Exhibit 10.4


[FORM OF]


 


SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

XSHARES GROUP, INC.


 


(Pursuant to Sections 242
and 245 of the

General Corporation Law of the State of Delaware)


 


XShares Group, Inc., a corporation organized and existing under
and by virtue of the provisions of the General Corporation Law of the State of
Delaware (the “General Corporation Law”),


 


DOES HEREBY CERTIFY:


 


1.             That the name of this corporation is XShares Group, Inc.,
and that this corporation was originally incorporated pursuant to the General
Corporation Law on August 7, 2008 under the name XShares Group, Inc.


 


2.             That the Board of Directors duly adopted
resolutions proposing to amend and restate the Certificate of Incorporation of
this corporation, declaring said amendment and restatement to be advisable and
in the best interests of this corporation and its stockholders, and authorizing
the appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment
and restatement is as follows:


 


RESOLVED, that the Certificate of
Incorporation of this corporation be amended and restated in its entirety to
read as follows:


 


FIRST:  The name of this corporation is XShares Group, Inc. (the “Corporation”).


 


SECOND: 
The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801, County of New Castle.  The name of its registered agent at such
address is The Corporation Trust Company.


 


THIRD: 
The nature of the business or purposes to be
conducted or promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law.


 


FOURTH: 
The total number of shares of all classes of
stock which the Corporation shall have authority to issue is (i) 1,400,000,000
shares of Common Stock, $0.0001 par value per share (“Common Stock”), and (ii) 672,000,000
shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).


 


The following is a statement of the designations and
the powers, privileges and rights, and the qualifications, limitations or
restrictions thereof in respect of each class of capital stock of the
Corporation.


 


A.                                   COMMON STOCK


 


1.             General. 
The voting, dividend and liquidation rights of the holders of the Common
Stock are subject to and qualified by the rights, powers and preferences of the
holders of the Preferred Stock set forth herein.


 

















 


2.             Voting. 
The holders of the Common Stock are entitled to one vote for each share
of Common Stock held at all meetings of stockholders (and written actions in
lieu of meetings); provided, however, that, except as otherwise
required by law, holders of Common Stock, as such, shall not be entitled to
vote on any amendment to the Certificate of Incorporation that relates solely
to the terms of one or more outstanding series of Preferred Stock if the
holders of such affected series are entitled, either separately or together
with the holders of one or more other such series, to vote thereon pursuant to
the Certificate of Incorporation or pursuant to the General Corporation
Law.  There shall be no cumulative
voting.  The number of authorized shares
of Common Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by (in addition to any vote of the holders of
one or more series of Preferred Stock that may be required by the terms of the
Certificate of Incorporation) the affirmative vote of the holders of shares of
capital stock of the Corporation representing a majority of the votes
represented by all outstanding shares of capital stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of
the General Corporation Law.


 


B.                                     PREFERRED
STOCK


 


One Hundred Seventy-Two Million (172,000,000) shares
of the authorized and unissued Preferred Stock of the Corporation are hereby
designated “Series A Preferred Stock,”
and Five Hundred Million (500,000,000) shares of the authorized and unissued
Preferred Stock of the Corporation are hereby designated “Series B Preferred Stock” with the
following rights, preferences, powers, privileges and restrictions,
qualifications and limitations. Unless otherwise indicated, references to “Sections”
or “Subsections” in this Part B of this Article Fourth refer to
sections and subsections of Part B of this Article Fourth.


 


1.             Dividends.  From and after the date of the issuance of
any shares of Series B Preferred Stock, dividends at the rate per annum of
$0.00284 per share shall accrue on such shares of Series B Preferred Stock
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Series A
Preferred Stock) (the “Accruing Dividends”).  Such Accruing Dividends shall be cumulative.
Accruing Dividends shall accrue from day to day and shall be declared and paid
on November 1st and May 1st of each year during which Series B
Preferred Stock remains issued and outstanding. 
The Accruing Dividends may be paid in either cash or in additional
shares of Series B Preferred Stock, as determined by the Board of
Directors.  Except as set forth above
with respect to the Series B Preferred Stock, the Corporation shall not
declare, pay or set aside any dividends on shares of any other class or series
of capital stock of the Corporation unless (in addition to the obtaining of any
consents required elsewhere in the Certificate of Incorporation) the holders of
the Series A Preferred Stock and Series B Preferred Stock then
outstanding shall first receive, or simultaneously receive, a dividend on each
outstanding share of Series A Preferred Stock and Series B Preferred
Stock in an amount at least equal to (i) in the case of a dividend on
Common Stock or any class or series that is convertible into Common Stock, that
dividend per share of Series A Preferred Stock or Series B Preferred
Stock as would equal the product of (A) the dividend payable on each share
of such class or series determined, if applicable, as if all shares of such
class or series had been converted into Common Stock and (B) the number of
shares of Common Stock issuable upon conversion of a share of Series A
Preferred Stock or Series B Preferred Stock, in each case calculated on
the record date for determination of holders entitled to receive such dividend
or (ii) in the case of a dividend on any class or series that is not
convertible into Common Stock, at a rate per share of Series A Preferred
Stock or Series B Preferred Stock determined by (A) dividing the
amount of the dividend payable on each share of such class or series of capital
stock by the original issuance price of such class or series of capital stock
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to such class
or series) and (B) multiplying such fraction by an amount equal to the
Original Issue Price (as defined below); provided that, if the Corporation
declares, pays or sets aside, on the same date, a dividend on shares of more
than one class or series of capital stock of the Corporation, the dividend
payable to the holders of Series A Preferred Stock Original Issue Price
pursuant to this Section 1 shall be calculated based upon the dividend
on the class or series of capital 


 


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stock that would result in the
highest Series A Preferred Stock Original Issue Price dividend..  The “Original
Issue Price” shall mean $0.30 per share with respect to the Series A
Preferred Stock and $0.0284 per share with respect to the Series B
Preferred Stock, subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization with
respect to the Series A Preferred Stock or Series B Preferred Stock,
as applicable.


 


2.             Liquidation, Dissolution or
Winding Up; Certain Mergers, Consolidations and Asset Sales.


 


2.1           Payments to Holders of Preferred
Stock.


 


2.1.1        Series B Preferred Stock. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation or a
Deemed Liquidation Event, the holders of shares of Series B Preferred
Stock then outstanding shall be entitled to be paid in cash out of the assets
of the Corporation available for distribution to its stockholders before any
payment shall be made to the holders of securities ranking junior to the Series B
Preferred Stock by reason of their ownership thereof (including, without
limitation, the Series A Preferred Stock), an amount per share equal to
the greater of (i) the Original Issue Price, plus any accrued but unpaid
dividends thereon, or (ii)  such amount per share as would have been
payable had all shares of Series B Preferred Stock been converted into
Common Stock pursuant to Section 4 immediately prior to such
liquidation, dissolution or winding up (the amount payable pursuant to this
sentence is hereinafter referred to as the “Series B
Liquidation Amount”).  If upon
any such liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series B Preferred Stock the
full amount to which they shall be entitled under this Subsection 2.1,
the holders of shares of Series B Preferred Stock shall share ratably in
any distribution of the assets available for distribution in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect
to such shares were paid in full.


