EXHIBIT 4.1


    EXHIBIT
      4.1

    
 

    EQUITEX,
      INC.

     

    CERTIFICATE
      OF DESIGNATION OF

     

    SERIES
      L PREFERRED STOCK

     

    


     

    The
      Undersigned,
      on
      behalf of Equitex, Inc. a Delaware corporation (the “Corporation”), hereby
      certifies that the following resolutions were adopted by the Corporation’s board
      of directors (the “Board”), effective as of March 14, 2006, pursuant to the
      authority conferred upon the Board by the Corporation’s certificate of
      incorporation, as amended, and in accordance with the Delaware General
      Corporation Law (the “DGCL”):

     

    RESOLVED:
      that
      pursuant to the authority granted to and vested in the Board in accordance
      with
      the provisions of the Corporation’s certificate of incorporation, as amended, a
      series of preferred stock of the Corporation is hereby created and designated
      with the following relative rights, preferences, privileges, qualifications,
      limitations and restrictions:

     

    1. Amount;
      Designation; Sub-Series.
      The
      designation of this series, the authorized amount of which consists of 300,000
      shares of preferred stock, is Series L Preferred Stock with a par value of
      $0.01
      per share (the “Series L Preferred Stock”). The Series L Preferred Stock
      shall be divided into and issuable in three separate sub-series denominated
      “Series L-1 Preferred Stock,” “Series L-2 Preferred Stock,” and “Series L-3
      Preferred Stock.” Each sub-series of Series L Preferred Stock shall have an
      authorized amount equal to one-third of the total amount of shares authorized
      for issuance as Series L Preferred Stock.

     

    2. Rank.
      In the
      event of the Corporation’s liquidation, the Series L Preferred Stock shall rank
      senior to any class or series of the Corporation’s capital stock hereafter
      created that ranks junior to the Series L Preferred Stock; pari
      passu
      with any
      class or series of the Corporation’s capital stock hereafter created that ranks
      on parity with the Series L Preferred Stock; and junior to any class or series
      of the Corporation’s capital stock hereafter created that ranks senior to the
      Series L Preferred Stock. The Series L Preferred Stock shall be junior to all
      classes of the Corporation’s preferred stock authorized as of the date hereof;
      shall be senior to the Corporation’s common stock; and each sub-series of Series
      L Preferred Stock shall be pari
      passu
      with
      each other sub-series.

     

    3. Voting
      Rights.
      The
      holders of Series L Preferred Stock shall be entitled to one vote, on all
      matters respecting the affairs of the Corporation submitted to the holders
      of
      the Corporation’s voting capital stock, for each share of Series L Preferred
      Stock held.

     

    4. No
      Dividends.
      No
      dividends shall accrue on the Series L Preferred Stock.

     

    5. No
      Preemptive Rights.
      Holders
      of Series L Preferred Stock shall not be entitled, as a matter of right, to
      subscribe for, purchase or receive any part of any stock of the Corporation
      of
      any class whatsoever, or of securities convertible into or exchangeable for
      any
      stock of any class whatsoever, whether now or hereafter authorized and whether
      issued for cash or other consideration or by way of dividend by virtue of the
      Series L Preferred Stock.

     

    6. Liquidation
      Rights.
      In the
      event of a liquidation of the Corporation, the holders of Series L Preferred
      Stock then outstanding shall be entitled to receive a liquidation preference,
      before any distribution is made to the holders of the Corporation’s common
      stock, in an aggregate amount equal to the par value of their shares of Series
      L
      Preferred Stock.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    7. Conversion
      Rights.

     

    (a) The
      Series L Preferred Stock shall convert into such number of fully paid and
      non-assessable shares of Corporation’s common stock in the manner set forth in
      paragraph (b) below.

     

    (b) Subject
      to the conditions set forth in paragraph (c) below, the adjustments set forth
      in
      paragraph (d) below, and Section 11:

     

    (i) If
      one of
      the conditions set forth in paragraph (c) below is satisfied on or prior to
      the
      180th day after the Effective Date, then on such 180th
      day all
      outstanding shares of Series L-1 Preferred Stock shall together convert into
      40%
      of the then-outstanding number of shares of the Corporation’s common stock (on a
      pre-conversion basis).

     

    (ii) If
      either
      (z) two of the conditions set forth in paragraph (c) below are satisfied on
      or
      prior to the 270th day after the Effective Date, or (y) one of the conditions
      set forth in paragraph (c) below is satisfied on or prior to the 270th day
      after
      the Effective Date, but none of the conditions was satisfied on or prior to
      the
      180th day after the Effective Date, then on such 270th
      day all
      outstanding shares of Series L-2 Preferred Stock shall together convert into
      40%
      of the then-outstanding number of shares of the Corporation’s common stock (on a
      pre-conversion basis).

