
Mandatory Conversion Notice,



9









 




to convert such portion of the Preferred Stock owned by such holder into shares of Common
Stock such that the total number of shares of Common Stock beneficially owned by such holder after
such conversion shall equal up to 4.99% but not more, of the shares of Common Stock outstanding
after such conversion.




               (iv) As used herein, a “Mandatory Conversion Date” shall be the date when the Mandatory
Conversion Notice shall be deemed delivered pursuant to Section 5(i). Notwithstanding the
foregoing, the Mandatory Conversion Date shall be extended for as long as (a) a Triggering Event
(as defined in Section 8(d) hereof) shall have occurred and be continuing, or (b) any event shall
have occurred and be continuing which with the passage of time and the failure to cure would result
in a Triggering Event. The Mandatory Conversion Date and the Voluntary Conversion Date
collectively are referred to in this Certificate of Designation as the “Conversion Date.”



               (v) On the Mandatory Conversion Date, the outstanding shares of Preferred Stock shall be
converted automatically without any further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the Company or its Transfer Agent;
provided, however, that the Company shall not be obligated to issue the shares of
Common Stock issuable upon conversion of any shares of Preferred Stock unless certificates
evidencing such shares of Preferred Stock are either delivered to the Company or the holder
notifies the Company that such certificates have been lost, stolen, or destroyed, and executes an
agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in
connection therewith. Upon the occurrence of a Mandatory Conversion of the Preferred Stock
pursuant to this Section 5, the holders of the Preferred Stock shall surrender the certificates
representing the Preferred Stock for which the Mandatory Conversion Date has occurred to the
Company and the Company shall cause its Transfer Agent to deliver the shares of Common Stock
issuable upon such conversion (in the same manner set forth in Section 5(b)(ii)) to the holder
within three (3) business days of the holder’s delivery of the applicable Preferred Stock
Certificates.



          (d) Conversion Price.




               (i) The term “Conversion Price” shall mean $1.32, subject to adjustment under Section 5(e)
hereof. Notwithstanding any adjustment hereunder, at no time shall the Conversion Price be greater
than $1.32 per share except if it is adjusted pursuant to Section 5(e)(i).



               (ii) Notwithstanding the foregoing to the contrary, if during any period (a “Black-out
Period”), a holder of Preferred Stock is unable to trade any Common Stock issued or issuable
upon conversion of the Preferred Stock immediately due to the postponement of filing or delay or
suspension of effectiveness of the Registration Statement or because the Company has otherwise
informed such holder of Preferred Stock that an existing prospectus cannot be used at that time in
the sale or transfer of such Common Stock (provided that such postponement, delay, suspension or
fact that the prospectus cannot be used is not due to factors solely within the control of the
holder of Preferred Stock or due to the Company exercising its rights under Section 3(n) of the
Registration Rights Agreement), such holder of Preferred Stock shall have the option but not the
obligation on any Conversion Date within ten (10) trading days following the expiration of the
Black-out Period of using the Conversion Price applicable on



10









 




such Conversion Date or any Conversion Price selected by such holder of Preferred Stock that
would have been applicable had such Conversion Date been at any earlier time during the Black-out
Period or within the ten (10) trading days thereafter.




          (e) Adjustments of Conversion Price.




               (i) Adjustments for Stock Splits and Combinations. If the Company shall at any time
or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock,
the Conversion Price shall be proportionately decreased. If the Company shall at any time or from
time to time after the Issuance Date, combine the outstanding shares of Common Stock, the
Conversion Price shall be proportionately increased. Any adjustments under this Section 5(e)(i)
shall be effective at the close of business on the date the stock split or combination becomes
effective.



               (ii) Adjustments for Certain Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in shares of Common Stock, then, and in each event, the Conversion Price shall be decreased
as of the time of such issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying the Conversion Price then in effect by a
fraction:



                    (A) the numerator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date; and



                    (B) the denominator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution.



               (iii) Adjustment for Other Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in securities of the Company other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be made and provision shall be made
(by adjustments of the Conversion Price or otherwise) so that the holders of Preferred Stock shall
receive upon conversions thereof, in addition to the number of shares of Common Stock receivable
thereon, the number of securities of the Company which they would have received had their Preferred
Stock been converted into Common Stock on the date of such event and had thereafter, during the
period from the date of such event to and including the Conversion Date, retained such securities
(together with any distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 5(e)(iii) with respect to the rights
of the holders of the Preferred Stock; provided, however, that if such record date
shall have been fixed and such dividend is not fully paid or if such distribution is not fully made
on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of
the time of actual payment of such dividends or distributions; and provided
further, however, that no such adjustment shall be made if the holders



11









 




of Preferred Stock simultaneously receive (i) a dividend or other distribution of shares of
Common Stock in a number equal to the number of shares of Common Stock as they would have received
if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of
such event or (ii) a dividend or other distribution of shares of Preferred Stock which are
convertible, as of the date of such event, into such number of shares of Common Stock as is equal
to the number of additional shares of Common Stock being issued with respect to each share of
Common Stock in such dividend or distribution.