 


2.1.2        Series A Preferred Stock. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation or a Deemed Liquidation Event, the holders of shares of Series A
Preferred Stock then outstanding shall be entitled to be paid in cash out of
the assets of the Corporation available for distribution to its stockholders
following the payment in full of the Series B Liquidation Amount before
any payment shall be made to the holders of securities ranking junior to the Series A
Preferred Stock by reason of their ownership thereof, an amount per share equal
to the greater of (i) the Original Issue Price, plus any dividends
declared but unpaid thereon, or (ii)  such amount per share as would have
been payable had all shares of Series A Preferred Stock been converted
into Common Stock pursuant to Section 4 immediately prior to such
liquidation, dissolution or winding up (the amount payable pursuant to this
sentence is hereinafter referred to as the “Series A
Liquidation Amount”).  If upon
any such liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series A Preferred Stock the
full amount to which they shall be entitled under this Subsection 2.1,
after the payment in full of the Series B Liquidation Amount, the holders
of shares of Series A Preferred Stock shall share ratably in any
distribution of the assets available for distribution in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect
to such shares were paid in full.


 


2.2           Payments to Holders of Common
Stock.  In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation or a
Deemed Liquidation Event, after the payment of all preferential amounts
required to be paid to the holders of shares of Series A Preferred Stock
and Series B Preferred Stock, the remaining assets of the Corporation
available for distribution to its stockholders shall be distributed among the
holders of shares of Common Stock, pro rata based on the number of shares held
by each such holder.


 


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2.3          Deemed Liquidation Events.


 


2.3.1        Definition. 
Each of the following events shall be considered a “Deemed Liquidation Event”:


 


(a)           a merger or consolidation in which (i) the
Corporation is a constituent party or (ii) a subsidiary of the Corporation
is a constituent party and the Corporation issues shares of its capital stock
pursuant to such merger or consolidation, except any such merger or consolidation
involving the Corporation or a subsidiary in which the shares of capital stock
of the Corporation outstanding immediately prior to such merger or
consolidation continue to represent, or are converted into or exchanged for
shares of capital stock that represent, immediately following such merger or
consolidation, at least a majority, by voting power, of the capital stock of (1) the
surviving or resulting corporation or (2) if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately
following such merger or consolidation, the parent corporation of such
surviving or resulting corporation (provided  that, for the
purpose of this Subsection 2.3.1, all shares of Common Stock issuable
upon exercise of Options (as defined below) outstanding immediately prior to
such merger or consolidation or upon conversion of Convertible Securities (as
defined below) outstanding immediately prior to such merger or consolidation
shall be deemed to be outstanding immediately prior to such merger or
consolidation and, if applicable, converted or exchanged in such merger or
consolidation on the same terms as the actual outstanding shares of Common
Stock are converted or exchanged); or


 


(b)           the sale, lease, transfer, exclusive
license or other disposition, in a single transaction or series of related
transactions, by the Corporation or any subsidiary of the Corporation of all or
substantially all the assets of the Corporation and its subsidiaries taken as a
whole, or the sale or disposition (whether by merger or otherwise) of one or
more subsidiaries of the Corporation if substantially all of the assets of the
Corporation and its subsidiaries taken as a whole are held by such subsidiary
or subsidiaries, except where such sale, lease, transfer, exclusive license or
other disposition is to a wholly owned subsidiary of the Corporation.


 


2.3.2       Effecting a Deemed Liquidation Event.


 


(a)           The Corporation shall not have the
power to effect a Deemed Liquidation Event referred to in Subsection
2.3.1(a)(i) unless the agreement or plan of merger or consolidation
for such transaction (the “Merger Agreement”)
provides that the consideration payable to the stockholders of the Corporation
shall be allocated among the holders of capital stock of the Corporation in
accordance with Subsections 2.1 and 2.2.


 


(b)           In the event of a Deemed Liquidation Event referred to in Subsection
2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a
dissolution of the Corporation under the General Corporation Law within 90 days
after such Deemed Liquidation Event, then (i) the Corporation shall send a
written notice to each holder of Series B Preferred Stock no later than
the 90th day after the Deemed Liquidation Event advising such holders of their
right (and the requirements to be met to secure such right) pursuant to the
terms of the following clause (ii) to require the redemption of
such shares of Series B Preferred Stock, and (ii) if the holders of
at least sixty-seven percent of the then outstanding shares of Series B
Preferred Stock so request in a written instrument delivered to the Corporation
not later than 120 days after such Deemed Liquidation Event, the Corporation
shall use the consideration received by the Corporation for such Deemed
Liquidation Event (net of any retained liabilities associated with the assets
sold or technology licensed, as determined in good faith by the Board of
Directors of the Corporation), together with any other assets of the
Corporation available for distribution to its stockholders (the “Available Proceeds”), to the extent
legally available therefor, on the 150th day after such Deemed Liquidation
Event, to redeem all outstanding shares of Series B Preferred Stock at a
price per share equal to 1.05 times the Series B Liquidation Amount.  Notwithstanding the foregoing, in the event of
a redemption pursuant to the preceding sentence, if the Available Proceeds are 


 


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not sufficient to redeem all outstanding
shares of Series B Preferred Stock, or if the Corporation does not have
sufficient lawfully available funds to effect such redemption, the Corporation
shall redeem a pro rata portion of each holder’s shares of Series B
Preferred Stock to the fullest extent of such Available Proceeds or such
lawfully available funds, based on the respective amounts which would otherwise
be payable in respect of the shares to be redeemed if the Available Proceeds or
lawfully available funds were sufficient to redeem all such shares, and shall
redeem the remaining shares to have been redeemed as soon as practicable after
the Corporation has funds legally available therefor.  The provisions of Subsections 6.2
through 6.4 shall apply, with such necessary changes in the details
thereof as are necessitated by the context, to the redemption of the Series B
Preferred Stock pursuant to this Subsection 2.3.2(b).  Prior to the distribution or redemption
provided for in this Subsection 2.3.2(b), the Corporation shall not
expend or dissipate the consideration received for such Deemed Liquidation
Event, except to discharge expenses incurred in connection with such Deemed
Liquidation Event or in the ordinary course of business.


 


(c)           In
the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or
2.3.1(b), if the Corporation does not effect a dissolution of the
Corporation under the General Corporation Law within 90 days after such Deemed
Liquidation Event, then (i) the Corporation shall send a written notice to
each holder of Series A Preferred Stock no later than the 90th day after
the Deemed Liquidation Event advising such holders of their right (and the
requirements to be met to secure such right) pursuant to the terms of the
following clause (ii) to require the redemption of such shares of Series B
Preferred Stock, and (ii) if the holders of at least sixty-seven percent
of the then outstanding shares of Series A Preferred Stock so request in a
written instrument delivered to the Corporation not later than 120 days after
such Deemed Liquidation Event, the Corporation shall use the Available Proceeds
remaining after the redemption of the Series B Preferred Stock pursuant to
Subsection 2.3.2(b), is applicable, to the extent legally available therefor,
on the 150th day after such Deemed Liquidation Event, to redeem all outstanding
shares of Series A Preferred Stock at a price per share equal to the Series A
Liquidation Amount.  Notwithstanding the
foregoing, in the event of a redemption pursuant to the preceding sentence, if
the remaining Available Proceeds are not sufficient to redeem all outstanding
shares of Series A Preferred Stock, or if the Corporation does not have
sufficient lawfully available funds to effect such redemption, the Corporation
shall redeem a pro rata portion of each holder’s shares of Series A
Preferred Stock to the fullest extent of such remaining Available Proceeds or
such lawfully available funds, based on the respective amounts which would
otherwise be payable in respect of the shares to be redeemed if the remaining
Available Proceeds or lawfully available funds were sufficient to redeem all
such shares, and shall redeem the remaining shares to have been redeemed as
soon as practicable after the Corporation has funds legally available
therefor.  The provisions of Subsections
6.2 through 6.4 shall apply, with such necessary changes in the
details thereof as are necessitated by the context, to the redemption of the Series A
Preferred Stock pursuant to this Subsection 2.3.2(c).  Prior to the distribution or redemption
provided for in this Subsection 2.3.2(b), the Corporation shall not
expend or dissipate the consideration received for such Deemed Liquidation
Event, except to discharge expenses incurred in connection with such Deemed
Liquidation Event or in the ordinary course of business.


