Exhibit
10.2


 


CERTIFICATE OF DESIGNATIONS


 


CERTIFICATE OF
DESIGNATIONS, PREFERENCES

AND RELATIVE, PARTICIPATING, OPTIONAL AND

OTHER SPECIAL RIGHTS OF PREFERRED STOCK

AND QUALIFICATIONS, LIMITATIONS

AND RESTRICTIONS THEREOF


 


 


OF


 


 


SERIES D
CONVERTIBLE

PREFERRED STOCK


 


 


OF


 


ELECTRIC CITY
CORP.


 


 


PURSUANT TO
SECTION 151 OF THE

GENERAL CORPORATION LAW OF THE STATE OF DELAWARE


 


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


 


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


 


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


 


“Board”
means Board of Directors of the Corporation.


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


3

















 


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


 


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


 


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


 


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


 


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


 


3.             Dividends.


 


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


 


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


 


4

















 


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


 


4.             Liquidation.


 


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


 


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


 


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


 


5

















 


5.             Redemption.


 


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


 


(b)           Optional
Redemption.  Through and including
the third anniversary of the Series D Preferred Stock Issue Date, the shares of
Series D Preferred Stock may not be redeemed by the Corporation.   At any time after the third anniversary of
the Series D Preferred Stock Issue Date, all, but not less than all, of the
outstanding shares of Series D Preferred Stock may be redeemed, at the option
of the Corporation, at a price per share equal to and in the form of cash in an
amount equal to the Stated Value plus any accrued but unpaid dividends (the “Redemption
Price”) if (A) the Closing Price exceeds $7.50 per share (as adjusted for
stock splits, stock combinations, recapitalizations and the like) for at least
the twenty (20) consecutive trading days immediately preceding the date the
Corporation sends a Notice of Redemption to all holders of record of the Series
D Preferred Stock and (B) the average daily trading volume for such twenty (20)
trading day period (as adjusted to exclude the highest and lowest volume
trading days during such period) exceeds 500,000 shares.


 


(c)           Mechanics
of Redemption.  A notice of
redemption (“Notice of Redemption”) shall be sent by or on behalf of the
Corporation not less than fifteen (15) Business Days nor more than thirty (30)
days prior to the date specified for redemption in such notice (the “Redemption
Date”), by first class mail, postage prepaid, to all holders of record of
the Series D Preferred Stock at their last addresses as they shall appear on
the books of the Corporation; provided, however, that no failure
to give such notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of any shares of
Series D Preferred Stock except as to the holder to whom the Corporation has
failed to give notice or except as to the holder to whom notice was defective.  In addition to any information required by
law or by the applicable rules of any exchange upon which the Series D
Preferred Stock or the Common Stock may be listed or admitted to trading, such
notice shall state: (i) that such redemption is being made pursuant to the
optional redemption provisions hereof; (ii) the Redemption Date; (iii) a
calculation of the Redemption Price as of the date of the Notice of Redemption;
(iv) that all the outstanding shares of Series D Preferred Stock are to be
redeemed; (v) the place or places where certificates for such shares are to be
surrendered for payment of the Redemption Price; and (vi) that dividends on the
shares of Series D Preferred Stock will cease to accumulate on the Redemption
Date.  Upon the mailing of any such
Notice of Redemption, the Corporation shall become obligated to redeem at the
time of redemption specified therein all shares of Series D Preferred Stock.


 


(d)           If
a Notice of Redemption has been mailed in accordance with Section 5(c)
above and if all funds and shares of Common Stock necessary for such redemption
shall have been set aside by the Corporation on or before the Redemption Date,
separate and apart from its other funds in trust for the benefit of the holders
of the outstanding shares of Series D Preferred Stock, so as to be, and to
continue to be available therefor, then dividends on the shares of the Series D
Preferred Stock so called for redemption shall cease to accrue or accumulate on
the Redemption Date, and such shares shall no longer be deemed to be
outstanding and shall not have the status of shares of Series D Preferred Stock
on the Redemption Date, and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from the Corporation the
Redemption Price) shall cease on the Redemption Date.  Upon surrender, in accordance with such Notice of Redemption, of
the certificates for any shares of Series D


 


6

















 


Preferred Stock so redeemed (properly endorsed or assigned
for transfer, if the Corporation shall so require and the Notice shall so
state), such shares of Series D Preferred Stock shall be redeemed by the
Corporation at the Redemption Price.