     

    (iii) If
      either
      (z) each of the conditions set forth in paragraph (c) below are satisfied on
      or
      prior to the 360th day after the Effective Date, (y) two of the conditions
      set
      forth in paragraph (c) below are satisfied on or prior to the 360th day after
      the Effective Date, but only one of the conditions was satisfied prior to the
      270th day after the Effective Date, or (x) one of the conditions set forth
      in
      paragraph (c) below is satisfied on or prior to the 360th day after the
      Effective Date, but none of the conditions was satisfied on or prior to the
      270th day after the Effective Date, then on such 360th day all outstanding
      shares of Series L-3 Preferred Stock shall together convert into 40% of the
      then-outstanding number of shares of the Corporation’s common stock (on a
      pre-conversion basis). 

     

    (iv) Upon
      any
      conversion of Series L Preferred Stock hereunder, each holder of the particular
      sub-series of Series L Preferred Stock being converted shall be entitled to
      receive that proportion of shares of common stock issued upon such conversion
      that the total number of such sub-series of preferred shares held by such holder
      (immediately prior to such conversion) bears to the total number of such
      sub-series of preferred shares outstanding (immediately prior to such
      conversion).

     

    (v) For
      purposes of this Certificate of Designation, the following terms shall have
      the
      meanings set forth below:

     

    (A) “Effective
      Date” shall have the meaning set forth in the Merger Agreement; and

     

    (B) “Merger
      Agreement” shall mean that certain Agreement and Plan of Merger and
      Reorganization by and among the Corporation, HPI and EI Acquisition Co., dated
      as of September 13, 2005, as the same may be amended.

     

    (c) The
      conversion of the Series L Preferred Stock as set forth in paragraph (b) above
      is subject to the prior satisfaction, as determined in the sole discretion
      of
      the Board, of the following conditions: 

     

    (i) Since
      the
      date of the Merger Agreement, Equitex and its subsidiaries shall have raised
      at
      least $3,000,000 in additional financing, including, without limitation, any
      proceeds

     


    
      
        
        

      

      
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    received
      by Equitex upon the exercise of the Corporation’s warrants; provided
      that,
      the Loan
      Amount of $3,000,000 (as contemplated in Section 5.1 of the Merger Agreement),
      and any financing secured by Equitex to raise such $3,000,000 for the Loan
      Amount, will not be included in such financing;

     

    (ii) HPI
      shall
      have engineered a prototype generator, of marketable value, which produces
      hydrogen from the aluminum-assisted water splitting process for various micro
      and portable power applications, such as, for purposes of illustration only,
      cell phone power charging applications or military soldier power applications;
      and

     

    (iii) HPI
      shall
      have engineered a prototype generator, of marketable value, which produces
      hydrogen from the aluminum-assisted water splitting process for macro power
      applications such as fuel cells and internal combustion engines.

     

    (d) In
      case
      the Corporation (i) reclassifies its capital stock, consolidates or merges
      with
      or into another entity (where the Corporation is not the survivor or where
      there
      is a change in, or distribution with respect to, the Corporation’s common
      stock), sells, conveys, transfers or otherwise disposes of all of its property,
      assets or business to another person or entity, or effectuates a transaction
      or
      series of related transactions in which more than 50% of the voting power of
      the
      Corporation is disposed of (other than upon any conversions of Series L
      Preferred Stock hereunder) (each a “Fundamental Corporate Change”) and, (ii)
      pursuant to the terms of such Fundamental Corporate Change, shares of common
      stock of the successor or acquiring corporation, or any cash or securities
      or
      property of any nature whatsoever (including warrants or other subscription
      or
      purchase rights) in addition to or in lieu of common stock of the successor
      or
      acquiring corporation (collectively, “Other Property”), are to be received by or
      distributed to the holders of Corporation’s common stock; then, upon conversion
      of the Series L Preferred Stock hereunder in accordance with the terms hereof,
      each holder of shares of Series L Preferred Stock shall have the right to
      receive the number of shares of common stock of the successor or acquiring
      corporation or of the Corporation and Other Property as is receivable upon
      or as
      a result of such Fundamental Corporate Change by a holder of the number of
      shares of common stock into which such Series L Preferred Stock may be converted
      immediately prior to such Fundamental Corporate Change.

     

    (e) Shares
      of
      common stock to be issued upon any conversion of Series L Preferred Stock shall
      be rounded to the nearest full share; no fractional shares of common stock
      shall
      be issued upon any such conversion.

     

    (f) The
      Corporation shall reserve and keep available out of its authorized but unissued
      common stock such number of shares of common stock as shall from time to time
      be
      sufficient to effect the conversion of the Series L Preferred Stock then
      outstanding pursuant to the terms of this Certificate of
      Designation.