               (iv) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock
issuable upon conversion of the Preferred Stock at any time or from time to time after the Issuance
Date shall be changed to the same or different number of shares of any class or classes of stock,
whether by reclassification, exchange, substitution or otherwise (other than by way of a stock
split or combination of shares or stock dividends provided for in Sections 5(e)(i), (ii) and (iii),
or a reorganization, merger, consolidation, or sale of assets provided for in Section 5(e)(v)),
then, and in each event, an appropriate revision to the Conversion Price shall be made and
provisions shall be made (by adjustments of the Conversion Price or otherwise) so that the holder
of each share of Preferred Stock shall have the right thereafter to convert such share of Preferred
Stock into the kind and amount of shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by holders of the number of shares of
Common Stock into which such share of Preferred Stock might have been converted immediately prior
to such reclassification, exchange, substitution or other change, all subject to further adjustment
as provided herein.



               (v) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets.
If at any time or from time to time after the Issuance Date there shall be a capital reorganization
of the Company (other than by way of a stock split or combination of shares or stock dividends or
distributions provided for in Section 5(e)(i), (ii) and (iii), or a reclassification, exchange or
substitution of shares provided for in Section 5(e)(iv)), or a merger or consolidation of the
Company with or into another corporation where the holders of outstanding voting securities prior
to such merger or consolidation do not own over 50% of the outstanding voting securities of the
merged or consolidated entity, immediately after such merger or consolidation, or the sale of all
or substantially all of the Company’s properties or assets to any other person (an “Organic
Change”), then as a part of such Organic Change an appropriate revision to the Conversion Price
shall be made if necessary and provision shall be made if necessary (by adjustments of the
Conversion Price or otherwise) so that the holder of each share of Preferred Stock shall have the
right thereafter to convert such share of Preferred Stock into the kind and amount of shares of
stock and other securities or property of the Company or any successor corporation resulting from
Organic Change. In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5(e)(v) with respect to the rights of the holders of the Preferred Stock
after the Organic Change to the end that the provisions of this Section 5(e)(v) (including any
adjustment in the Conversion Price then in effect and the number of shares of stock or other
securities deliverable upon conversion of the Preferred Stock) shall be applied after that event in
as nearly an equivalent manner as may be practicable. Notwithstanding the foregoing to the
contrary, in the event of an Organic Change, the Company shall have the sole option, in lieu of the
rights of each holder of Preferred Stock contained in this Section 5(e)(v) upon an Organic Change,
to pay to each holder of Preferred Stock an amount equal to the Liquidation Preference Amount of
each share of Preferred Stock held by such holder



12









 




at the time plus any accrued and unpaid dividends and liquidated damages owed under the
Transaction Documents.




               (vi) Adjustments for Issuance of Additional Shares of Common Stock.



               (A) Commencing on the Issuance Date and for a period of two (2) years thereafter, in the event
the Company shall issue or sell any additional shares of Common Stock (otherwise than as provided
in the foregoing subsections (i) through (v) of this Section 5(e) or pursuant to Common Stock
Equivalents (hereafter defined) granted or issued on or prior to the Issuance Date) (the
“Additional Shares of Common Stock”), at a price per share less than the Conversion Price, or
without consideration, the Conversion Price then in effect upon each such issuance shall be
adjusted to the price equal to the consideration per share paid for such Additional Shares of
Common Stock.



               (B) Commencing on the date that is two (2) years and one (1) day following the Issuance Date,
in the event the Company shall issue or sell any additional shares of Common Stock (otherwise than
as provided in the foregoing subsections (i) through (v) of this Section 5(e) or pursuant to Common
Stock Equivalents (hereafter defined) granted or issued on or prior to the Issuance Date) (the
“Additional Shares of Common Stock”), at a price per share less than the Conversion Price, or
without consideration, the Conversion Price then in effect upon each such issuance shall be
adjusted to that price (rounded to the nearest cent) determined by multiplying the Conversion Price
by a fraction:



                    (1) the numerator of which shall be equal to the sum of (A) the number of shares of Common
Stock outstanding immediately prior to the issuance of such Additional Shares of Common Stock
plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which
the aggregate consideration for the total number of such Additional Shares of Common Stock so
issued would purchase at a price per share equal to the then Conversion Price, and



                    (2) the denominator of which shall be equal to the number of shares of Common Stock
outstanding immediately after the issuance of such Additional Shares of Common Stock;


No adjustment of the number of shares of Common Stock shall be made under paragraphs (A) and (B) of
Section 5(e)(vi) upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to
the exercise of any conversion or exchange rights in any Common Stock Equivalents (as defined
below), if any such adjustment shall previously have been made upon the issuance of such warrants
or other rights or upon the issuance of such Common Stock Equivalents (or upon the issuance of any
warrant or other rights therefore) pursuant to Section 5(e)(vii).