 


(e)           Option
to Convert.  Notwithstanding the
delivery by the Corporation of a Notice of Redemption, each holder of Series D
Preferred Stock may convert all or any portion of his, her or its shares of
Series D Preferred Stock into shares of Common Stock in accordance with Section
7(a) and Section 7(c) hereof until the close of business on the day
prior to the Redemption Date.


 


6.             Voting
Rights.


 


(a)           General.  Except as to the election of directors and
as to any special approvals required under Section 6(b), as to which Section
6(b) and (c) shall apply to the exclusion of any voting rights under
this Section 6(a), the holder of record of each share of Series D
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such share of Series D Preferred Stock could then be converted, and
with respect to such vote, such holder of record shall have full voting rights
and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled to notice of any stockholders’ meeting in
accordance with the bylaws of the Corporation, and shall be entitled to vote
together with the holders of Common Stock as a single class, with respect to
any question upon which holders of record of Common Stock have the right to
vote, except as otherwise required by applicable law.  Fractional votes shall not, however, be permitted and any
fractional voting rights available on an as-converted basis (after aggregating
all shares into which shares of Series D Preferred Stock held by each holder of
record could be converted) shall be rounded to the nearest whole number (with one-half
being rounded upward).


 


(b)           Special
Approval Rights.


 


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


 


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


 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


8

















 


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


 


7.             Conversion
Rights.


 


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


 


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


 


(b)           Automatic
Conversion.  Each share of Series D
Preferred Stock shall be automatically converted into such number of fully paid
and nonassessable shares of Common Stock as determined by dividing the Stated
Value by the Conversion Price in effect at the time of such conversion:  (i) at such time as the Closing Price
exceeds $12.00 per share (as adjusted appropriately for stock splits, stock
combinations, recapitalizations and the like) for twenty (20) consecutive
trading days and the average daily trading volume for such twenty (20) trading
day period (as adjusted to exclude the highest and lowest volume trading days during
such period) exceeds  500,000  shares; or (ii) in the event
of the consummation of a firmly underwritten primary public offering of Common
Stock by the Corporation that results in aggregate gross proceeds of not less
than $35 million, at a price per share of not less than $5.00 (as adjusted
appropriately for stock splits, stock combinations, recapitalizations and the
like).  All accrued but unpaid dividends
shall be payable immediately prior to conversion, either in cash or, at the
option of the Corporation if such conversion occurs prior to the third
anniversary of the Series D Preferred Stock Issue Date, in additional shares of
Series D Preferred Stock.


 


(c)           Delivery
of Stock Certificates.  The holder
of any shares of Series D Preferred Stock may exercise the optional conversion
right pursuant to Section 7(a) by delivering to the Corporation during
regular business hours the certificate or certificates for the shares to be
converted, duly endorsed or assigned either in blank or to the Corporation (if
required by it),


 


9

















 


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


 


(d)           No
Fractional Shares of Common Stock.


 


(i)            No
fractional shares of Common Stock shall be issued upon conversion of shares of
Series D Preferred Stock and in lieu thereof, the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to the
then current Market Price (as defined in Section 7(e)(vi) below) of a
share of Common Stock multiplied by such fractional interest.  The holders of fractional interests shall
not be entitled to any rights as stockholders of the Corporation in respect of
such fractional interests.  In
determining the number of shares of Common Stock and the payment, if any, in
lieu of fractional shares that a holder of Series D Preferred Stock shall
receive, the total number of shares of Series D Preferred Stock surrendered for
conversion by such holder shall be aggregated.


 


10

















 


(ii)           On
the first Dividend Payment Date on which accrued dividends are paid in full to
holders of Series D Preferred Stock following the optional conversion pursuant
to Section 7(a) of all or any portion of the Series D Preferred Stock,
the Corporation shall pay any dividends accrued on such converted Series D
Preferred Stock to the date of such conversion.  Accrued dividends with respect to all shares converted pursuant
to Section 7(b) hereof shall be paid in full on the Conversion Date out
of funds legally available therefor or, at the option of the Corporation if
such conversion occurs prior to the third anniversary of the Series D Preferred
Stock Issue Date, in additional shares of Series D Preferred Stock.


 


(e)           Adjustment
of Conversion Price Upon Issuance of Common Stock.  If and whenever after the Series D Preferred
Stock Issue Date the Corporation shall issue or sell any shares of its Common
Stock for a price per share less than, under certain circumstances (including,
without limitation, those circumstances described in paragraphs (i) through
(vii) below), the Conversion Price in effect immediately prior to the time of
such issue or sale, then immediately upon such issue or sale, the Conversion
Price then in effect shall be reduced to such lower price per share.