     

    (g) As
      a
      condition to the Corporation’s obligation to issue and deliver certificates
      representing the shares of common stock into which the Series L Preferred Stock
      is convertible under this Section 7, holders of converted shares of Series
      L
      Preferred Stock shall return their certificates representing such preferred
      stock for cancellation on the Corporation’s books.

     

    8. Loss,
      Theft, Destruction of Certificates.
      Upon
      the Corporation’s receipt of evidence of the loss, theft, destruction or
      mutilation of a certificate representing shares of Series L Preferred Stock
      (in
      form reasonable satisfactory to the Corporation) and, in the case of any such
      loss, theft or destruction, upon receipt of indemnity or security reasonably
      satisfactory to the Corporation, or, in the case of mutilation, upon surrender
      and cancellation of the mutilated certificate, the Corporation shall make,
      issue
      and deliver, in lieu of such lost, stolen, destroyed or mutilated certificate
      representing shares of Series L Preferred Stock, a new certificate representing
      shares of Series L Preferred Stock of like tenor.


    
      
        
        

      

      
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    9. Who
      Deemed Absolute Owner.
      The
      Corporation may deem the holder, whether an individual or an entity, in whose
      name shares of Series L Preferred Stock is registered upon the Corporation’s
      books to be, and may treat it as, the absolute owner of such shares of Series
      L
      Preferred Stock for all purposes, and the Corporation shall not be affected
      or
      bound by any notice to the contrary.

     

    10. Transfer
      Restrictions; Legend.
      Until
      the lapse of the 181st, 271st and 361st days after the Effective Date, no shares
      of Series L-1 Preferred Stock, Series L-2 Preferred Stock and Series L-3
      Preferred Stock, respectively, shall be transferable on the Corporation’s books,
      except with the consent of the Board. Certificates representing all shares
      of
      Series L Preferred Stock, and all shares of the Corporation’s common stock
      issued upon conversion thereof, shall contain a legend substantially in the
      form
      set forth in Section 1.5 of the Merger Agreement.

     

    11. Offset
      and Forfeiture.
      The
      Corporation’s obligation to issue shares of its common stock upon conversion of
      Series L Preferred Stock issued to GHTI (as defined in the Merger Agreement)
      pursuant to Section 7 hereof is subject to the right of offset contained in
      Article 8 of the Merger Agreement. In the event that the Corporation exercises
      its right to offset its applicable damages against the shares of common stock
      issuable under this Certificate of Designation, then the Corporation shall
      be
      obligated only to issue that number of shares of its common stock not subject
      to
      offset, and HPI shall thereupon automatically forfeit its right to such offset
      shares with any further action required by the Corporation.

     

    12. Stock-Transfer
      Register.
      The
      Corporation shall keep at its principal office an original or copy of a register
      in which it shall provide for the registration of the Series L Preferred Stock.
      Upon any transfer of Series L Preferred Stock in accordance with the provisions
      hereof, the Corporation shall register such transfer on its stock-transfer
      register.

     

    13. Amendments.
      The
      Corporation may amend this Certificate of Designation only with the approving
      vote of holders of a majority of the then-outstanding shares of Series L
      Preferred Stock.

     

    14. Headings.
      The
      headings of the sections, subsections and paragraphs of this Certificate of
      Designation are inserted for the convenience of the reader only and shall not
      affect the interpretation of the terms and provisions of this Certificate of
      Designation.

     

    15. Severability.
      If any
      provision of this Certificate of Designation, or the application thereof to
      any
      person or any circumstance, is invalid or unenforceable, (i) a suitable and
      equitable provision shall be substituted therefore in order to carry out, so
      far
      as may be valid and enforceable, the intent and purpose of such invalid or
      unenforceable provision, and (ii) the remainder of this Certificate of
      Designation and the application of such provision to other persons, entities
      or
      circumstances shall not be affected by such invalidity or unenforceability,
      nor
      shall such invalidity or unenforceability affect the validity or enforceability
      of such provision, or the application thereof, in any other
      jurisdiction.

     

    16. Governing
      Law.
      The
      terms of this Certificate of Designation shall be governed by the laws of the
      State of Delaware, without regard to its conflicts-of-law
      principles.

     

    


     


    
      
        
        

      

      
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    In
      Witness Whereof,
      Equitex, Inc. has caused this Certificate of Designation to be duly executed
      in
      its corporate name on this 14th
      day of
      March, 2006.

     

    


    
      
        
          	 	
                  EQUITEX,
                    INC.:

                
	 	
                   

                   

                   

                  By:
                    /s/
                    Henry Fong

                
	 	
                  Henry
                    Fong

                  Chief
                    Executive Officer, President and

                  Chief
                    Financial Officer

                


        

      

    

    
 

     

     

     

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