               (vii) Issuance of Common Stock Equivalents. The provisions of this Section 5(e)(vii)
shall apply if (a) the Company, at any time after the Issuance Date, shall issue any securities
convertible into or exchangeable for, directly or indirectly, Common Stock (“Convertible
Securities”), other than the Preferred Stock, or (b) any rights or warrants or options to purchase
any such Common Stock or Convertible Securities (collectively, the “Common Stock Equivalents”)
shall be issued or sold. If the price per share for which Additional Shares of



13









 




Common Stock may be issuable pursuant to any such Common Stock Equivalent shall be less than
the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may be issuable
thereafter is amended or adjusted, and such price as so amended shall be less than the applicable
Conversion Price in effect at the time of such amendment or adjustment, then the applicable
Conversion Price upon each such issuance or amendment shall be adjusted as provided in subsection
(vi) of this Section 5(e). No adjustment shall be made to the Conversion Price upon the issuance
of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or
Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the
issuance or purchase of any Convertible Security or Common Stock Equivalent.




               (viii) Shareholder Approval. Unless Shareholder Approval has been obtained and deemed
effective, neither the Company nor any subsidiary shall make any issuance whatsoever of Additional
Shares of Common Stock or Common Stock Equivalents which would cause any adjustment of the
Conversion Price of the Preferred Stock. Any holder of Preferred Stock shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages.



               (ix) Consideration for Stock. In case any shares of Common Stock or Convertible
Securities other than the Preferred Stock, or any rights or warrants or options to purchase any
such Common Stock or Convertible Securities, shall be issued or sold:



                    (A) in connection with any merger or consolidation in which the Company is the surviving
corporation (other than any consolidation or merger in which the previously outstanding shares of
Common Stock of the Company shall be changed to or exchanged for the stock or other securities of
another corporation), the amount of consideration therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the Company, 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 or warrants or options,
as the case may be; or



                    (B) in the event of any consolidation or merger of the Company in which the Company is not the
surviving corporation or in which the previously outstanding shares of Common Stock of the Company
shall be changed into or exchanged for the stock or other securities of another corporation, or in
the event of any sale of all or substantially all of the assets of the Company for stock or other
securities of any corporation, the Company shall be deemed to have issued a number of shares of its
Common Stock for stock or securities or other property of the other corporation computed on the
basis of the actual exchange ratio on which the transaction was predicated, and for a consideration
equal to the fair market value on the date of such transaction of all such stock or securities or
other property of the other corporation. If any such calculation results in adjustment of the
applicable Conversion Price, or the number of shares of Common Stock issuable upon conversion of
the Preferred Stock, the determination of the applicable Conversion Price or the number of shares
of Common Stock issuable upon conversion of the Preferred Stock immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such adjustment of the number of shares
of Common Stock issuable upon conversion of the Preferred Stock. In the event any consideration
received by the Company for any securities consists of property other than cash, the fair market
value thereof at



14









 




the time of issuance or as otherwise applicable shall be as determined in good faith by the
Board of Directors of the Company. In the event Common Stock is issued with other shares or
securities or other assets of the Company for consideration which covers both, the consideration
computed as provided in this Section (5)(e)(viii) shall be allocated among such securities and
assets as determined in good faith by the Board of Directors of the Company.




               (x) Record Date. In case the Company shall take record of the holders of its Common
Stock or any other Preferred Stock for the purpose of entitling them to subscribe for or purchase
Common Stock or Convertible Securities, then the date of the issue or sale of the shares of Common
Stock shall be deemed to be such record date.



               (xi) Certain Issues Excepted. Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustment to the Conversion Price upon (i) securities
issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii)
securities issued pursuant to the conversion or exercise of convertible or exercisable securities
issued or outstanding on or prior to the Issuance Date (so long as the conversion or exercise price
in such securities are not amended to lower such price (except as the result of stock dividends,
subdivisions or combinations) and/or adversely affect the holders), (iii) securities issued in
connection with bona fide strategic license agreements or other partnering arrangements so long as
such issuances are not for the purpose of raising capital, (iv) Common Stock issued or the issuance
or grants of options to purchase Common Stock pursuant to the Issuer’s stock option plans and
employee stock purchase plans outstanding as they exist on the Issuance Date, (v) securities issued
as payment of dividends on the Preferred Stock, and (vi) any warrants issued to the placement agent
and its designees for the transactions contemplated by the Purchase Agreement.



          (f) No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed hereunder by the Company,
but will at all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the holders of the Preferred Stock against impairment. In the
event a holder shall elect to convert any shares of Preferred Stock as provided herein, the Company
cannot refuse conversion based on any claim that such holder or any one associated or affiliated
with such holder has been engaged in any violation of law, unless (i) an order from the Securities
and Exchange Commission prohibiting such conversion or (ii) an injunction from a court, on notice,
restraining and/or adjoining conversion of all or of said shares of Preferred Stock shall have been
issued and the Company posts a surety bond for the benefit of such holder in an amount equal to
120% of the Stated Value of the Preferred Stock such holder has elected to convert, which bond
shall remain in effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such holder in the event it obtains judgment.




          (g) Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion
of the Preferred Stock pursuant to this Section 5, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and




15









 




furnish to each holder of such Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon written request of the holder of such affected Preferred Stock, at any time,
furnish or cause to be furnished to such holder a like certificate setting forth such adjustments
and readjustments, the Conversion Price in effect at the time, and the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time would be received
upon the conversion of a share of such Preferred Stock. Notwithstanding the foregoing, the Company
shall not be obligated to deliver a certificate unless such certificate would reflect an increase
or decrease of at least one percent of such adjusted amount.