 


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


 


(i)            Issuance
of Rights or Options.  In case at
any time after the date hereof the Corporation shall in any manner grant
(whether directly or by assumption in a merger or otherwise, except in the
circumstances described in Section 7(f) below) any rights to subscribe
for or to purchase, or any options or warrants for the purchase of, Common
Stock or any stock, notes or securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable stock, notes or securities being
herein called “Convertible Securities”), whether or not such rights,
options or warrants or the right to convert or exchange any such Convertible
Securities are immediately exercisable, such grant shall be deemed a sale by
the Corporation of its Common Stock and the price per share for such deemed
sale of Common Stock shall be determined by dividing (A) the total amount, if
any, in cash or property received or receivable by the Corporation as
consideration for the granting of such rights, options or warrants, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the exercise of such rights, options or warrants, plus, in the
case of such rights, options or warrants that relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, options or warrants or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights, options or warrants. 
Except as provided in Section 7(e)(iii), no further adjustment of
the Conversion Price shall be made upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such rights, options or
warrants or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.


 


(ii)           Issuance
of Convertible Securities.  In case
at any time after the date hereof the Corporation shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, such issuance or sale of Convertible
Securities shall be


 


11

















 


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


 


(iii)          Change
in Option Price or Conversion Price. 
If the purchase price provided for in any right or option referred to in
Section 7(e)(i), the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in Section
7(e)(i) or 7(e)(ii), or the rate at which any Convertible Securities
referred to in Section 7(e)(i) or 7(e)(ii) are convertible into
or exchangeable for Common Stock shall change (other than under or by reason of
provisions designed to protect against dilution), the Conversion Price then in
effect hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Conversion Price that would have been in effect at such
time had such rights, options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued or
sold.  No readjustment pursuant to the
preceding sentence shall have the effect of increasing the Conversion Price by
an amount in excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of rights, options or
Convertible Securities.  On the
expiration of any such option or right referred to in Section 7(e)(i) or
the termination of any such right to convert or exchange any such Convertible
Securities referred to in Section 7(e)(i) or 7(e)(ii), the
Conversion Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may be) to the Conversion Price that would
have been in effect at the time of such expiration or termination had such
right, option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been granted, issued or
sold.  If the purchase price provided
for in any such right or option referred to in Section 7(e)(i) or the
rate at which any Convertible Securities referred to in Section 7(e)(i)
or Section 7(e)(ii) are convertible into or exchangeable for Common
Stock shall be reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of the
delivery of shares of Common Stock upon the exercise of any such right or
option or upon conversion or exchange of any such Convertible Securities, the
Conversion Price then in effect hereunder shall, if not already adjusted, forthwith
be adjusted to such amount as would have obtained had such right, option or
Convertible Securities never been issued as to such shares of Common Stock and
had adjustments been made upon the issuance of the shares of Common Stock
delivered as aforesaid, but only if as a result of such adjustment the
Conversion Price then in effect hereunder is thereby reduced.


 


12

















 


(iv)          Consideration
for Stock.  Anything herein to the
contrary notwithstanding, in case at any time any shares of Common Stock or
Convertible Securities or any rights, options or warrants to purchase any such
Common Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
the Corporation therefor, without deduction therefrom of any expenses incurred
or any underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith.


 


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


 


(v)           Record
Date.  In case the Corporation shall
take a record of the holders of its Common Stock for the purpose of entitling
them to subscribe for or purchase shares of Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or sold as a
result of the granting of such right of subscription or purchase.


 


(vi)          Definition
of Market Price.  Unless otherwise
set forth in this resolution, “Market Price” shall mean the last
reported sale price of the applicable security as reported by the American
Stock Exchange, the National Association of Securities Dealers, Inc. Automatic
Quotations System, or, if the applicable security is listed or admitted for
trading on another securities exchange, the last reported sales price of the
applicable security on the principal exchange on which the applicable security
is listed or admitted for trading (which shall be for consolidated trading if
applicable to such exchange), or if neither so reported or listed or admitted
for trading, the last reported bid price of the applicable security in the
over-the-counter market.  In the event
that the Market Price cannot be determined as aforesaid, the Board of Directors
of the Corporation shall determine the Market Price on the basis of such
quotations as it in good faith considers appropriate, in consultation with a
nationally recognized investment bank. 
The Market Price shall be such price averaged over a period of ten (10)
consecutive


 


13

















 


Business
Days ending two (2) days prior to the day as of which “Market Price” is being
determined.