 


2.3.3       Amount Deemed Paid or Distributed.  If the amount deemed paid or distributed
under this Subsection 2.3.3 is made in property other than in cash, the
value of such distribution shall be the fair market value of such property,
determined as follows:


 


(a)           For securities not subject to
investment letters or other similar restrictions on free marketability,


 


(i)            if traded on a securities exchange
or the NASDAQ Stock Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or market over the 30-period
ending three days prior to the closing of such transaction;


 


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(ii)           if actively traded over-the-counter,
the value shall be deemed to be the average of the closing bid prices over the
30-day period ending three days prior to the closing of such transaction; or


 


(iii)          if there is no active public market,
the value shall be the fair market value thereof, as determined in good faith
by the Board of Directors of the Corporation (so long as the Series B
Director concurs).


 


(b)           The method of valuation of securities
subject to investment letters or other similar restrictions on free
marketability (other than restrictions arising solely by virtue of a
stockholder’s status as an affiliate or former affiliate) shall take into
account an appropriate discount (as determined in good faith by the Board of
Directors of the Corporation (so long as the Series B Director concurs))
from the market value as determined pursuant to clause (a) above so as to
reflect the approximate fair market value thereof.


 


3.            Voting.


 


3.1          General;
Series B Director.


 


3.1.1        General.  On any
matter presented to the stockholders of the Corporation for their action or
consideration at any meeting of stockholders of the Corporation (or by written
consent of stockholders in lieu of meeting), each holder of outstanding shares
of Series A Preferred Stock and Series B Preferred Stock shall be
entitled to cast the number of votes equal to the number of whole shares of
Common Stock into which the shares of Series A Preferred Stock and Series B
Preferred Stock held by such holder are convertible as of the record date for
determining stockholders entitled to vote on such matter.  Except as provided by law or by the other
provisions of the Certificate of Incorporation, holders of Series A
Preferred Stock and Series B Preferred Stock shall vote together with the
holders of Common Stock as a single class.


 


3.1.2        Election of Directors. 
The holders of record of the shares of Series B Preferred Stock,
exclusively and as a separate class, shall be entitled to elect one (1) director
of the Corporation (the “Series B
Director”).  The Board of
Directors shall be comprised of seven (7) individuals (inclusive of the Series B
Director). The Series B Director may be removed without cause by, and only
by, the affirmative vote of the holders of Series B Preferred Stock, given
either at a special meeting of such stockholders duly called for that purpose
or pursuant to a written consent of stockholders.  If the holders of shares of Series B
Preferred Stock fail to elect a director to fill the Series B Director
position, then such directorship shall remain vacant until such time as the
holders of the Series B Preferred Stock elect a person to fill such
directorship by vote or written consent in lieu of a meeting; and no such
directorship may be filled by stockholders of the Corporation other than by the
holders of the Series B Preferred Stock, voting exclusively and as a
separate class.  The holders of
record of the shares of Common Stock, and of any other class or series of
voting stock (including the Series B Preferred Stock), exclusively and
voting together as a single class, shall be entitled to elect the balance of
the total number of directors of the Corporation.  At any meeting held for the purpose of
electing a director, the presence in person or by proxy of the holders of a
majority of the outstanding shares of the class or series entitled to elect
such director shall constitute a quorum for the purpose of electing such
director.


 


3.2          Series A
Preferred Stock Protective Provisions. 
At any time when shares of Series A Preferred Stock are
outstanding, the Corporation shall not, either directly or indirectly by
amendment, merger, consolidation or otherwise, do any of the following without
(in addition to any other vote required by law or the Certificate of
Incorporation) the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series A Preferred
Stock, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class:


 


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(a)           liquidate, dissolve or wind-up the
business and affairs of the Corporation, effect any Deemed Liquidation Event,
or consent to any of the foregoing;


 


(b)           amend, alter or repeal any provision
of the Certificate of Incorporation or Bylaws of the Corporation in a manner
that adversely affects the powers, preferences or rights of the Series A
Preferred Stock;


 


(c)           create,
or authorize the creation of, or issue or obligate itself to issue shares of,
any additional class or series of capital stock unless the same ranks junior to
the Series A Preferred Stock with respect to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, the payment of
dividends and rights of redemption, or increase the authorized number of shares
of Series A Preferred Stock or increase the authorized number of shares of
any additional class or series of capital stock unless the same ranks junior to
the Series A Preferred Stock with respect to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, the payment of
dividends and rights of redemption;


 


(d)           (i) reclassify,
alter or amend any existing security of the Corporation that is pari passu with
the Series A Preferred Stock in respect of the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, the payment of
dividends or rights of redemption, if such reclassification, alteration or
amendment would render such other security senior to the Series A
Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify,
alter or amend any existing security of the Corporation that is junior to the Series A
Preferred Stock in respect of the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, the payment of dividends or
rights of redemption, if such reclassification, alteration or amendment would
render such other security senior to or pari passu with the Series A
Preferred Stock in respect of any such right, preference or privilege;


 


(e)           purchase
or redeem (or permit any subsidiary to purchase or redeem) or pay or declare
any dividend or make any distribution on, any shares of capital stock of the
Corporation other than (i) redemptions of or dividends or distributions on
the Series A Preferred Stock as expressly authorized herein, (ii) dividends
or other distributions payable on the Common Stock solely in the form of
additional shares of Common Stock and or (iii) repurchases of stock from
former employees, officers, directors, consultants or other persons who
performed services for the Corporation or any subsidiary in connection with the
cessation of such employment or service at the lower of the original purchase
price or the then-current fair market value thereof;


 


(f)            increase
the number of shares of Common Stock reserved for any of the Company’s equity
incentive plans;


 


(h)           determine
the remuneration of directors of the Corporation; or


 


(i)            increase
or decrease the number of directors of the Corporation to more than 5 members,
including the Series B Director.


 


3.3           Series B Preferred Stock
Protective Provisions.  At any time
when shares of Series B Preferred Stock are outstanding, the Corporation
shall not, either directly or indirectly by amendment, merger, consolidation or
otherwise, do any of the following without (in addition to any other vote
required by law or the Certificate of Incorporation) the written consent or
affirmative vote of the holders of at least a majority of the then outstanding
shares of Series B Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class:


 


(a)           liquidate, dissolve or wind-up the
business and affairs of the Corporation, effect any Deemed Liquidation Event,
or consent to any of the foregoing;


 


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(b)         amend,
alter or repeal any provision of the Certificate of Incorporation or Bylaws of
the Corporation in a manner that adversely affects the powers, preferences or
rights of the Series B Preferred Stock;


 


(c)         create,
or authorize the creation of, or issue or obligate itself to issue shares of,
any additional class or series of capital stock unless (i) the same ranks
junior to the Series B Preferred Stock with respect to the distribution of
assets on the liquidation, dissolution or winding up of the Corporation, the
payment of dividends and rights of redemption, or increase the authorized
number of shares of Series B Preferred Stock or increase the authorized
number of shares of any additional class or series of capital stock unless the
same ranks junior to the Series B Preferred Stock with respect to the
distribution of assets on the liquidation, dissolution or winding up of the
Corporation, the payment of dividends and rights of redemption; or (ii) the
proceeds of such security shall be used to redeem all of the outstanding Series B
Preferred Stock pursuant to Section 6.1.1 hereof;


 