          (h) Issue Taxes. The Company shall pay any and all issue and other taxes, excluding
federal, state or local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Preferred Stock pursuant hereto;
provided, however, that the Company shall not be obligated to pay any transfer
taxes resulting from any transfer requested by any holder in connection with any such conversion.




          (i) Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile or e-mail or three (3) business days
following being mailed by certified or registered mail, postage prepaid, return-receipt requested,
addressed to the holder of record at its address appearing on the books of the Company. The
Company will give written notice to each holder of Preferred Stock at least twenty (20) days prior
to the date on which the Company closes its books or takes a record (I) with respect to any
dividend or distribution upon the Common Stock, (II) with respect to any pro rata subscription
offer to holders of Common Stock or (III) for determining rights to vote with respect to any
Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be
provided to such holder prior to such information being made known to the public. The Company will
also give written notice to each holder of Preferred Stock at least twenty (20) days prior to the
date on which any Organic Change, dissolution, liquidation or winding-up will take place and in no
event shall such notice be provided to such holder prior to such information being made known to
the public.




          (j) Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Company shall round the number of shares to be issued upon conversion up
to the nearest whole number of shares.




          (k) Reservation of Common Stock. The Company shall, so long as any shares of
Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the Preferred Stock, such
number of shares of Common Stock equal to at least one hundred twenty percent (120%) of the
aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Preferred Stock then outstanding. The initial number of shares of Common
Stock reserved for conversions of the Preferred Stock and any increase in the number of shares so
reserved shall be allocated pro rata among the holders of the Preferred Stock based on the number
of shares of Preferred Stock held by each holder of record at the time of issuance of the Preferred
Stock or increase in the number of reserved shares, as the case may be. In the event a holder
shall sell or otherwise transfer any of such holder’s shares of Preferred Stock, each transferee
shall be allocated a pro rata portion of the number of reserved shares of Common




16









 




Stock reserved for such transferor. Any shares of Common Stock reserved and which remain
allocated to any person or entity which does not hold any shares of Preferred Stock shall be
allocated to the remaining holders of Preferred Stock, pro rata based on the number of shares of
Preferred Stock then held by such holder.




          (l) Retirement of Preferred Stock. Conversion of Preferred Stock shall be deemed to
have been effected on the Conversion Date. Upon conversion of only a portion of the number of
shares of Preferred Stock represented by a certificate surrendered for conversion, the Company
shall issue and deliver to such holder at the expense of the Company, a new certificate covering
the number of shares of Preferred Stock representing the unconverted portion of the certificate so
surrendered as required by Section 5(b)(ii).




          (m) Regulatory Compliance. If any shares of Common Stock to be reserved for the
purpose of conversion of Preferred Stock require registration or listing with or approval of any
governmental authority, stock exchange or other regulatory body under any federal or state law or
regulation or otherwise before such shares may be validly issued or delivered upon conversion, the
Company shall, at its sole cost and expense, in good faith and as expeditiously as possible,
endeavor to secure such registration, listing or approval, as the case may be.




     6. No Preemptive Rights. Except as provided in Section 5 hereof and in the Purchase
Agreement, no holder of the Preferred Stock shall be entitled to rights to subscribe for, purchase
or receive any part of any new or additional shares of any class, whether now or hereinafter
authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of any class, or any
bond, debentures or other evidences of indebtedness convertible into or exchangeable for shares,
may be issued and disposed of by the Board of Directors on such terms and for such consideration
(to the extent permitted by law), and to such person or persons as the Board of Directors in their
absolute discretion may deem advisable.



     7. Conversion Restriction. Notwithstanding anything to the contrary set forth in
Section 5 of this Certificate of Designation, at no time may a holder of shares of Preferred Stock
convert shares of the Preferred Stock if the number of shares of Common Stock to be issued pursuant
to such conversion would cause the number of shares of Common Stock owned by such holder and its
affiliates at such time to exceed, when aggregated with all other shares of Common Stock owned by
such holder and its affiliates at such time, the number of shares of Common Stock which would
result in such holder and its affiliates beneficially owning (as determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in
excess of 4.99% of the then issued and outstanding shares of Common Stock outstanding at such time;
provided, however, that upon a holder of Preferred Stock providing the Company with
sixty-one (61) days notice (pursuant to Section 5(i) hereof) (the “Waiver Notice”) that such holder
would like to waive Section 7 of this Certificate of Designation with regard to any or all shares
of Common Stock issuable upon conversion of Preferred Stock, this Section 7 shall be of no force or
effect with regard to those shares of Preferred Stock referenced in the Waiver Notice.