 


(vii)         Adjustment
to Determination of Conversion Price. 
When making the calculations and determinations described in this Section
7(e), there shall not be taken into account (A) the issuance of Common
Stock upon the exercise of outstanding options or warrants outstanding on the
Series D Preferred Stock Issue Date, (B) the issuance of Common Stock upon
conversion of the Series A Preferred Stock or the Series C Preferred Stock or
the Series D Preferred Stock, (C) the issuance of Common Stock upon exercise of
any warrants issued pursuant to the Securities Purchase Agreement, (D) the
issuance of Series D Preferred Stock upon exercise of the Series D Preferred
Stock Warrants (as defined in the Securities Purchase Agreement), and (E) the
issuance of 22,562 shares of Common Stock pursuant to the Securities Purchase
Agreement.


 


(f)            Dividends
and Distributions; Purchase Rights.


 


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


 


(ii)           If
at any time or from time to time on or after the Series D Preferred Stock Issue
Date, the Corporation grants, issues or sells any options or rights (other than
Convertible Securities) to purchase stock, warrants, securities or other
property pro rata to the holders of Common Stock of all classes (“Purchase
Rights”), and if the holder shall be entitled to an adjustment pursuant to Section
7(e) above, then in lieu of such adjustment, each holder of Series D
Preferred Stock shall be entitled, at such holder’s option, to acquire (whether
or not such holder’s Series D Preferred Stock shall have been converted), upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
that such holder could have acquired if such holder had held the number of
shares of Common Stock issuable upon conversion of such Series D Preferred
Stock immediately prior to the time or times at which the Corporation granted,
issued or sold such Purchase Rights.


 


(g)           Subdivision
or Combination of Stock or Stock Dividends.  In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, by split or
otherwise, or issue additional shares of Common Stock as a dividend (other than
a dividend in accordance with Section 3 hereof), or make any other
distribution upon any class or series of stock payable in shares of Common
Stock or Convertible Securities, the Conversion Price in effect immediately
prior to such subdivision shall be


 


14

















 


proportionately
reduced and, conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination shall be proportionately
increased.


 


(h)           Changes
in Common Stock.  If any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with or into another Person, or the
sale, transfer or other disposition of all or substantially all of its assets
to another corporation for cash or stock of such other corporation, shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each holder of Series D Preferred Stock shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions herein specified and in lieu of the shares of the Common
Stock of the Corporation immediately theretofore issuable upon conversion of
the Series D Preferred Stock, such kind and amount of shares of stock,
securities (of the Corporation or another issuer) or property or cash as may be
issuable or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such Common Stock
immediately theretofore issuable upon conversion of the Series D Preferred
Stock had such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition not taken place, and in any such case appropriate
provisions shall be made with respect to the rights and interests of each
holder of Series D Preferred Stock to the end that the provisions hereof
(including without limitation provisions for adjustment of the Conversion
Price) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any shares of stock, securities or property or cash
thereafter deliverable upon the conversion thereof.  The Corporation shall not effect any such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, unless prior to or
simultaneously with the consummation thereof the successor corporation (if
other than the Corporation) resulting from such reorganization,
reclassification, consolidation or merger or the corporation purchasing or
otherwise acquiring such properties shall assume, by written instrument
executed and mailed or delivered to the holders of Series D Preferred Stock at
the last address of such holders appearing on the books of the Corporation, the
obligation to deliver to such holders such shares of stock, securities or
properties or cash as, in accordance with the foregoing provisions, such
holders may be entitled to acquire.  The
above provisions of this subparagraph shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers
or other dispositions.


 


(i)            Certain
Events.  If any event occurs as to
which in the reasonable opinion of the Board of Directors of the Corporation,
in good faith, the other provisions of this Section 7 are not strictly
applicable or if strictly applicable would not fairly protect the conversion
rights of the holders of the Series D Preferred Stock in accordance with the
essential intent and principles of such provisions, then such Board of Directors,
acting by a vote of at least a majority of the members thereof, shall provide
for the benefit of holders of shares of Series D Preferred Stock an adjustment,
if any, on a basis consistent with such essential intent and principles,
necessary to preserve, without dilution, the rights of the holders of the
Series D Preferred Stock.  Upon such
vote by the Board of Directors, the Corporation shall forthwith make the
adjustments described therein; provided, however, that no such
adjustments shall have the effect of increasing the Conversion Price as
otherwise determined pursuant to this Section 7 except in the event of a



 


15

















 


combination
of shares of the type contemplated in Section 7(g) and then in no event
to an amount larger than the Conversion Price as adjusted pursuant to Section
7(g).