(d)           (i) reclassify,
alter or amend any existing security of the Corporation that is pari passu with
the Series B Preferred Stock in respect of the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, the payment of
dividends or rights of redemption, if such reclassification, alteration or
amendment would render such other security senior to the Series B
Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify,
alter or amend any existing security of the Corporation that is junior to the Series B
Preferred Stock in respect of the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, the payment of dividends or
rights of redemption, if such reclassification, alteration or amendment would
render such other security senior to or pari passu with the Series B
Preferred Stock in respect of any such right, preference or privilege;


 


(e)           purchase
or redeem (or permit any subsidiary to purchase or redeem) or pay or declare
any dividend or make any distribution on, any shares of capital stock of the
Corporation other than (i) redemptions of or dividends or distributions on
the Series B Preferred Stock as expressly authorized herein, (ii) dividends
or other distributions payable on the Common Stock solely in the form of
additional shares of Common Stock and or (iii) repurchases of stock from
former employees, officers, directors, consultants or other persons who performed
services for the Corporation or any subsidiary in connection with the cessation
of such employment or service at the lower of the original purchase price or
the then-current fair market value thereof;


 


(f)            increase
the number of shares of Common Stock reserved for any of the Company’s equity
incentive plans;


 


(h)           determine
the remuneration of directors of the Corporation;


 


(i)            increase
or decrease the number of directors of the Corporation to more than 5 members,
including the Series B Director; or


 


(j)            create,
or authorize the creation of, or issue, or authorize the issuance of any debt
security unless the proceeds of such security shall be used to redeem all of
the outstanding Series B Preferred Stock pursuant to Section 6.1.1
hereof.


 


4.            Optional Conversion.  The holders of the Series A Preferred
Stock and Series B Preferred Stock shall have conversion rights as follows
(the “Conversion Rights”):


 


4.1          Right to Convert.


 


4.1.1        Conversion Ratio. 
Each share of Series A Preferred Stock and Series B Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
and from time to time, 


 


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and without the payment of additional consideration by the
holder thereof, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Original Issue Price by the
Conversion Price (as defined below) in effect at the time of conversion.  The “Conversion
Price” shall initially be equal to $0.30 with respect to the Series A
Preferred Stock and $0.0284 with respect to the Series B Preferred
Stock.  Such initial Conversion Price,
and the rate at which shares of Series A Preferred Stock or Series B
Preferred Stock may be converted into shares of Common Stock, shall be subject
to adjustment as provided below.


 


4.1.2        Termination of Conversion Rights. In the event of a
notice of redemption of any shares of Series A Preferred Stock or Series B
Preferred Stock pursuant to Section 6, the Conversion Rights of the
shares designated for redemption shall terminate on the applicable date set
forth in Section 6.


 


4.2          Fractional
Shares.  No fractional shares of
Common Stock shall be issued upon conversion of the Series A Preferred
Stock or Series B Preferred Stock. 
In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the fair market value of a share of Common Stock as determined in good faith by
the Board of Directors of the Corporation. 
Whether or not fractional shares would be issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A
Preferred Stock or Series B Preferred Stock the holder is at the time
converting into Common Stock and the aggregate number of shares of Common Stock
issuable upon such conversion.


 


4.3          Mechanics
of Conversion.


 


4.3.1        Notice of Conversion. 
In order for a holder of Series A Preferred Stock or Series B
Preferred Stock, if and as applicable, to voluntarily convert shares of Series A
Preferred Stock or Series B Preferred Stock into shares of Common Stock,
such holder shall surrender the certificate or certificates for such shares of Series A
Preferred Stock or Series B Preferred Stock (or, if such registered holder
alleges that such certificate has been lost, stolen or destroyed, a lost
certificate affidavit and agreement reasonably acceptable to the Corporation to
indemnify the Corporation against any claim that may be made against the
Corporation on account of the alleged loss, theft or destruction of such
certificate), at the office of the transfer agent for the Series A
Preferred Stock or Series B Preferred Stock (or at the principal office of
the Corporation if the Corporation serves as its own transfer agent), together
with written notice that such holder elects to convert all or any number of the
shares of the Series A Preferred Stock or Series B Preferred Stock
represented by such certificate or certificates and, if applicable, any event
on which such conversion is contingent. 
Such notice shall state such holder’s name or the names of the nominees
in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued, if permitted. 
If required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or his, her or its attorney duly authorized in writing.  The close of business on the date of receipt
by the transfer agent (or by the Corporation if the Corporation serves as its
own transfer agent) of such certificates (or lost certificate affidavit and
agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common
Stock issuable upon conversion of the shares represented by such certificate
shall be deemed to be outstanding of record as of such date.  The Corporation shall, as soon as practicable
after the Conversion Time, (i) issue and deliver to such holder of Series A
Preferred Stock or Series B Preferred Stock, or to his, her or its
nominees, a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion in accordance with the provisions hereof
and a certificate for the number (if any) of the shares of Series A
Preferred Stock or Series B Preferred Stock represented by the surrendered
certificate that were not converted into Common Stock, (ii) pay in cash
such amount as provided in Subsection 4.2 in lieu of any fraction of a
share of Common Stock otherwise issuable upon such conversion and (iii) pay
all declared but unpaid dividends on the shares of Series A Preferred
Stock or Series B Preferred Stock converted.


 


9

















 


4.3.2        Reservation of Shares. 
The Corporation shall at all times when the Series A Preferred
Stock or Series B Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued capital stock, for the purpose of
effecting the conversion of the Series A Preferred Stock or Series B
Preferred Stock, as applicable, such number of its duly authorized shares of
Common Stock equal to 120% of the number of shares of Common Stock as shall
from time to time be sufficient (i) to effect the conversion of all
outstanding Series A Preferred Stock and Series B Preferred Stock and
to effect any dividends paid in shares of the Company’s Common Stock and (ii) in
the event of any breach by the Corporation under that certain Securities
Purchase Agreement (the “Purchase Agreement”) between the Corporation and MGT
Capital Investments, Inc. (“MGT”), dated as of May 14, 2009, or that
certain Convertible Promissory Note held by MGT (the “Note”), dated May 14,
2009, which breach remains uncured after the running of any cure period, such
number of shares of Common Stock sufficient to give MGT fifty (50%) percent of
the Corporation’s outstanding shares (exclusive of MGT’s current equity
holdings); and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock and Series B
Preferred Stock and to effect any dividends paid in shares of the Corporation’s
Common Stock and shares of Common Stock issued as a result of the Corporation’s
breach of the Purchase Agreement or the Note, the Corporation shall take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite stockholder approval of any necessary amendment to the Certificate of
Incorporation.  Before taking any action
which would cause an adjustment reducing the applicable Conversion Price below
the then par value of the shares of Common Stock issuable upon conversion of
the Series A Preferred Stock or Series B Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such adjusted
Conversion Price.


 


4.3.3        Effect of Conversion. 
All shares of Series A Preferred Stock and Series B Preferred
Stock which shall have been surrendered for conversion as herein provided shall
no longer be deemed to be outstanding and all rights with respect to such
shares shall immediately cease and terminate at the Conversion Time, except
only the right of the holders thereof to receive shares of Common Stock in
exchange therefor, to receive payment in lieu of any fraction of a share
otherwise issuable upon such conversion as provided in Subsection 4.2
and to receive payment of any dividends declared but unpaid thereon.  Any shares of Series A Preferred Stock
or Series B Preferred Stock so converted shall be retired and cancelled
and may not be reissued as shares of such series, and the Corporation may
thereafter take such appropriate action (without the need for stockholder
action) as may be necessary to reduce the authorized number of shares of Series A
Preferred Stock or Series B Preferred Stock accordingly.


 


1.1.2        No Further Adjustment. 
Upon any such conversion, no adjustment to the applicable Conversion
Price shall be made for any declared but unpaid dividends on the Series A
Preferred Stock or Series B Preferred Stock surrendered for conversion or
on the Common Stock delivered upon conversion.