17









 





     8. Redemption.



          (a) Redemption Option Upon Major Transaction. In addition to all other rights of the
holders of Preferred Stock contained herein, simultaneous with the occurrence of a Major
Transaction (as defined below), each holder of Preferred Stock shall have the right, at such
holder’s option, to require the Company to redeem all or a portion of such holder’s shares of
Preferred Stock at a price per share of Preferred Stock equal to one hundred percent (100%) of the
Stated Value, plus any accrued but unpaid dividends and liquidated damages (the “Major Transaction
Redemption Price”); provided that the Company shall have the sole option to pay the Major
Transaction Redemption Price in cash or shares of Common Stock. If the Company elects to pay the
Major Transaction Redemption Price in shares of Common Stock, the price per share shall be equal to
the lesser of (i) the Conversion Price then in effect on the day preceding the date of delivery of
the Notice of Redemption at Option of Buyer Upon Major Transaction (as hereafter defined) or (ii)
the average of the VWAP of the Common Stock for the thirty (30) trading days immediately preceding
the date of delivery of the Notice of Redemption at Option of Buyer Upon Major Transaction. The
holder of such shares of Common Stock shall have demand registration rights with respect to such
shares.




          (b) Redemption Option Upon Triggering Event. In addition to all other rights of the
holders of Preferred Stock contained herein, after a Triggering Event (as defined below), each
holder of Preferred Stock shall have the right, at such holder’s option, to require the Company to
redeem all or a portion of such holder’s shares of Preferred Stock at a price per share of
Preferred Stock equal to one hundred twenty percent (120%) of the Stated Value, plus any accrued
but unpaid dividends and liquidated damages the “Triggering Event Redemption Price” and,
collectively with the “Major Transaction Redemption Price,” the “Redemption Price”); provided that
with respect to the Triggering Events described in clauses (i), (ii), (iii) and (vii) of Section
8(d), the Company shall have the sole option to pay the Triggering Event Redemption Price in cash
or shares of Common Stock; and provided, further, that with respect to the Triggering Event
described in clauses (iv), (v) and (vi) of Section 8(d), the Company shall pay the Triggering Event
Redemption Price in cash. If the Company elects to pay the Triggering Event Redemption Price in
shares of Common Stock in accordance with this Section 8(b), the price per share shall be equal to
the lesser of (i) the Conversion Price then in effect on the day preceding the date of delivery of
the Notice of Redemption at Option of Buyer Upon Triggering Event (as hereafter defined) or (ii)
the average of the VWAP of the Common Stock for the thirty (30) trading days immediately preceding
the date of delivery of the Notice of Redemption at Option of Buyer Upon Triggering Event. The
holder of such shares of Common Stock shall have demand registration rights with respect to such
shares.




          (c) “Major Transaction”. A “Major Transaction” shall be deemed to have occurred at
such time as any of the following events:




               (i) the consolidation, merger or other business combination of the Company with or into
another Person (other than (A) pursuant to a migratory merger effected solely for the purpose of
changing the jurisdiction of incorporation of the Company or (B) a consolidation, merger or other
business combination in which holders of the Company’s voting power immediately prior to the
transaction continue after the transaction to hold, directly or indirectly, the voting power of the
surviving entity or entities necessary to elect a majority of the members of the board of directors
(or their equivalent if other than a corporation) of such entity or entities).



18









 





               (ii) the sale or transfer of more than 50% of the Company’s assets other than inventory in the
ordinary course of business in one or a related series of transactions; or



               (iii) closing of a purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty percent (50%) of
the outstanding shares of Common Stock were tendered and accepted.



          (d) “Triggering Event”. A “Triggering Event” shall be deemed to have occurred at such
time as any of the following events:




               (i) so long as any shares of Preferred Stock are outstanding, the effectiveness of the
Registration Statement, after it becomes effective, (i) lapses for any reason (including, without
limitation, the issuance of a stop order) and such lapse continues for a period of thirty (30)
consecutive trading days, or (ii) is unavailable to the holder of the Preferred Stock for sale of
the shares of Common Stock, and such lapse or unavailability continues for a period of thirty (30)
consecutive trading days, and the shares of Common Stock into which such holder’s Preferred Stock
can be converted cannot be sold in the public securities market pursuant to Rule 144(k) under the
Securities Act of 1933, as amended, provided that the cause of such lapse or unavailability
is not due to factors solely within the control of such holder of Preferred Stock.



               (ii) the suspension from listing, without subsequent listing on any one of, or the failure of
the Common Stock to be listed on a Trading Market for a period of ten (10) consecutive trading
days;



               (iii) the Company’s notice to any holder of Preferred Stock, including by way of public
announcement, at any time, of its inability to comply (including for any of the reasons described
in Section 9) or its intention not to comply with proper requests for conversion of any Preferred
Stock into shares of Common Stock; or



               (iv) the Company’s failure to comply with a Conversion Notice tendered in accordance with the
provisions of this Certificate of Designation within ten (10) business days after the receipt by
the Company of the Conversion Notice and the Preferred Stock Certificates; or



               (v) the Company deregisters its shares of Common Stock and as a result such shares of Common
Stock are no longer publicly traded; or



               (vi) the Company consummates a “going private” transaction and as a result the Common Stock is
no longer registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended; or



               (vii) the Company breaches any representation, warranty, covenant or other term or condition
of the Purchase Agreement, this Certificate of Designation or any other agreement, document,
certificate or other instrument delivered in connection with the transactions contemplated thereby
or hereby, except to the extent that such breach would not have a Material Adverse Effect and
except, in the case of a breach of a covenant which is



19









 




curable, only if such breach continues for a period of a least twenty (20) business days;
provided, however, a breach of a representation or warranty under the Purchase Agreement shall
constitute a Triggering Event only during the two (2) year period following the Closing.