 


(j)            Prohibition
of Certain Actions.  The Corporation
will not take any action that would result in any adjustment of the Conversion
Price pursuant to the terms hereof if the total number of shares of Common
Stock issuable after such action upon conversion of all the Series D Preferred
Stock would exceed the total number of shares of Common Stock then authorized
by the Corporation’s Certificate of Incorporation.


 


(k)           Common
Stock to be Reserved.  The
Corporation will at all times reserve and keep available out of its authorized
Common Stock, solely for the purpose of issue upon the conversion of Series D
Preferred Stock as herein provided, such number of shares of Common Stock as
shall then be issuable upon the conversion of all outstanding Series D
Preferred Stock.  The Corporation
covenants that all shares of Common Stock that shall be so issuable shall, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable,
free from preemptive or similar rights on the part of the holders of any shares
of capital stock or securities of the Corporation, and free from all liens and
charges with respect to the issue thereof; and without limiting the generality
of the foregoing, the Corporation covenants that it will from time to time take
all such action as may be requisite to assure that the par value, if any, per
share of the Common Stock is at all times equal to or less than the then
effective Conversion Price.  The
Corporation will take all such action as may be necessary to assure that such
shares of Common Stock may be so issued without violation by the Corporation of
any applicable law or regulation or agreement, or of any requirements of any
domestic securities exchange upon which the Series D Preferred Stock or Common
Stock may be listed.  Without limiting
the foregoing, the Corporation will take all such action as may be necessary to
assure that, upon conversion of any of the Series D Preferred Stock, an amount
equal to the lesser of (i) the par value of each share of Common Stock
outstanding immediately prior to such conversion, or (ii) the Conversion Price
shall be credited to the Corporation’s stated capital account for each share of
Common Stock issued upon such conversion, and that, if Section 7(k)(i)
above is applicable, the balance of the Conversion Price of Series D Preferred
Stock converted shall be credited to the Corporation’s capital surplus
account.  If at any time the Corporation
should not have a sufficient number of authorized shares of Common Stock to
issue upon conversion of all then outstanding shares of Series D Preferred
Stock or the shares of Series D Preferred Stock issuable upon exercise of
outstanding options, rights or warrants to purchase Series D Preferred Stock,
the Corporation covenants to take all steps necessary to amend its Certificate
of Incorporation to increase the number of shares of authorized Common Stock to
the extent necessary.


 


(l)            Preferred
Stock to be Reserved.  The Corporation
will at all times reserve and keep available out of its authorized Series D
Preferred Stock, solely for the purpose of issue upon the declaration of a
dividend on the outstanding Series D Preferred Stock, such number of shares of
Series D Preferred Stock as shall then be issuable as a dividend on the Series
D Preferred Stock.  The Corporation
covenants that all shares of Series D Preferred Stock that shall be issued as
such dividends shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable, free from preemptive or similar rights on the part of the
holders of any shares of capital stock or securities of the Corporation, and
free from all liens and charges with respect to the issue thereof.  The Corporation will take all such action as
may be necessary to assure that such shares of Series D Preferred Stock may be
so issued without violation by the Corporation of


 


16

















 


any
applicable law or regulation or agreement, or of any requirements of any
domestic securities exchange upon which the Series D Preferred Stock or the
Common Stock may be listed.  If at any
time the Corporation should not have a sufficient number of authorized shares
of Series D Preferred Stock to issue as dividends on the then outstanding
shares of Series D Preferred Stock, the Corporation covenants to amend this
resolution to increase the number of shares of authorized Series D Preferred
Stock to the extent necessary.


 


(m)          Registration
and Listing of Common Stock.  If any
shares of Common Stock required hereunder to be reserved for purposes of
conversion of Series D Preferred Stock require registration with or approval of
any governmental authority under any Federal or state law (other than the
Securities Act) before such shares may be issued upon conversion, the
Corporation will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.  If and so long as the Common Stock
is listed on any national securities exchange, the Corporation will, at its
expense, obtain promptly and maintain the approval for listing on each such
exchange upon official notice of issuance, of shares of Common Stock issuable
upon conversion of the then outstanding Series D Preferred Stock and the shares
of Series D Preferred Stock then issuable upon the exercise of options, rights
or warrants to purchase Series D Preferred Stock, and maintain the listing of
such shares after their issuance; and the Corporation will also list on such
national securities exchange, will register under the Exchange Act and will
maintain such listing of, any other securities that at any time are issuable
upon conversion of the Series D Preferred Stock, if and at the time that any
securities of the same class shall be listed on such national securities
exchange by the Corporation.


 


(n)           Closing
of Books.  The Corporation will at
no time close its transfer books against the transfer of any Series D Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion
of any Series D Preferred Stock in any manner that interferes with the timely
conversion of such Series D Preferred Stock.


 


(o)           Statement
of Adjustment of Conversion Price. 
Whenever the Conversion Price shall be adjusted as provided in Section
7(e), Section 7(g), Section 7(h) or Section 7(i)
above, the Corporation shall forthwith file at its office a statement, signed
by its independent certified public accountants, showing in detail the facts
requiring such adjustment and the Conversion Price that shall be in effect
after such adjustment.  The Corporation
shall also cause a copy of such statement to be sent by certified mail, return
receipt requested, to each holder of shares of Series D Preferred Stock to such
holder’s address appearing on the Corporation’s records.  When appropriate, such copy may be given in
advance and may be included as part of a notice required to be mailed under the
provisions of Section 7(p) below.


 


(p)           Notice.  In the event the Corporation shall propose
to take any action of the types described in Section 7(e), Section
7(f), Section 7(g) or Section 7(h) above, the Corporation
shall give notice to each holder of shares of Series D Preferred Stock.  The notice shall specify the record date, if
any, with respect to any such action and the date on which such action is to
take place.  Such notice shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Conversion Price and the number, kind or class
of shares or other securities or property or cash that shall be deliverable or
purchasable upon the


 


17

















 


occurrence
of such action or deliverable upon conversion of shares of Series D Preferred
Stock.  In the case of any action that
would require the fixing of a record date, such notice shall be given at least
twenty (20) days prior to the date so fixed, and in case of all other action,
such notice shall be given at least thirty (30) days prior to the taking of
such proposed action.


 


(q)           Taxes.  The Corporation shall pay all documentary,
stamp or other transactional taxes attributable to the issuance or delivery of
shares of capital stock of the Corporation upon conversion of any shares of
Series D Preferred Stock.  The
Corporation shall not, however, be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of Common
Stock or the reissuance of the Series D Preferred Stock in a name other than
that in which the shares of Series D Preferred Stock so converted were
registered, and no such issuance or delivery shall be made unless and until the
person requesting such issuance has paid to the Corporation the amount of any
such tax or has established to the satisfaction of the Corporation that such
tax, if any, has been paid.


 


8.             Exclusion
of Other Rights.  Except as may
otherwise be required by law, the shares of Series D Preferred Stock shall not
have any voting powers, preferences and relative, participating, optional or
other special rights, other than those specifically set forth in this
resolution and in the Certificate of Incorporation.


 


9.             Headings
of Subdivisions.  The headings of
the various subdivisions hereof are for convenience of reference only and shall
not affect the interpretation of any of the provisions hereof.


 


10.           Reissuance
of Preferred Stock.  Shares of
Series D Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or exchanged or converted, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized but unissued shares of preferred stock of the Corporation
undesignated as to series and may be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the
Corporation, provided that any issuance of such shares as preferred
stock must be in compliance with the terms hereof.


 


11.           Mutilated
or Missing Preferred Stock Certificates. 
If any of the Series D Preferred Stock certificates shall be mutilated,
lost, stolen or destroyed, the Corporation shall issue, in exchange and in
substitution for and upon cancellation of the mutilated Series D Preferred
Stock certificate, or in lieu of and substitution for the Series D Preferred
Stock certificate lost, stolen or destroyed, a new Series D Preferred Stock
certificate of like tenor and representing an equivalent amount of shares of
Series D Preferred Stock, but only upon receipt of evidence of such loss, theft
or destruction of such Series D Preferred Stock certificate and indemnity, if
requested, reasonably satisfactory to the Corporation and the transfer agent
(if other than the Corporation), or, in the case of mutilation, upon surrender
and cancellation of such mutilated certificate.


 


[SIGNATURE PAGE
FOLLOWS]


 


18

















 


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


 


 


	
   

  	
  ELECTRIC CITY CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Jeffrey Mistarz

  	
   

  
	
   

  	
  Name: Jeffrey Mistarz

  
	
   

  	
  Title:  Chief Financial Officer

  



 


 


[Signature
Page To Certificate Of Designations]