 


4.3.4        Taxes.  The
Corporation shall pay any and all issue and other similar taxes that may be
payable in respect of any issuance or delivery of shares of Common Stock upon
conversion of shares pursuant to this Section 4.  The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock in a name other
than that in which the shares of Series A Preferred Stock or Series B
Preferred Stock so converted were registered, and no such issuance or delivery
shall be made unless and until the person or entity requesting such issuance
has paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid.


 


4.4           Adjustments to Conversion Price for
Diluting Issues.


 


10
















 


4.4.1        Special Definitions. 
For purposes of this Article Fourth, the following definitions
shall apply:


 


(a)           “Option”
shall mean rights, options or warrants to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities.


 


(b)           “Original
Issue Date” shall mean the date on which the first share of the
applicable series of Preferred Stock was issued.


 


(c)           “Convertible
Securities” shall mean any evidences of indebtedness, shares or
other securities directly or indirectly convertible into or exchangeable for
Common Stock, but excluding Options.


 


(d)           “Additional
Shares of Common Stock” shall mean all shares of Common Stock issued
(or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the
Corporation after the Original Issue Date, other than (1) the following
shares of Common Stock and (2) shares of Common Stock deemed issued
pursuant to the following Options and Convertible Securities (clauses (1) and
(2), collectively, “Exempted Securities”):


 


(i)                         shares of
Common Stock, Options or Convertible Securities issued as a dividend or
distribution on Series A Preferred Stock or Series B Preferred Stock;


 


(ii)                      shares of
Common Stock, Options or Convertible Securities issued by reason of a dividend,
stock split, split-up or other distribution on shares of Common Stock that is
covered by Subsection 4.5, 4.6, 4.7 or 4.8; or


 


(iii)                   shares of Common Stock or
Options issued to employees or directors of, or consultants or advisors to, the
Corporation or any of its subsidiaries pursuant to a plan, agreement or
arrangement unanimously approved by the Board of Directors of the Corporation
(including the Series B Preferred Director).


 


4.4.2        No Adjustment of Conversion Price.  No adjustment in the Conversion Price shall
be made as the result of the issuance or deemed issuance of Additional Shares
of Common Stock if the Corporation receives written notice from the holders of
at least majority of the then outstanding shares of Series B Preferred
Stock, each voting as a separate class, agreeing that no such adjustment shall
be made as the result of the issuance or deemed issuance of such Additional
Shares of Common Stock.


 


4.4.3        Deemed Issue of Additional Shares of Common Stock.


 


(a)           If the Corporation at any time or
from time to time after the Original Issue Date shall issue any Options or
Convertible Securities (excluding Options or Convertible Securities which are
themselves Exempted Securities) or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares of Common
Stock (as set forth in the instrument relating thereto, assuming the
satisfaction of any conditions to exercisability, convertibility or
exchangeability but without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of 


 


11

















 


the time of such issue or,
in case such a record date shall have been fixed, as of the close of business
on such record date.


 


(b)           If the terms of any Option or
Convertible Security, the issuance of which resulted in an adjustment to the
Conversion Price pursuant to the terms of Subsection 4.4.4, are revised
as a result of an amendment to such terms or if any other adjustment is made
pursuant to the provisions of such Option or Convertible Security (but
excluding automatic adjustments to such terms pursuant to anti-dilution or
similar provisions of such Option or Convertible Security) to provide for
either (1) any increase or decrease in the number of shares of Common
Stock issuable upon the exercise, conversion and/or exchange of any such Option
or Convertible Security or (2) any increase or decrease in the
consideration payable to the Corporation upon such exercise, conversion and/or
exchange, then, effective upon such increase or decrease becoming effective,
the Conversion Price computed upon the original issue of such Option or
Convertible Security (or upon the occurrence of a record date with respect
thereto) shall be readjusted to such Conversion Price as would have obtained
had such revised terms been in effect upon the original date of issuance of
such Option or Convertible Security. 
Notwithstanding the foregoing, no readjustment pursuant to this clause
(b) shall have the effect of increasing the Conversion Price to an
amount which exceeds the lower of (i) the applicable Conversion Price in
effect immediately prior to the original adjustment made as a result of the
issuance of such Option or Convertible Security, or (ii) the applicable
Conversion Price that would have resulted from any issuances of Additional
Shares of Common Stock (other than deemed issuances of Additional Shares of
Common Stock as a result of the issuance of such Option or Convertible
Security) between the original adjustment date and such readjustment date.


 


(c)           If the terms of any Option or
Convertible Security (excluding Options or Convertible Securities which are
themselves Exempted Securities), the issuance of which did not result in an
adjustment to the Conversion Price pursuant to the terms of Subsection 4.4.4
(either because the consideration per share (determined pursuant to Subsection
4.4.5) of the Additional Shares of Common Stock subject thereto was equal
to or greater than the Conversion Price then in effect, or because such Option
or Convertible Security was issued before the Original Issue Date), are revised
after the Original Issue Date as a result of an amendment to such terms or any
other adjustment pursuant to the provisions of such Option or Convertible Security
(but excluding automatic adjustments to such terms pursuant to anti-dilution or
similar provisions of such Option or Convertible Security) to provide for
either (1) any increase in the number of shares of Common Stock issuable
upon the exercise, conversion or exchange of any such Option or Convertible
Security or (2) any decrease in the consideration payable to the
Corporation upon such exercise, conversion or exchange, then such Option or
Convertible Security, as so amended or adjusted, and the Additional Shares of
Common Stock subject thereto (determined in the manner provided in Subsection
4.4.3(a)) shall be deemed to have been issued effective upon such increase
or decrease becoming effective.


 


(d)           Upon the expiration or termination of
any unexercised Option or unconverted or unexchanged Convertible Security (or
portion thereof) which resulted (either upon its original issuance or upon a
revision of its terms) in an adjustment to the Conversion Price pursuant to the
terms of Subsection 4.4.4, the Conversion Price shall be readjusted to
such Conversion Price as would have obtained had such Option or Convertible
Security (or portion thereof) never been issued.


 


(e)           If the number of shares of Common
Stock issuable upon the exercise, conversion and/or exchange of any Option or
Convertible Security, or the consideration payable to the Corporation upon such
exercise, conversion and/or exchange, is calculable at the time such Option or
Convertible Security is issued or amended but is subject to adjustment based
upon subsequent events, any adjustment to the Conversion Price provided for in
this Subsection 4.4.3 shall be effected at the time of such issuance or
amendment based on such number of shares or amount of consideration without
regard to any provisions for subsequent adjustments (and any subsequent
adjustments shall be treated as provided in clauses (b) and (c) of
this Subsection 4.4.3).  If the number of shares of Common Stock 


 


12

















 


issuable upon the exercise,
conversion and/or exchange of any Option or Convertible Security, or the
consideration payable to the Corporation upon such exercise, conversion and/or
exchange, cannot be calculated at all at the time such Option or Convertible
Security is issued or amended, any adjustment to the Conversion Price that
would result under the terms of this Subsection 4.4.3 at the time of
such issuance or amendment shall instead be effected at the time such number of
shares and/or amount of consideration is first calculable (even if subject to
subsequent adjustments), assuming for purposes of calculating such adjustment
to the Conversion Price that such issuance or amendment took place at the time
such calculation can first be made.


 


4.4.4        Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock.


 


4.4.4.1     Special Adjustments to Series B
Conversion Price in Absence of Qualfied Equity Financing.  Unless a Qualified Equity Financing has
occurred, and in the event the Series B Preferred Stock is not previously
redeemed pursuant to Subsection 2.3.2 or Section 6, on January 1,
2010, the Series B Conversion Price shall be adjusted to equal $0.001,
where “Qualified Equity Financing”
means an equity financing by the Corporation in an aggregate sum of at least
$5,000,000, upon terms and conditions acceptable to the Corporation’s Board of
Directors, which shall include the specific approval of the Series B
Director, not to be unreasonably withheld, which financing closes on or before December 31,
2009.


 


4.4.4.2     Adjustments to Series A Conversion
Price and Series B Conversion Price. In addition to the adjustment set
forth in Subsection 4.4.4.1, in the event the Corporation shall at any time
after the Original Issue Date of the Series B Preferred Stock issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to
be issued pursuant to Subsection 4.4.3), without consideration or for a
consideration per share less than the applicable Conversion Price in effect
immediately prior to such issue, then


 


(a)           the Conversion Price of the Series A Preferred Stock
shall be reduced, concurrently with such issue, to a price (calculated to the
nearest one-hundredth of a cent) determined in accordance with the following
formula:


 


CP2 = CP1* (A + B) ÷ (A + C).


 


For purposes of the
foregoing formula, the following definitions shall apply:


 


“CP2”          shall mean the Conversion
Price for such series of Preferred Stock in effect immediately after such issue
of Additional Shares of Common Stock


 


“CP1”          shall mean the Conversion
Price for such series of Preferred Stock in effect immediately prior to such
issue of Additional Shares of Common Stock;


 


“A”                    shall mean the
number of shares of Common Stock outstanding immediately prior to such issue of
Additional Shares of Common Stock (treating for this purpose as outstanding all
shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue or upon conversion or exchange of Convertible
Securities (including the Series A Preferred Stock and Series B
Preferred Stock) outstanding (assuming exercise of any 


 


13

















 


outstanding Options therefor) immediately prior to such issue);


 


“B”                      shall mean the
number of shares of Common Stock that would have been issued if such Additional
Shares of Common Stock had been issued at a price per share equal to CP1 (determined by dividing the aggregate
consideration received by the Corporation in respect of such issue by CP1); and


 


“C”                      shall mean the
number of such Additional Shares of Common Stock issued in such transaction;
and


 


(b)           the Conversion Price of the Series B Preferred Stock
shall be reduced, concurrently with adjustment to the Series A Preferred
Stock Conversion Price, to a price (calculated to the nearest one-hundredth of
a cent) in order to maintain the ratio of the number of shares of Series B
Preferred Stock to the number of shares of Series A Preferred Stock (each
as measured on an as-converted basis) as existed prior to the adjustment to the
Series A Preferred Stock Conversion Price.


 


4.4.5        Determination of Consideration.  For purposes of this Subsection 4.4,
the consideration received by the Corporation for the issue of any Additional
Shares of Common Stock shall be computed as follows:


 


(a)           Cash and Property:  Such consideration shall:


 


(i)                         insofar as it
consists of cash, be computed at the aggregate amount of cash received by the
Corporation, excluding amounts paid or payable for accrued interest;


 


(ii)                      insofar as it
consists of property other than cash, be computed at the fair market value
thereof at the time of such issue, as determined in good faith by the Board of
Directors of the Corporation (with the concurrence of the Series B
Preferred Stock Director); and


 


(iii)                   in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(i) and (ii) above, as determined in good faith by the
Board of Directors of the Corporation.


 


(b)           Options and Convertible Securities.  The consideration per share received by the
Corporation for Additional Shares of Common Stock deemed to have been issued
pursuant to Subsection 4.4.3, relating to Options and Convertible
Securities, shall be determined by dividing


 


(i)                         the total
amount, if any, received or receivable by the Corporation as consideration for
the issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set 


 


14

















 


forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by


 


(ii)                      the maximum
number of shares of Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities.


 


4.4.6        Multiple Closing Dates.  In the event the Corporation shall issue on
more than one date Additional Shares of Common Stock that are a part of one
transaction or a series of related transactions and that would result in an
adjustment to the Conversion Price pursuant to the terms of Subsection
4.4.4, then, upon the final such issuance, the Conversion Price shall be
readjusted to give effect to all such issuances as if they occurred on the date
of the first such issuance (and without giving effect to any additional
adjustments as a result of any such subsequent issuances within such period).


 


4.5           Adjustment for Stock Splits and
Combinations.  If the Corporation
shall at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Conversion Price in effect
immediately before that subdivision shall be proportionately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase in the aggregate
number of shares of Common Stock outstanding. 
If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price in effect immediately before the combination shall be
proportionately increased so that the number of shares of Common Stock issuable
on conversion of each share of such series shall be decreased in proportion to
such decrease in the aggregate number of shares of Common Stock
outstanding.  Any adjustment under this
subsection shall become effective at the close of business on the date the
subdivision or combination becomes effective.


 


4.6           Adjustment for Certain Dividends
and Distributions.  In the event the
Corporation at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable on
the Common Stock in additional shares of Common Stock, then and in each such
event the Conversion Price in effect immediately before such event shall be
decreased as of the time of such issuance or, in the event such a 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:


 


(1)                                  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


 


(2)                                  the denominator
of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such 


 


15

















 


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.


 


Notwithstanding the foregoing, (a) 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 recomputed
accordingly as of the close of business on such record date and thereafter the
Conversion Price shall be adjusted pursuant to this subsection as of the time
of actual payment of such dividends or distributions; and (b) that no such
adjustment shall be made if the holders of Series A Preferred Stock or Series B
Preferred Stock simultaneously receive 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 Series A
Preferred Stock and Series B Preferred Stock had been converted into
Common Stock on the date of such event.


 


4.7           Adjustments for Other Dividends
and Distributions.  In the event the
Corporation at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation or in other property and the provisions of Section 1
do not apply to such dividend or distribution, then and in each such event the
holders of Series A Preferred Stock and Series B Preferred Stock
shall receive, simultaneously with the distribution to the holders of Common
Stock, a dividend or other distribution of such securities or other property in
an amount equal to the amount of such securities or other property as they
would have received if all outstanding shares of Series A Preferred Stock
and Series B Preferred Stock had been converted into Common Stock on the
date of such event.


 


4.8           Adjustment for Merger or
Reorganization, etc.  Subject to the
provisions of Subsection 2.3, if there shall occur any reorganization, recapitalization,
reclassification, consolidation or merger involving the Corporation in which
the Common Stock (but not the Series A Preferred Stock or Series B
Preferred Stock) is converted into or exchanged for securities, cash or other
property (other than a transaction covered by Subsections 4.4, 4.6
or 4.7), then, following any such reorganization, recapitalization,
reclassification, consolidation or merger, each share of Series A
Preferred Stock and Series B Preferred Stock shall thereafter be convertible
in lieu of the Common Stock into which it was convertible prior to such event
into the kind and amount of securities, cash or other property which a holder
of the number of shares of Common Stock of the Corporation issuable upon
conversion of one share of Series A Preferred Stock and Series B
Preferred Stock immediately prior to such reorganization, recapitalization,
reclassification, consolidation or merger would have been entitled to receive
pursuant to such transaction; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Corporation) shall be
made in the application of the provisions in this Section 4 with
respect to the rights and interests thereafter of the holders of the Series A
Preferred Stock and Series B Preferred Stock, to the end that the
provisions set forth in this Section 4 (including provisions with
respect to changes in and other adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities or other property thereafter deliverable upon the conversion of the Series A
Preferred Stock and Series B Preferred Stock.


 


4.9           Certificate as to Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Section 4,
the Corporation at its expense shall, as promptly as reasonably practicable but
in any event not later than 10 days thereafter, compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of Series A
Preferred Stock and Series B Preferred Stock a certificate setting forth
such adjustment or readjustment (including the kind and amount of securities,
cash or other property into which the Series A Preferred Stock or Series B
Preferred Stock is convertible) and showing in detail the facts upon which such
adjustment or readjustment is based.  The
Corporation shall, as promptly as reasonably practicable after the written
request at any time of any holder of Series A Preferred Stock or Series B
Preferred Stock (but 


 


16

















 


in any event not later than 10
days thereafter), furnish or cause to be furnished to such holder a certificate
setting forth (i) the Conversion Price then in effect, and (ii) the
number of shares of Common Stock and the amount, if any, of other securities,
cash or property which then would be received upon the conversion of Series A
Preferred Stock or Series B Preferred Stock.


 


4.10         Notice of Record Date.  In the event:


 


(a)           the Corporation shall take a record
of the holders of its Common Stock (or other capital stock or securities at the
time issuable upon conversion of the Series A Preferred Stock or Series B
Preferred Stock) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of capital stock of any class or any other securities, or
to receive any other security; or


 


(b)           of any capital reorganization of the
Corporation, any reclassification of the Common Stock of the Corporation, or
any Deemed Liquidation Event; or


 


(c)           of the voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation,


 


then, and in each such case, the Corporation will send or cause to be
sent to the holders of the Series A Preferred Stock or Series B
Preferred Stock a notice specifying, as the case may be, (i) the record
date for such dividend, distribution or right, and the amount and character of
such dividend, distribution or right, or (ii) the effective date on which
such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is proposed to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such other capital stock or securities at the time issuable upon the conversion
of the Series A Preferred Stock or Series B Preferred Stock) shall be
entitled to exchange their shares of Common Stock (or such other capital stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up, and the amount per share and character of such
exchange applicable to the Series A Preferred Stock, Series B
Preferred Stock and the Common Stock. 
Such notice shall be sent at least 10 days prior to the record date or
effective date for the event specified in such notice.


 


5.             Mandatory Conversion.


 


5.1           Upon the date and time, or the
occurrence of an event, specified by vote or written consent of the holders of
at least sixty-seven percent of the then outstanding shares of Series B
Preferred Stock (the time of such closing or the date and time specified or the
time of the event specified in such vote or written consent is referred to
herein as the “Mandatory Conversion Time”),
(i) all outstanding shares of Series A Preferred Stock and Series B
Preferred Stock shall automatically be converted into shares of Common Stock,
at the then effective conversion rate and (ii) such shares may not be
reissued by the Corporation.


 


5.2           Procedural Requirements.  All holders of record of shares of Series A
Preferred Stock and Series B Preferred Stock shall be sent written notice
of the Mandatory Conversion Time and the place designated for mandatory
conversion of all such shares of Series A Preferred Stock and Series B
Preferred Stock pursuant to this Section 5.  Such notice need not be sent in advance of
the occurrence of the Mandatory Conversion Time.  Upon receipt of such notice, each holder of
shares of Series A Preferred Stock and Series B Preferred Stock shall
surrender his, her or its certificate or certificates for all such shares (or,
if such holder alleges that such certificate has been lost, stolen or destroyed,
a lost certificate affidavit and agreement reasonably acceptable to the
Corporation to indemnify the Corporation against any claim that may be made
against the Corporation on account of the alleged loss, theft or destruction of
such certificate) to the Corporation at the place designated in such notice and
shall 


 


17

















 


thereafter receive certificates
for the number of shares of Common Stock to which such holder is entitled
pursuant to this Section 5. 
At the Mandatory Conversion Time, all outstanding shares of Series A
Preferred Stock and Series B Preferred Stock shall be deemed to have been
converted into shares of Common Stock, which shall be deemed to be outstanding
of record, and all rights with respect to the Series A Preferred Stock and
Series B Preferred Stock so converted, including the rights, if any, to
receive notices and vote (other than as a holder of Common Stock), will
terminate notwithstanding the failure of the holder or holders thereof to surrender
the certificates at or prior to such time, except only the rights of the
holders thereof, upon surrender of their certificate or certificates (or lost
certificate affidavit and agreement) therefor, to receive the items provided
for in the last sentence of this Subsection 5.2.  If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or by his, her or its
attorney duly authorized in writing.  As
soon as practicable after the Mandatory Conversion Time and the surrender of
the certificate or certificates (or lost certificate affidavit and agreement)
for Series A Preferred Stock and Series B Preferred Stock, the
Corporation shall issue and deliver to such holder, or to his, her or its
nominees, a certificate or certificates for the number of full shares of Common
Stock issuable on such conversion in accordance with the provisions hereof,
together with cash as provided in Subsection 4.2 in lieu of any fraction
of a share of Common Stock otherwise issuable upon such conversion and the
payment of any declared but unpaid dividends on the shares of Series A
Preferred Stock and Series B Preferred Stock converted.  Such converted Series A Preferred Stock
and Series B Preferred Stock shall be retired and cancelled and may not be
reissued as shares of such series, and the Corporation may thereafter take such
appropriate action (without the need for stockholder action) as may be
necessary to reduce the authorized number of shares of Series A Preferred
Stock and Series B Preferred Stock accordingly.


 


6.             Redemption.


 


6.1           Redemption.


 


6.1.1        Shares of Series B Preferred Stock may be redeemed by
the Corporation at any time, out of funds lawfully available therefor, at a
price per share equal to 1.05 times the Original Issue Price, plus all declared
but unpaid dividends thereon, in a single installment payable on the applicable
date set forth in the redemption notice. 
The Corporation shall send written notice of the mandatory redemption to
each holder of record of Series B Preferred Stock not less than 20 days
prior to the redemption date, which notice shall state: (x) the date of
redemption; (y) that the holder’s right to convert such shares has
terminated; and (z) that the holder is to surrender to the Corporation, in
the manner and at the place designated, his, her or its certificate or
certificates representing the shares of Series B Preferred Stock to be
redeemed.  The Series B Preferred
Stock may not be converted following the issuance of the redemption notice,
unless the Corporation fails to timely pay the redemption price as set forth in
the notice.


 


6.1.2        Shares of Series A Preferred Stock shall be redeemed by
the Corporation out of funds lawfully available therefor at a price per share
equal to the Original Issue Price, plus all declared but unpaid dividends
thereon  (the “Redemption Price”), in three annual
installments commencing not more than 60 days after receipt by the Corporation
at any time on or after July 31, 2013, from the holders of at least
sixty-seven percent (67%) of the then outstanding shares of Series A
Preferred Stock, of written notice requesting redemption of all shares of Series A
Preferred Stock. The date of each such installment shall be referred to as a “Redemption Date”.  On each Redemption Date, the Corporation
shall redeem, on a pro rata basis in accordance with the number of shares of Series A
Preferred Stock owned by each holder, that number of outstanding shares of Series A
Preferred Stock determined by dividing (i) the total number of shares of Series A
Preferred Stock outstanding immediately prior to such Redemption Date by (ii) the
number of remaining Redemption Dates (including the Redemption Date to which
such calculation applies).  If the
Corporation does not have sufficient 


 


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funds legally available to redeem on any Redemption Date all
shares of Series A Preferred Stock to be redeemed on such Redemption Date,
the Corporation shall redeem a pro rata portion of each holder’s redeemable
shares of such capital stock out of funds legally available therefor, based on
the respective amounts which would otherwise be payable in respect of the
shares to be redeemed if the legally available funds were sufficient to redeem
all such shares, and shall redeem the remaining shares to have been redeemed as
soon as practicable after the Corporation has funds legally available therefor.


 


6.2           Redemption Notice.  The Corporation shall send written notice of
the mandatory redemption (the “Redemption
Notice”) to each holder of record of Series A Preferred Stock
not less than 40 days prior to each Redemption Date.  Each Redemption Notice shall state:


 


(a)           the number of shares of Series A
Preferred Stock held by the holder that the Corporation shall redeem on the
Redemption Date specified in the Redemption Notice;


 


(b)           the Redemption Date and the
Redemption Price;


 


(c)           the date upon which the holder’s
right to convert such shares terminates (as determined in accordance with Subsection
4.1); and


 


(d)           that the holder is to surrender to
the Corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares of Series A Preferred
Stock to be redeemed.


 


6.3           Surrender of Certificates; Payment.  On or before the applicable Redemption Date,
each holder of shares of Series A Preferred Stock to be redeemed on such
Redemption Date, unless such holder has exercised his, her or its right to
convert such shares as provided in Section 4, shall surrender the
certificate or certificates representing such shares (or, if such registered
holder alleges that such certificate has been lost, stolen or destroyed, a lost
certificate affidavit and agreement reasonably acceptable to the Corporation to
indemnify the Corporation against any claim that may be made against the
Corporation on account of the alleged loss, theft or destruction of such
certificate) to the Corporation, in the manner and at the place designated in
the Redemption Notice, and thereupon the Redemption Price for such shares shall
be payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof.  In
the event less than all of the shares of Series A Preferred Stock
represented by a certificate are redeemed, a new certificate representing the
unredeemed shares of Series A Preferred Stock shall promptly be issued to
such holder.


 


6.4           Rights Subsequent to Redemption.  If the Redemption Notice shall have been duly
given, and if on the applicable Redemption Date the Redemption Price payable
upon redemption of the shares of Series A Preferred Stock to be redeemed
on such Redemption Date is paid or tendered for payment or deposited with an
independent payment agent so as to be available therefor in a timely manner,
then notwithstanding that the certificates evidencing any of the shares of Series A
Preferred Stock so called for redemption shall not have been surrendered,
dividends with respect to such shares of Series A Preferred Stock shall
cease to accrue after such Redemption Date and all rights with respect to such
shares shall forthwith after the Redemption Date terminate, except only the
right of the holders to receive the Redemption Price without interest upon
surrender of their certificate or certificates therefor.


 


7.             Redeemed or Otherwise Acquired Shares.  Any shares of Series A Preferred Stock
or Series B Preferred Stock that are redeemed or otherwise acquired by the
Corporation or any of its subsidiaries shall be automatically and immediately
cancelled and retired and shall not be reissued, sold or transferred.  Neither the Corporation nor any of its
subsidiaries may exercise any voting or other rights granted to the holders of Series A
Preferred Stock or Series B Preferred Stock following redemption.


 


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8.             Waiver. 
Any of the rights, powers, preferences and other terms of the Series A
Preferred Stock set forth herein may be waived on behalf of all holders of Series A
Preferred Stock by the affirmative written consent or vote of the holders of at
least sixty-seven percent of the shares of Series A Preferred Stock then
outstanding.  Any of the rights, powers,
preferences and other terms of the Series B Preferred Stock set forth
herein may be waived on behalf of all holders of Series B Preferred Stock
by the affirmative written consent or vote of the holders of at least a
majority of the shares of Series B Preferred Stock then outstanding.


 


9.             Notices. 
Any notice required or permitted by the provisions of this Article Fourth
to be given to a holder of shares of Series A Preferred Stock or Series B
Preferred Stock shall be mailed, postage prepaid, to the post office address
last shown on the records of the Corporation, or given by electronic
communication in compliance with the provisions of the General Corporation Law,
and shall be deemed sent upon such mailing or electronic transmission.


 


SECOND:  The Corporation shall not
recognize any transfer of any of the securities issued by the Corporation
unless the board of directors has first approved such transfer.  For purposes of this article, “Transfer,” “Transferring,” “Transferred”
or words of similar import, mean and include any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise
or descent, or other transfer or disposition of any kind, including but not
limited to transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, except
for:  (i) any repurchase of
securities by the Corporation; (ii) any Transfer, other than pursuant to
divorce decree, dissolution, or property settlement, of Shares to a holder’s
spouse, sibling, lineal descendant or ancestor or to a trust established for
the benefit of any such individual; (iii) any Transfer of securities on a
holder’s death by will or intestacy; (iv) bona
fide gifts of up to 10% in the aggregate of the securities held by
the transferring holder as of the date hereof or (v) any Transfer of
securities by a holder to an affiliate.


 


THIRD:  Subject to any additional
vote required by the Certificate of Incorporation or Bylaws, in furtherance and
not in limitation of the powers conferred by statute, the Board of Directors is
expressly authorized to make, repeal, alter, amend and rescind any or all of
the Bylaws of the Corporation.


 


FOURTH:  Subject to any additional
vote required by the Certificate of Incorporation, the number of directors of
the Corporation shall be determined in the manner set forth in the Bylaws of
the Corporation.


 


FIFTH:  Elections of directors need
not be by written ballot unless the Bylaws of the Corporation shall so provide.


 


SIXTH:  Meetings of stockholders may
be held within or without the State of Delaware, as the Bylaws of the
Corporation may provide.  The books of
the Corporation may be kept outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or in
the Bylaws of the Corporation.


 


SEVENTH:  To the fullest extent
permitted by law, a director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.  If the
General Corporation Law or any other law of the State of Delaware is amended
after approval by the stockholders of this Article Tenth to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General
Corporation Law as so amended.


 


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Any repeal or modification of the foregoing provisions of this Article Tenth
by the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of, or
increase the liability of any director of the Corporation with respect to any
acts or omissions of such director occurring prior to, such repeal or
modification.


 


To
the fullest extent permitted by applicable law, the Corporation is authorized
to provide indemnification of (and advancement of expenses to) directors,
officers and agents of the Corporation (and any other persons to which General
Corporation Law permits the Corporation to provide indemnification) through
Bylaw provisions, agreements with such agents or other persons, vote of
stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law.  Any amendment,
repeal or modification of the foregoing provisions of this Article Tenth
shall not adversely affect any right or protection of any director, officer or
other agent of the Corporation existing at the time of such amendment, repeal
or modification.


 


ELEVENTH:  The Corporation renounces any interest or
expectancy of the Corporation in, or in being offered an opportunity to
participate in, any Excluded Opportunity. 
An “Excluded Opportunity”
is any matter, transaction or interest that is presented to, or acquired, created
or developed by, or which otherwise comes into the possession of, (i) any
director of the Corporation who is not an employee of the Corporation or any of
its subsidiaries, or (ii) any holder of Series A Preferred Stock or
of Series B Preferred Stock, or any partner, member, director,
stockholder, employee or agent of any such holder, other than someone who is an
employee of the Corporation or any of its subsidiaries (collectively, “Covered
Persons”), unless such matter, transaction or interest is presented to, or
acquired, created or developed by, or otherwise comes into the possession of, a
Covered Person expressly and solely in such Covered Person’s capacity as a
director of the Corporation.


 


*     *    
*


 


3.             That the foregoing amendment and restatement was
approved by the holders of the requisite number of shares of this corporation
in accordance with Section 228 of the General Corporation Law.


 


4.             That this Second Amended and Restated Certificate of
Incorporation, which restates and integrates and further amends the provisions
of this corporation’s Certificate of Incorporation, has been duly adopted in
accordance with Sections 242 and 245 of the General Corporation Law.


 


IN WITNESS WHEREOF, this Second Amended and
Restated Certificate of Incorporation has been executed by a duly authorized
officer of this corporation on this 14th day of May, 2009.


 


 


	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jeffrey
  L. Feldman, Chief Executive Officer

  



 


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