          (e) Mechanics of Redemption at Option of Buyer Upon Major Transaction. No sooner than
fifteen (15) days nor later than ten (10) days prior to the consummation of a Major Transaction,
but not prior to the public announcement of such Major Transaction, the Company shall deliver
written notice thereof via facsimile and overnight courier (“Notice of Major Transaction”) to each
holder of Preferred Stock. At any time after receipt of a Notice of Major Transaction (or, in the
event a Notice of Major Transaction is not delivered at least ten (10) days prior to a Major
Transaction, at any time within ten (10) days prior to a Major Transaction), any holder of
Preferred Stock then outstanding may require the Company to redeem, effective immediately prior to
the consummation of such Major Transaction, all of the holder’s Preferred Stock then outstanding by
delivering written notice thereof via facsimile and overnight courier (“Notice of Redemption at
Option of Buyer Upon Major Transaction”) to the Company, which Notice of Redemption at Option of
Buyer Upon Major Transaction shall indicate (i) the number of shares of Preferred Stock that such
holder is electing to redeem and (ii) the applicable Major Transaction Redemption Price, as
calculated pursuant to Section 8(a) above.




          (f) Mechanics of Redemption at Option of Buyer Upon Triggering Event. Within one (1)
business day after the Company obtains knowledge of the occurrence of a Triggering Event, the
Company shall deliver written notice thereof via facsimile and overnight courier (“Notice of
Triggering Event”) to each holder of Preferred Stock. At any time after the earlier of a holder’s
receipt of a Notice of Triggering Event and such holder becoming aware of a Triggering Event, any
holder of Preferred Stock then outstanding may require the Company to redeem all of the Preferred
Stock by delivering written notice thereof via facsimile and overnight courier (“Notice of
Redemption at Option of Buyer Upon Triggering Event”) to the Company, which Notice of Redemption at
Option of Buyer Upon Triggering Event shall indicate (i) the number of shares of Preferred Stock
that such holder is electing to redeem and (ii) the applicable Triggering Event Redemption Price,
as calculated pursuant to Section 8(b) above.




          (g) Payment of Redemption Price. Upon the Company’s receipt of a Notice(s) of
Redemption at Option of Buyer Upon Triggering Event or a Notice(s) of Redemption at Option of Buyer
Upon Major Transaction from any holder of Preferred Stock, the Company shall immediately notify
each holder of Preferred Stock by facsimile of the Company’s receipt of such Notice(s) of
Redemption at Option of Buyer Upon Triggering Event or Notice(s) of Redemption at Option of Buyer
Upon Major Transaction and each holder which has sent such a notice shall promptly submit to the
Company such holder’s Preferred Stock Certificates which such holder has elected to have redeemed.
Other than with respect to the Triggering Event described in clause (iv) of Section 8(d), the
Company shall have the sole option to pay the Redemption Price in cash or shares of Common Stock in
accordance with Sections 8(a) and (b) and Section 9 of this Certificate of Designation. The
Company shall deliver the applicable Major Transaction Redemption Price immediately prior to the
consummation of the Major Transaction; provided that a holder’s Preferred Stock
Certificates shall have been so delivered to the Company; provided further that if
the Company is unable to redeem all of the Preferred Stock to be redeemed, the Company shall redeem
an amount from each holder of Preferred Stock being redeemed equal to such holder’s pro-rata amount
(based on the number of shares of Preferred




20









 




Stock held by such holder relative to the number of shares of Preferred Stock outstanding) of
all Preferred Stock being redeemed. If the Company shall fail to redeem all of the Preferred Stock
submitted for redemption (other than pursuant to a dispute as to the arithmetic calculation of the
Redemption Price), in addition to any remedy such holder of Preferred Stock may have under this
Certificate of Designation and the Purchase Agreement, the applicable Redemption Price payable in
respect of such unredeemed Preferred Stock shall bear interest at the rate of 1.0% per month
(prorated for partial months) until paid in full. Until the Company pays such unpaid applicable
Redemption Price in full to a holder of shares of Preferred Stock submitted for redemption, such
holder shall have the option (the “Void Optional Redemption Option”) to, in lieu of redemption,
require the Company to promptly return to such holder(s) all of the shares of Preferred Stock that
were submitted for redemption by such holder(s) under this Section 8 and for which the applicable
Redemption Price has not been paid, by sending written notice thereof to the Company via facsimile
(the “Void Optional Redemption Notice”). Upon the Company’s receipt of such Void Optional
Redemption Notice(s) and prior to payment of the full applicable Redemption Price to such holder,
(i) the Notice(s) of Redemption at Option of Buyer Upon Major Transaction shall be null and void
with respect to those shares of Preferred Stock submitted for redemption and for which the
applicable Redemption Price has not been paid and (ii) the Company shall immediately return any
Preferred Stock submitted to the Company by each holder for redemption under this Section 8(d) and
for which the applicable Redemption Price has not been paid and (iii) the Conversion Price of such
returned shares of Preferred Stock shall be adjusted to the lesser of (A) the Conversion Price and
(B) the lowest Closing Bid Price during the period beginning on the date on which the Notice(s) of
Redemption of Option of Buyer Upon Major Transaction is delivered to the Company and ending on the
date on which the Void Optional Redemption Notice(s) is delivered to the Company; provided
that no adjustment shall be made if such adjustment would result in an increase of the Conversion
Price then in effect. A holder’s delivery of a Void Optional Redemption Notice and exercise of its
rights following such notice shall not effect the Company’s obligations to make any payments which
have accrued prior to the date of such notice other than interest payments. Payments provided for
in this Section 8 shall have priority to payments to other stockholders in connection with a Major
Transaction.




          (h) Demand Registration Rights. If the Redemption Price upon the occurrence of a
Major Transaction or a Triggering Event is paid in shares of Common Stock and such shares have not
been previously registered on a registration statement under the Securities Act, a holder of
Preferred Stock may make a written request for registration under the Securities Act pursuant to
this Section 8(h) of all of its shares of Common Stock issued upon such Major Transaction or
Triggering Event. The Company shall use its reasonable best efforts to cause to be filed and
declared effective as soon as reasonably practicable (but in no event later than the ninetieth
(90th) day after such holder’s request is made) a registration statement under the
Securities Act, providing for the sale of all of the shares of Common Stock issued upon such Major
Transaction or Triggering Event by such holder. The Company agrees to use its reasonable best
efforts to keep any such registration statement continuously effective for resale of the Common
Stock for so long as such holder shall request, but in no event later than the date that the shares
of Common Stock issued upon such Major Transaction or Triggering Event may be offered for resale to
the public pursuant to Rule 144(k).




21









 





     9. Inability to Fully Convert.



          (a) Holder’s Option if Company Cannot Fully Convert. If, upon the Company’s receipt
of a Conversion Notice or on the Mandatory Conversion Date, the Company cannot issue shares of
Common Stock registered for resale under the Registration Statement for any reason, including,
without limitation, because the Company (w) does not have a sufficient number of shares of Common
Stock authorized and available, (x) is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or its securities from issuing all of the Common
Stock which is to be issued to a holder of Preferred Stock pursuant to a Conversion Notice or (y)
subsequent to the effective date of the Registration Statement, fails to have a sufficient number
of shares of Common Stock registered for resale under the Registration Statement, then the Company
shall issue as many shares of Common Stock as it is able to issue in accordance with such holder’s
Conversion Notice and pursuant to Section 5(b)(ii) above and, with respect to the unconverted
Preferred Stock, the holder, solely at such holder’s option, can elect, within five (5) business
days after receipt of notice from the Company thereof to:




               (i) require the Company to redeem from such holder those Preferred Stock for which the Company
is unable to issue Common Stock in accordance with such holder’s Conversion Notice (“Mandatory
Redemption”) at a price per share equal to the Major Transaction Redemption Price as of such
Conversion Date (the “Mandatory Redemption Price”); provided that the Company shall have the sole
option to pay the Mandatory Redemption Price in cash or shares of Common Stock;



               (ii) if the Company’s inability to fully convert Preferred Stock is pursuant to Section
9(a)(y) above, require the Company to issue restricted shares of Common Stock in accordance with
such holder’s Conversion Notice and pursuant to Section 5(b)(ii) above;



               (iii) void its Conversion Notice and retain or have returned, as the case may be, the shares
of Preferred Stock that were to be converted pursuant to such holder’s Conversion Notice (provided
that a holder’s voiding its Conversion Notice shall not effect the Company’s obligations to make
any payments which have accrued prior to the date of such notice); or



               (iv) exercise its Buy-In rights pursuant to and in accordance with the terms and provisions of
Section 5(b)(vi) hereof.



          (b) Mechanics of Fulfilling Holder’s Election. The Company shall immediately send via
facsimile to a holder of Preferred Stock, upon receipt of a facsimile copy of a Conversion Notice
from such holder which cannot be fully satisfied as described in Section 9(a) above, a notice of
the Company’s inability to fully satisfy such holder’s Conversion Notice (the “Inability to Fully
Convert Notice”). Such Inability to Fully Convert Notice shall indicate (i) the reason why the
Company is unable to fully satisfy such holder’s Conversion Notice, (ii) the number of Preferred
Stock which cannot be converted and (iii) the applicable Mandatory Redemption Price. Such holder
shall notify the Company of its election pursuant to Section 9(a) above by delivering written
notice via facsimile to the Company (“Notice in Response to Inability to Convert”).




22









 





          (c) Payment of Redemption Price. If such holder shall elect to have its shares
redeemed pursuant to Section 9(a)(i) above, the Company shall pay the Mandatory Redemption Price to
such holder within thirty (30) days of the Company’s receipt of the holder’s Notice in Response to
Inability to Convert, provided that prior to the Company’s receipt of the holder’s Notice
in Response to Inability to Convert the Company has not delivered a notice to such holder stating,
to the satisfaction of the holder, that the event or condition resulting in the Mandatory
Redemption has been cured and all Conversion Shares issuable to such holder can and will be
delivered to the holder in accordance with the terms of Section 2(g). If the Company shall fail to
pay the applicable Mandatory Redemption Price to such holder on a timely basis as described in this
Section 9(c) (other than pursuant to a dispute as to the determination of the arithmetic
calculation of the Redemption Price), in addition to any remedy such holder of Preferred Stock may
have under this Certificate of Designation and the Purchase Agreement, such unpaid amount shall
bear interest at the rate of 2.0% per month (prorated for partial months) until paid in full.
Until the full Mandatory Redemption Price is paid in full to such holder, such holder may (i) void
the Mandatory Redemption with respect to those shares of Preferred Stock for which the full
Mandatory Redemption Price has not been paid, (ii) receive back such Preferred Stock, and (iii)
require that the Conversion Price of such returned shares of Preferred Stock be adjusted to the
lesser of (A) the Conversion Price and (B) the lowest Closing Bid Price during the period beginning
on the Conversion Date and ending on the date the holder voided the Mandatory Redemption.




          (d) Pro-rata Conversion and Redemption. In the event the Company receives a
Conversion Notice from more than one holder of Preferred Stock on the same day and the Company can
convert and redeem some, but not all, of the Preferred Stock pursuant to this Section 9, the
Company shall convert and redeem from each holder of Preferred Stock electing to have Preferred
Stock converted and redeemed at such time an amount equal to such holder’s pro-rata amount (based
on the number shares of Preferred Stock held by such holder relative to the number shares of
Preferred Stock outstanding) of all shares of Preferred Stock being converted and redeemed at such
time.




     10. Vote to Change the Terms of or Issue Preferred Stock. The affirmative vote at a
meeting duly called for such purpose or the written consent without a meeting, of the holders of
not less than sixty-six and two-thirds percent
(662/3%) of the then outstanding shares of Preferred
Stock (in addition to any other corporate approvals then required to effect such action), shall be
required (a) for any change to this Certificate of Designation or the Company’s Certificate of
Incorporation which would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Preferred Stock or (b) for the issuance of shares of Preferred Stock
other than pursuant to the Purchase Agreement.



     11. Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates
representing the shares of Preferred Stock, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company shall execute and
deliver new preferred stock certificate(s) of like tenor and date; provided,
however, the Company shall not be obligated to re-issue Preferred Stock Certificates if the
holder contemporaneously requests the Company to convert such shares of Preferred Stock into Common
Stock.



23









 





     12. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.
The remedies provided in this Certificate of Designation shall be cumulative and in addition to all
other remedies available under this Certificate of Designation, at law or in equity (including a
decree of specific performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder’s right to pursue actual damages for any failure by the Company to comply with
the terms of this Certificate of Designation. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall be the amounts to
be received by the holder thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the holders of the
Preferred Stock and that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the holders of the
Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or
other security being required.



     13. Specific Shall Not Limit General; Construction. No specific provision contained
in this Certificate of Designation shall limit or modify any more general provision contained
herein. This Certificate of Designation shall be deemed to be jointly drafted by the Company and
all initial purchasers of the Preferred Stock and shall not be construed against any person as the
drafter hereof.



     14. Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of
Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privilege.



24









 





     IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate and does
affirm the foregoing as true this 29th day of October, 2007.



	 	 	 	 	 
	 	ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 





EXHIBIT I




ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

CONVERSION NOTICE



Reference is made to the Certificate of Designation of the Relative Rights and Preferences of the
Preferred Stock of Advanced Environmental Recycling Technologies, Inc. (the “Certificate of
Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned
hereby elects to convert the number of shares of Preferred Stock, par value $0.01 per share (the
“Preferred Shares”), of Advanced Environmental Recycling Technologies, Inc., a Delaware corporation
(the “Company”), indicated below into shares of Common Stock, par value $0.01 per share (the
“Common Stock”), of the Company, by tendering the stock certificate(s) representing the share(s) of
Preferred Shares specified below as of the date specified below.




	 	 	 	 	 
	 

	 	Date of Conversion:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Number of Preferred Shares to be converted:                    
	 
	 	 	 	 
	 	 	Stock certificate no(s). of Preferred Shares to be converted:                    
	 
	 	 	 	 
	 	 	The Common Stock have been sold pursuant to the Registration Statement: YES            NO          





Please confirm the following information:




	 	 	 	 	 
	 

	 	Conversion Price:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Number of shares of Common Stock
to be issued:	 	 
	 

	 	 	 	 




Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on
the Date of Conversion:                                         



Please issue the Common Stock into which the Preferred Shares are being converted and, if
applicable, any check drawn on an account of the Company in the following name and to the following
address:




	 	 	 	 	 	 	 	 	 
	 

	 	Issue to:	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Facsimile Number:	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Authorization:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 





Dated: