**Exhibit 10.4**

[FORM OF]

 

SECOND AMENDED AND RESTATEDCERTIFICATE OF INCORPORATIONOFXSHARES GROUP, INC.

 

(Pursuant to Sections 242and 245 of theGeneral Corporation Law of the State of Delaware)

 

XShares Group, Inc., a corporation organized and existing underand by virtue of the provisions of the General Corporation Law of the State ofDelaware (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 GeneralCorporation Law on August 7, 2008 under the name XShares Group, Inc.

* *

**2.            **That the Board of Directors duly adoptedresolutions proposing to amend and restate the Certificate of Incorporation ofthis corporation, declaring said amendment and restatement to be advisable andin the best interests of this corporation and its stockholders, and authorizingthe appropriate officers of this corporation to solicit the consent of thestockholders therefor, which resolution setting forth the proposed amendmentand restatement is as follows:

* *

**RESOLVED**, that the Certificate ofIncorporation of this corporation be amended and restated in its entirety toread as follows:

 

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

 

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

 

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

 

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

 

The following is a statement of the designations andthe powers, privileges and rights, and the qualifications, limitations orrestrictions thereof in respect of each class of capital stock of theCorporation.

 

### A.                                   COMMON STOCK

 

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

 

----

 

#### 2.             Voting. The holders of the Common Stock are entitled to one vote for each shareof Common Stock held at all meetings of stockholders (and written actions inlieu of meetings); provided, however, that, except as otherwiserequired by law, holders of Common Stock, as such, shall not be entitled tovote on any amendment to the Certificate of Incorporation that relates solelyto the terms of one or more outstanding series of Preferred Stock if theholders of such affected series are entitled, either separately or togetherwith the holders of one or more other such series, to vote thereon pursuant tothe Certificate of Incorporation or pursuant to the General CorporationLaw.  There shall be no cumulativevoting.  The number of authorized sharesof Common Stock may be increased or decreased (but not below the number ofshares thereof then outstanding) by (in addition to any vote of the holders ofone or more series of Preferred Stock that may be required by the terms of theCertificate of Incorporation) the affirmative vote of the holders of shares ofcapital stock of the Corporation representing a majority of the votesrepresented by all outstanding shares of capital stock of the Corporationentitled to vote, irrespective of the provisions of Section 242(b)(2) ofthe General Corporation Law.

 

B.                                     PREFERREDSTOCK

 

One Hundred Seventy-Two Million (172,000,000) sharesof the authorized and unissued Preferred Stock of the Corporation are herebydesignated “**Series A Preferred Stock**,”and Five Hundred Million (500,000,000) shares of the authorized and unissuedPreferred Stock of the Corporation are hereby designated “**Series B Preferred Stock**” with thefollowing 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 tosections and subsections of Part B of this Article Fourth.

 

1.             Dividends.  From and after the date of the issuance ofany 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, stocksplit, combination or other similar recapitalization with respect to the Series APreferred Stock) (the “**Accruing Dividends**”).  Such Accruing Dividends shall be cumulative.Accruing Dividends shall accrue from day to day and shall be declared and paidon November 1st and May 1st of each year during which Series BPreferred Stock remains issued and outstanding. The Accruing Dividends may be paid in either cash or in additionalshares of Series B Preferred Stock, as determined by the Board ofDirectors.  Except as set forth abovewith respect to the Series B Preferred Stock, the Corporation shall notdeclare, pay or set aside any dividends on shares of any other class or seriesof capital stock of the Corporation unless (in addition to the obtaining of anyconsents required elsewhere in the Certificate of Incorporation) the holders ofthe Series A Preferred Stock and Series B Preferred Stock thenoutstanding shall first receive, or simultaneously receive, a dividend on eachoutstanding share of Series A Preferred Stock and Series B PreferredStock in an amount at least equal to (i) in the case of a dividend onCommon Stock or any class or series that is convertible into Common Stock, thatdividend per share of Series A Preferred Stock or Series B PreferredStock as would equal the product of (A) the dividend payable on each shareof such class or series determined, if applicable, as if all shares of suchclass or series had been converted into Common Stock and (B) the number ofshares of Common Stock issuable upon conversion of a share of Series APreferred Stock or Series B Preferred Stock, in each case calculated onthe record date for determination of holders entitled to receive such dividendor (ii) in the case of a dividend on any class or series that is notconvertible into Common Stock, at a rate per share of Series A PreferredStock or Series B Preferred Stock determined by (A) dividing theamount of the dividend payable on each share of such class or series of capitalstock by the original issuance price of such class or series of capital stock(subject to appropriate adjustment in the event of any stock dividend, stocksplit, combination or other similar recapitalization with respect to such classor series) and (B) multiplying such fraction by an amount equal to theOriginal Issue Price (as defined below); provided that, if the Corporationdeclares, pays or sets aside, on the same date, a dividend on shares of morethan one class or series of capital stock of the Corporation, the dividendpayable to the holders of Series A Preferred Stock Original Issue Pricepursuant to this Section 1 shall be calculated based upon the dividendon the class or series of capital 

 

2

----

 

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

 

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

 

2.1           Payments to Holders of PreferredStock.

 

##### 2.1.1        Series B Preferred Stock. In the event of any voluntaryor involuntary liquidation, dissolution or winding up of the Corporation or aDeemed Liquidation Event, the holders of shares of Series B PreferredStock then outstanding shall be entitled to be paid in cash out of the assetsof the Corporation available for distribution to its stockholders before anypayment shall be made to the holders of securities ranking junior to the Series BPreferred Stock by reason of their ownership thereof (including, withoutlimitation, the Series A Preferred Stock), an amount per share equal tothe greater of (i) the Original Issue Price, plus any accrued but unpaiddividends thereon, or (ii)  such amount per share as would have beenpayable had all shares of Series B Preferred Stock been converted intoCommon Stock pursuant to Section 4 immediately prior to suchliquidation, dissolution or winding up (the amount payable pursuant to thissentence is hereinafter referred to as the “**Series BLiquidation Amoun**t”).  If uponany such liquidation, dissolution or winding up of the Corporation, the assetsof the Corporation available for distribution to its stockholders shall beinsufficient to pay the holders of shares of Series B Preferred Stock thefull amount to which they shall be entitled under this Subsection 2.1,the holders of shares of Series B Preferred Stock shall share ratably inany distribution of the assets available for distribution in proportion to therespective amounts which would otherwise be payable in respect of the sharesheld by them upon such distribution if all amounts payable on or with respectto such shares were paid in full.

#####  

##### 2.1.2        Series A Preferred Stock. In the event of anyvoluntary or involuntary liquidation, dissolution or winding up of theCorporation or a Deemed Liquidation Event, the holders of shares of Series APreferred Stock then outstanding shall be entitled to be paid in cash out ofthe assets of the Corporation available for distribution to its stockholdersfollowing the payment in full of the Series B Liquidation Amount beforeany payment shall be made to the holders of securities ranking junior to the Series APreferred Stock by reason of their ownership thereof, an amount per share equalto the greater of (i) the Original Issue Price, plus any dividendsdeclared but unpaid thereon, or (ii)  such amount per share as would havebeen payable had all shares of Series A Preferred Stock been convertedinto Common Stock pursuant to Section 4 immediately prior to suchliquidation, dissolution or winding up (the amount payable pursuant to thissentence is hereinafter referred to as the “**Series ALiquidation Amoun**t”).  If uponany such liquidation, dissolution or winding up of the Corporation, the assetsof the Corporation available for distribution to its stockholders shall beinsufficient to pay the holders of shares of Series A Preferred Stock thefull amount to which they shall be entitled under this Subsection 2.1,after the payment in full of the Series B Liquidation Amount, the holdersof shares of Series A Preferred Stock shall share ratably in anydistribution of the assets available for distribution in proportion to therespective amounts which would otherwise be payable in respect of the sharesheld by them upon such distribution if all amounts payable on or with respectto such shares were paid in full.

 

##### 2.2           Payments to Holders of CommonStock.  In the event of any voluntaryor involuntary liquidation, dissolution or winding up of the Corporation or aDeemed Liquidation Event, after the payment of all preferential amountsrequired to be paid to the holders of shares of Series A Preferred Stockand Series B Preferred Stock, the remaining assets of the Corporationavailable for distribution to its stockholders shall be distributed among theholders of shares of Common Stock, pro rata based on the number of shares heldby each such holder.

 

3

----

 

##### 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) theCorporation is a constituent party or (ii) a subsidiary of the Corporationis a constituent party and the Corporation issues shares of its capital stockpursuant to such merger or consolidation, except any such merger or consolidationinvolving the Corporation or a subsidiary in which the shares of capital stockof the Corporation outstanding immediately prior to such merger orconsolidation continue to represent, or are converted into or exchanged forshares of capital stock that represent, immediately following such merger orconsolidation, at least a majority, by voting power, of the capital stock of (1) thesurviving or resulting corporation or (2) if the surviving or resultingcorporation is a wholly owned subsidiary of another corporation immediatelyfollowing such merger or consolidation, the parent corporation of suchsurviving or resulting corporation (providedthat, for thepurpose of this Subsection 2.3.1, all shares of Common Stock issuableupon exercise of Options (as defined below) outstanding immediately prior tosuch merger or consolidation or upon conversion of Convertible Securities (asdefined below) outstanding immediately prior to such merger or consolidationshall be deemed to be outstanding immediately prior to such merger orconsolidation and, if applicable, converted or exchanged in such merger orconsolidation on the same terms as the actual outstanding shares of CommonStock are converted or exchanged); or

 

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

 

##### 2.3.2       Effecting a Deemed Liquidation Event.

#####  

(a)           The Corporation shall not have thepower to effect a Deemed Liquidation Event referred to in Subsection2.3.1(a)(i) unless the agreement or plan of merger or consolidationfor such transaction (the “**Merger Agreement**”)provides that the consideration payable to the stockholders of the Corporationshall be allocated among the holders of capital stock of the Corporation inaccordance with Subsections 2.1 and 2.2.

 

(b)           In the event of a Deemed Liquidation Event referred to in Subsection2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect adissolution of the Corporation under the General Corporation Law within 90 daysafter such Deemed Liquidation Event, then (i) the Corporation shall send awritten notice to each holder of Series B Preferred Stock no later thanthe 90th day after the Deemed Liquidation Event advising such holders of theirright (and the requirements to be met to secure such right) pursuant to theterms of the following clause (ii) to require the redemption ofsuch shares of Series B Preferred Stock, and (ii) if the holders ofat least sixty-seven percent of the then outstanding shares of Series BPreferred Stock so request in a written instrument delivered to the Corporationnot later than 120 days after such Deemed Liquidation Event, the Corporationshall use the consideration received by the Corporation for such DeemedLiquidation Event (net of any retained liabilities associated with the assetssold or technology licensed, as determined in good faith by the Board ofDirectors of the Corporation), together with any other assets of theCorporation available for distribution to its stockholders (the **“Available Proceeds**”), to the extentlegally available therefor, on the 150th day after such Deemed LiquidationEvent, to redeem all outstanding shares of Series B Preferred Stock at aprice per share equal to 1.05 times the Series B Liquidation Amount.  Notwithstanding the foregoing, in the event ofa redemption pursuant to the preceding sentence, if the Available Proceeds are 

 

4

----

 

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

 

(c)           Inthe event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or2.3.1(b), if the Corporation does not effect a dissolution of theCorporation under the General Corporation Law within 90 days after such DeemedLiquidation Event, then (i) the Corporation shall send a written notice toeach holder of Series A Preferred Stock no later than the 90th day afterthe Deemed Liquidation Event advising such holders of their right (and therequirements to be met to secure such right) pursuant to the terms of thefollowing clause (ii) to require the redemption of such shares of Series BPreferred Stock, and (ii) if the holders of at least sixty-seven percentof the then outstanding shares of Series A Preferred Stock so request in awritten instrument delivered to the Corporation not later than 120 days aftersuch Deemed Liquidation Event, the Corporation shall use the Available Proceedsremaining after the redemption of the Series B Preferred Stock pursuant toSubsection 2.3.2(b), is applicable, to the extent legally available therefor,on the 150th day after such Deemed Liquidation Event, to redeem all outstandingshares of Series A Preferred Stock at a price per share equal to the Series ALiquidation Amount.  Notwithstanding theforegoing, in the event of a redemption pursuant to the preceding sentence, ifthe remaining Available Proceeds are not sufficient to redeem all outstandingshares of Series A Preferred Stock, or if the Corporation does not havesufficient lawfully available funds to effect such redemption, the Corporationshall redeem a pro rata portion of each holder’s shares of Series APreferred Stock to the fullest extent of such remaining Available Proceeds orsuch lawfully available funds, based on the respective amounts which wouldotherwise be payable in respect of the shares to be redeemed if the remainingAvailable Proceeds or lawfully available funds were sufficient to redeem allsuch shares, and shall redeem the remaining shares to have been redeemed assoon as practicable after the Corporation has funds legally availabletherefor.  The provisions of Subsections6.2 through 6.4 shall apply, with such necessary changes in thedetails thereof as are necessitated by the context, to the redemption of the Series APreferred Stock pursuant to this Subsection 2.3.2(c).  Prior to the distribution or redemptionprovided for in this Subsection 2.3.2(b), the Corporation shall notexpend or dissipate the consideration received for such Deemed LiquidationEvent, except to discharge expenses incurred in connection with such DeemedLiquidation Event or in the ordinary course of business.

 

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

#####  

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

 

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

 

5

----

 

(ii)           if actively traded over-the-counter,the value shall be deemed to be the average of the closing bid prices over the30-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 faithby the Board of Directors of the Corporation (so long as the Series BDirector concurs).

 

(b)           The method of valuation of securitiessubject to investment letters or other similar restrictions on freemarketability (other than restrictions arising solely by virtue of astockholder’s status as an affiliate or former affiliate) shall take intoaccount an appropriate discount (as determined in good faith by the Board ofDirectors of the Corporation (so long as the Series B Director concurs))from the market value as determined pursuant to clause (a) above so as toreflect the approximate fair market value thereof.

 

##### 3.            Voting.

#####  

##### 3.1          General;Series B Director.

#####  

##### 3.1.1        General.  On anymatter presented to the stockholders of the Corporation for their action orconsideration at any meeting of stockholders of the Corporation (or by writtenconsent of stockholders in lieu of meeting), each holder of outstanding sharesof Series A Preferred Stock and Series B Preferred Stock shall beentitled to cast the number of votes equal to the number of whole shares ofCommon Stock into which the shares of Series A Preferred Stock and Series BPreferred Stock held by such holder are convertible as of the record date fordetermining stockholders entitled to vote on such matter.  Except as provided by law or by the otherprovisions of the Certificate of Incorporation, holders of Series APreferred Stock and Series B Preferred Stock shall vote together with theholders 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) directorof the Corporation (the “**Series BDirector**”).  The Board ofDirectors shall be comprised of seven (7) individuals (inclusive of the Series BDirector). The Series B Director may be removed without cause by, and onlyby, the affirmative vote of the holders of Series B Preferred Stock, giveneither at a special meeting of such stockholders duly called for that purposeor pursuant to a written consent of stockholders.  If the holders of shares of Series BPreferred Stock fail to elect a director to fill the Series B Directorposition, then such directorship shall remain vacant until such time as theholders of the Series B Preferred Stock elect a person to fill suchdirectorship by vote or written consent in lieu of a meeting; and no suchdirectorship may be filled by stockholders of the Corporation other than by theholders of the Series B Preferred Stock, voting exclusively and as aseparate class.****The holders ofrecord of the shares of Common Stock, and of any other class or series ofvoting stock (including the Series B Preferred Stock), exclusively andvoting together as a single class, shall be entitled to elect the balance ofthe total number of directors of the Corporation.  At any meeting held for the purpose ofelecting a director, the presence in person or by proxy of the holders of amajority of the outstanding shares of the class or series entitled to electsuch director shall constitute a quorum for the purpose of electing suchdirector.

#####  

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

 

6

----

 

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

 

(b)           amend, alter or repeal any provisionof the Certificate of Incorporation or Bylaws of the Corporation in a mannerthat adversely affects the powers, preferences or rights of the Series APreferred 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 tothe Series A Preferred Stock with respect to the distribution of assets onthe liquidation, dissolution or winding up of the Corporation, the payment ofdividends and rights of redemption, or increase the authorized number of sharesof Series A Preferred Stock or increase the authorized number of shares ofany additional class or series of capital stock unless the same ranks junior tothe Series A Preferred Stock with respect to the distribution of assets onthe liquidation, dissolution or winding up of the Corporation, the payment ofdividends and rights of redemption;

 

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

 

(e)           purchaseor redeem (or permit any subsidiary to purchase or redeem) or pay or declareany dividend or make any distribution on, any shares of capital stock of theCorporation other than (i) redemptions of or dividends or distributions onthe Series A Preferred Stock as expressly authorized herein, (ii) dividendsor other distributions payable on the Common Stock solely in the form ofadditional shares of Common Stock and or (iii) repurchases of stock fromformer employees, officers, directors, consultants or other persons whoperformed services for the Corporation or any subsidiary in connection with thecessation of such employment or service at the lower of the original purchaseprice or the then-current fair market value thereof;

 

(f)            increasethe number of shares of Common Stock reserved for any of the Company’s equityincentive plans;

 

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

 

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

 

##### 3.3           Series B Preferred StockProtective Provisions.  At any timewhen shares of Series B Preferred Stock are outstanding, the Corporationshall not, either directly or indirectly by amendment, merger, consolidation orotherwise, do any of the following without (in addition to any other voterequired by law or the Certificate of Incorporation) the written consent oraffirmative vote of the holders of at least a majority of the then outstandingshares of Series B Preferred Stock, given in writing or by vote at ameeting, consenting or voting (as the case may be) separately as a class:

#####  

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

 

7

----

 

(b)         amend,alter or repeal any provision of the Certificate of Incorporation or Bylaws ofthe Corporation in a manner that adversely affects the powers, preferences orrights 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 ranksjunior to the Series B Preferred Stock with respect to the distribution ofassets on the liquidation, dissolution or winding up of the Corporation, thepayment of dividends and rights of redemption, or increase the authorizednumber of shares of Series B Preferred Stock or increase the authorizednumber of shares of any additional class or series of capital stock unless thesame ranks junior to the Series B Preferred Stock with respect to thedistribution of assets on the liquidation, dissolution or winding up of theCorporation, the payment of dividends and rights of redemption; or (ii) theproceeds of such security shall be used to redeem all of the outstanding Series BPreferred Stock pursuant to Section 6.1.1 hereof;

 

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

 

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

 

(f)            increasethe number of shares of Common Stock reserved for any of the Company’s equityincentive plans;

 

(h)           determinethe remuneration of directors of the Corporation;

 

(i)            increaseor 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 debtsecurity unless the proceeds of such security shall be used to redeem all ofthe outstanding Series B Preferred Stock pursuant to Section 6.1.1hereof.

 

##### 4.            Optional Conversion.  The holders of the Series A PreferredStock 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 PreferredStock shall be convertible, at the option of the holder thereof, at any timeand from time to time, 

 

8

----

 

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

#####  

##### 4.1.2        Termination of Conversion Rights. In the event of anotice of redemption of any shares of Series A Preferred Stock or Series BPreferred Stock pursuant to Section 6, the Conversion Rights of theshares designated for redemption shall terminate on the applicable date setforth in Section 6.

#####  

##### 4.2          FractionalShares.  No fractional shares ofCommon Stock shall be issued upon conversion of the Series A PreferredStock or Series B Preferred Stock. In lieu of any fractional shares to which the holder would otherwise beentitled, the Corporation shall pay cash equal to such fraction multiplied bythe fair market value of a share of Common Stock as determined in good faith bythe Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversionshall be determined on the basis of the total number of shares of Series APreferred Stock or Series B Preferred Stock the holder is at the timeconverting into Common Stock and the aggregate number of shares of Common Stockissuable upon such conversion.

#####  

##### 4.3          Mechanicsof Conversion.

#####  

##### 4.3.1        Notice of Conversion. In order for a holder of Series A Preferred Stock or Series BPreferred Stock, if and as applicable, to voluntarily convert shares of Series APreferred Stock or Series B Preferred Stock into shares of Common Stock,such holder shall surrender the certificate or certificates for such shares of Series APreferred Stock or Series B Preferred Stock (or, if such registered holderalleges that such certificate has been lost, stolen or destroyed, a lostcertificate affidavit and agreement reasonably acceptable to the Corporation toindemnify the Corporation against any claim that may be made against theCorporation on account of the alleged loss, theft or destruction of suchcertificate), at the office of the transfer agent for the Series APreferred Stock or Series B Preferred Stock (or at the principal office ofthe Corporation if the Corporation serves as its own transfer agent), togetherwith written notice that such holder elects to convert all or any number of theshares of the Series A Preferred Stock or Series B Preferred Stockrepresented by such certificate or certificates and, if applicable, any eventon which such conversion is contingent. Such notice shall state such holder’s name or the names of the nomineesin which such holder wishes the certificate or certificates for shares ofCommon Stock to be issued, if permitted. If required by the Corporation, certificates surrendered for conversionshall be endorsed or accompanied by a written instrument or instruments oftransfer, in form satisfactory to the Corporation, duly executed by theregistered holder or his, her or its attorney duly authorized in writing.  The close of business on the date of receiptby the transfer agent (or by the Corporation if the Corporation serves as itsown transfer agent) of such certificates (or lost certificate affidavit andagreement) and notice shall be the time of conversion (the “**Conversion Time**”), and the shares of CommonStock issuable upon conversion of the shares represented by such certificateshall be deemed to be outstanding of record as of such date.  The Corporation shall, as soon as practicableafter the Conversion Time, (i) issue and deliver to such holder of Series APreferred Stock or Series B Preferred Stock, or to his, her or itsnominees, a certificate or certificates for the number of full shares of CommonStock issuable upon such conversion in accordance with the provisions hereofand a certificate for the number (if any) of the shares of Series APreferred Stock or Series B Preferred Stock represented by the surrenderedcertificate that were not converted into Common Stock, (ii) pay in cashsuch amount as provided in Subsection 4.2 in lieu of any fraction of ashare of Common Stock otherwise issuable upon such conversion and (iii) payall declared but unpaid dividends on the shares of Series A PreferredStock or Series B Preferred Stock converted.

 

9

----

 

##### 4.3.2        Reservation of Shares. The Corporation shall at all times when the Series A PreferredStock or Series B Preferred Stock shall be outstanding, reserve and keepavailable out of its authorized but unissued capital stock, for the purpose ofeffecting the conversion of the Series A Preferred Stock or Series BPreferred Stock, as applicable, such number of its duly authorized shares ofCommon Stock equal to 120% of the number of shares of Common Stock as shallfrom time to time be sufficient (i) to effect the conversion of alloutstanding Series A Preferred Stock and Series B Preferred Stock andto effect any dividends paid in shares of the Company’s Common Stock and (ii) inthe event of any breach by the Corporation under that certain SecuritiesPurchase Agreement (the “Purchase Agreement”) between the Corporation and MGTCapital Investments, Inc. (“MGT”), dated as of May 14, 2009, or thatcertain Convertible Promissory Note held by MGT (the “Note”), dated May 14,2009, which breach remains uncured after the running of any cure period, suchnumber of shares of Common Stock sufficient to give MGT fifty (50%) percent ofthe Corporation’s outstanding shares (exclusive of MGT’s current equityholdings); and if at any time the number of authorized but unissued shares ofCommon Stock shall not be sufficient to effect the conversion of all thenoutstanding shares of the Series A Preferred Stock and Series BPreferred Stock and to effect any dividends paid in shares of the Corporation’sCommon Stock and shares of Common Stock issued as a result of the Corporation’sbreach of the Purchase Agreement or the Note, the Corporation shall take suchcorporate action as may be necessary to increase its authorized but unissuedshares of Common Stock to such number of shares as shall be sufficient for suchpurposes, including, without limitation, engaging in best efforts to obtain therequisite stockholder approval of any necessary amendment to the Certificate ofIncorporation.  Before taking any actionwhich would cause an adjustment reducing the applicable Conversion Price belowthe then par value of the shares of Common Stock issuable upon conversion ofthe Series A Preferred Stock or Series B Preferred Stock, theCorporation will take any corporate action which may, in the opinion of itscounsel, be necessary in order that the Corporation may validly and legallyissue fully paid and nonassessable shares of Common Stock at such adjustedConversion Price.

#####  

##### 4.3.3        Effect of Conversion. All shares of Series A Preferred Stock and Series B PreferredStock which shall have been surrendered for conversion as herein provided shallno longer be deemed to be outstanding and all rights with respect to suchshares shall immediately cease and terminate at the Conversion Time, exceptonly the right of the holders thereof to receive shares of Common Stock inexchange therefor, to receive payment in lieu of any fraction of a shareotherwise issuable upon such conversion as provided in Subsection 4.2and to receive payment of any dividends declared but unpaid thereon.  Any shares of Series A Preferred Stockor Series B Preferred Stock so converted shall be retired and cancelledand may not be reissued as shares of such series, and the Corporation maythereafter take such appropriate action (without the need for stockholderaction) as may be necessary to reduce the authorized number of shares of Series APreferred Stock or Series B Preferred Stock accordingly.

#####  

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

######  

##### 4.3.4        Taxes.  TheCorporation shall pay any and all issue and other similar taxes that may bepayable in respect of any issuance or delivery of shares of Common Stock uponconversion of shares pursuant to this Section 4.  The Corporation shall not, however, berequired to pay any tax which may be payable in respect of any transferinvolved in the issuance and delivery of shares of Common Stock in a name otherthan that in which the shares of Series A Preferred Stock or Series BPreferred Stock so converted were registered, and no such issuance or deliveryshall be made unless and until the person or entity requesting such issuancehas paid to the Corporation the amount of any such tax or has established, tothe satisfaction of the Corporation, that such tax has been paid.

#####  

##### 4.4           Adjustments to Conversion Price forDiluting Issues.

 

10

----

#####  

##### 4.4.1        Special Definitions. For purposes of this Article Fourth, the following definitionsshall apply:

#####  

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

 

(b)           “**OriginalIssue Date**” shall mean the date on which the first share of theapplicable series of Preferred Stock was issued.

 

(c)           “**ConvertibleSecurities**” shall mean any evidences of indebtedness, shares orother securities directly or indirectly convertible into or exchangeable forCommon Stock, but excluding Options.

 

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

 

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

 

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

 

(iii)                   shares of Common Stock orOptions issued to employees or directors of, or consultants or advisors to, theCorporation or any of its subsidiaries pursuant to a plan, agreement orarrangement 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 shallbe made as the result of the issuance or deemed issuance of Additional Sharesof Common Stock if the Corporation receives written notice from the holders ofat least majority of the then outstanding shares of Series B PreferredStock, each voting as a separate class, agreeing that no such adjustment shallbe made as the result of the issuance or deemed issuance of such AdditionalShares of Common Stock.

#####  

##### 4.4.3        Deemed Issue of Additional Shares of Common Stock.

#####  

(a)           If the Corporation at any time orfrom time to time after the Original Issue Date shall issue any Options orConvertible Securities (excluding Options or Convertible Securities which arethemselves Exempted Securities) or shall fix a record date for thedetermination of holders of any class of securities entitled to receive any suchOptions or Convertible Securities, then the maximum number of shares of CommonStock (as set forth in the instrument relating thereto, assuming thesatisfaction of any conditions to exercisability, convertibility orexchangeability but without regard to any provision contained therein for asubsequent adjustment of such number) issuable upon the exercise of suchOptions or, in the case of Convertible Securities and Options therefor, theconversion or exchange of such Convertible Securities, shall be deemed to beAdditional 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 businesson such record date.

 

(b)           If the terms of any Option orConvertible Security, the issuance of which resulted in an adjustment to theConversion Price pursuant to the terms of Subsection 4.4.4, are revisedas a result of an amendment to such terms or if any other adjustment is madepursuant to the provisions of such Option or Convertible Security (butexcluding automatic adjustments to such terms pursuant to anti-dilution orsimilar provisions of such Option or Convertible Security) to provide foreither (1) any increase or decrease in the number of shares of CommonStock issuable upon the exercise, conversion and/or exchange of any such Optionor Convertible Security or (2) any increase or decrease in theconsideration payable to the Corporation upon such exercise, conversion and/orexchange, then, effective upon such increase or decrease becoming effective,the Conversion Price computed upon the original issue of such Option orConvertible Security (or upon the occurrence of a record date with respectthereto) shall be readjusted to such Conversion Price as would have obtainedhad such revised terms been in effect upon the original date of issuance ofsuch Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause(b) shall have the effect of increasing the Conversion Price to anamount which exceeds the lower of (i) the applicable Conversion Price ineffect immediately prior to the original adjustment made as a result of theissuance of such Option or Convertible Security, or (ii) the applicableConversion Price that would have resulted from any issuances of AdditionalShares of Common Stock (other than deemed issuances of Additional Shares ofCommon Stock as a result of the issuance of such Option or ConvertibleSecurity) between the original adjustment date and such readjustment date.

 

(c)           If the terms of any Option orConvertible Security (excluding Options or Convertible Securities which arethemselves Exempted Securities), the issuance of which did not result in anadjustment to the Conversion Price pursuant to the terms of Subsection 4.4.4(either because the consideration per share (determined pursuant to Subsection4.4.5) of the Additional Shares of Common Stock subject thereto was equalto or greater than the Conversion Price then in effect, or because such Optionor Convertible Security was issued before the Original Issue Date), are revisedafter the Original Issue Date as a result of an amendment to such terms or anyother adjustment pursuant to the provisions of such Option or Convertible Security(but excluding automatic adjustments to such terms pursuant to anti-dilution orsimilar provisions of such Option or Convertible Security) to provide foreither (1) any increase in the number of shares of Common Stock issuableupon the exercise, conversion or exchange of any such Option or ConvertibleSecurity or (2) any decrease in the consideration payable to theCorporation upon such exercise, conversion or exchange, then such Option orConvertible Security, as so amended or adjusted, and the Additional Shares ofCommon Stock subject thereto (determined in the manner provided in Subsection4.4.3(a)) shall be deemed to have been issued effective upon such increaseor decrease becoming effective.

 

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

 

(e)           If the number of shares of CommonStock issuable upon the exercise, conversion and/or exchange of any Option orConvertible Security, or the consideration payable to the Corporation upon suchexercise, conversion and/or exchange, is calculable at the time such Option orConvertible Security is issued or amended but is subject to adjustment basedupon subsequent events, any adjustment to the Conversion Price provided for inthis Subsection 4.4.3 shall be effected at the time of such issuance oramendment based on such number of shares or amount of consideration withoutregard to any provisions for subsequent adjustments (and any subsequentadjustments shall be treated as provided in clauses (b) and (c) ofthis 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 theconsideration payable to the Corporation upon such exercise, conversion and/orexchange, cannot be calculated at all at the time such Option or ConvertibleSecurity is issued or amended, any adjustment to the Conversion Price thatwould result under the terms of this Subsection 4.4.3 at the time ofsuch issuance or amendment shall instead be effected at the time such number ofshares and/or amount of consideration is first calculable (even if subject tosubsequent adjustments), assuming for purposes of calculating such adjustmentto the Conversion Price that such issuance or amendment took place at the timesuch calculation can first be made.

 

##### 4.4.4        Adjustment of Conversion Price Upon Issuance of AdditionalShares of Common Stock.

#####  

###### 4.4.4.1     Special Adjustments to Series BConversion Price in Absence of Qualfied Equity Financing.  Unless a Qualified Equity Financing hasoccurred, and in the event the Series B Preferred Stock is not previouslyredeemed 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 ofDirectors, which shall include the specific approval of the Series BDirector, not to be unreasonably withheld, which financing closes on or before December 31,2009.

######  

###### 4.4.4.2     Adjustments to Series A ConversionPrice and Series B Conversion Price. In addition to the adjustment setforth in Subsection 4.4.4.1, in the event the Corporation shall at any timeafter the Original Issue Date of the Series B Preferred Stock issue AdditionalShares of Common Stock (including Additional Shares of Common Stock deemed tobe issued pursuant to Subsection 4.4.3), without consideration or for aconsideration per share less than the applicable Conversion Price in effectimmediately prior to such issue, then

######  

(a)           the Conversion Price of the Series A Preferred Stockshall be reduced, concurrently with such issue, to a price (calculated to thenearest one-hundredth of a cent) determined in accordance with the followingformula:

 

CP2 = CP1* (A + B) ÷ (A + C).

 

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

 

“CP2”          shall mean the ConversionPrice for such series of Preferred Stock in effect immediately after such issueof Additional Shares of Common Stock

 

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

 

“A”                    shall mean thenumber of shares of Common Stock outstanding immediately prior to such issue ofAdditional Shares of Common Stock (treating for this purpose as outstanding allshares of Common Stock issuable upon exercise of Options outstandingimmediately prior to such issue or upon conversion or exchange of ConvertibleSecurities (including the Series A Preferred Stock and Series BPreferred Stock) outstanding (assuming exercise of any 

 

13

----

 

outstanding Options therefor) immediately prior to such issue);

 

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

 

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

 

(b)           the Conversion Price of the Series B Preferred Stockshall be reduced, concurrently with adjustment to the Series A PreferredStock Conversion Price, to a price (calculated to the nearest one-hundredth ofa cent) in order to maintain the ratio of the number of shares of Series BPreferred Stock to the number of shares of Series A Preferred Stock (eachas measured on an as-converted basis) as existed prior to the adjustment to theSeries 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 AdditionalShares of Common Stock shall be computed as follows:

#####  

(a)           Cash and Property:  Such consideration shall:

 

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

 

(ii)                      insofar as itconsists of property other than cash, be computed at the fair market valuethereof at the time of such issue, as determined in good faith by the Board ofDirectors of the Corporation (with the concurrence of the Series BPreferred Stock Director); and

 

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

 

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

 

(i)                         the totalamount, if any, received or receivable by the Corporation as consideration forthe issue of such Options or Convertible Securities, plus the minimum aggregateamount of additional consideration (as set 

 

14

----

 

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

 

(ii)                      the maximumnumber of shares of Common Stock (as set forth in the instruments relatingthereto, without regard to any provision contained therein for a subsequentadjustment of such number) issuable upon the exercise of such Options or theconversion or exchange of such Convertible Securities, or in the case ofOptions for Convertible Securities, the exercise of such Options forConvertible Securities and the conversion or exchange of such ConvertibleSecurities.

 

##### 4.4.6        Multiple Closing Dates.  In the event the Corporation shall issue onmore than one date Additional Shares of Common Stock that are a part of onetransaction or a series of related transactions and that would result in anadjustment to the Conversion Price pursuant to the terms of Subsection4.4.4, then, upon the final such issuance, the Conversion Price shall bereadjusted to give effect to all such issuances as if they occurred on the dateof the first such issuance (and without giving effect to any additionaladjustments as a result of any such subsequent issuances within such period).

#####  

##### 4.5           Adjustment for Stock Splits andCombinations.  If the Corporationshall at any time or from time to time after the Original Issue Date effect asubdivision of the outstanding Common Stock, the Conversion Price in effectimmediately before that subdivision shall be proportionately decreased so thatthe number of shares of Common Stock issuable on conversion of each share ofsuch series shall be increased in proportion to such increase in the aggregatenumber of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after theOriginal Issue Date combine the outstanding shares of Common Stock, theConversion Price in effect immediately before the combination shall beproportionately increased so that the number of shares of Common Stock issuableon conversion of each share of such series shall be decreased in proportion tosuch decrease in the aggregate number of shares of Common Stockoutstanding.  Any adjustment under thissubsection shall become effective at the close of business on the date thesubdivision or combination becomes effective.

#####  

##### 4.6           Adjustment for Certain Dividendsand Distributions.  In the event theCorporation at any time or from time to time after the Original Issue Dateshall make or issue, or fix a record date for the determination of holders ofCommon Stock entitled to receive, a dividend or other distribution payable onthe Common Stock in additional shares of Common Stock, then and in each suchevent the Conversion Price in effect immediately before such event shall bedecreased as of the time of such issuance or, in the event such a record dateshall have been fixed, as of the close of business on such record date, bymultiplying the Conversion Price then in effect by a fraction:

#####  

(1)                                  the numeratorof which shall be the total number of shares of Common Stock issued andoutstanding immediately prior to the time of such issuance or the close ofbusiness on such record date, and

 

(2)                                  the denominatorof which shall be the total number of shares of Common Stock issued andoutstanding immediately prior to the time of such 

 

15

----

 

issuance or the close of business on suchrecord date plus the number of shares of Common Stock issuable in payment ofsuch dividend or distribution.

 

Notwithstanding the foregoing, (a) if such record date shall havebeen fixed and such dividend is not fully paid or if such distribution is not fullymade on the date fixed therefor, the Conversion Price shall be recomputedaccordingly as of the close of business on such record date and thereafter theConversion Price shall be adjusted pursuant to this subsection as of the timeof actual payment of such dividends or distributions; and (b) that no suchadjustment shall be made if the holders of Series A Preferred Stock or Series BPreferred Stock simultaneously receive a dividend or other distribution ofshares of Common Stock in a number equal to the number of shares of CommonStock as they would have received if all outstanding shares of Series APreferred Stock and Series B Preferred Stock had been converted intoCommon Stock on the date of such event.

 

##### 4.7           Adjustments for Other Dividendsand Distributions.  In the event theCorporation at any time or from time to time after the Original Issue Dateshall make or issue, or fix a record date for the determination of holders ofCommon Stock entitled to receive, a dividend or other distribution payable insecurities of the Corporation or in other property and the provisions of Section 1do not apply to such dividend or distribution, then and in each such event theholders of Series A Preferred Stock and Series B Preferred Stockshall receive, simultaneously with the distribution to the holders of CommonStock, a dividend or other distribution of such securities or other property inan amount equal to the amount of such securities or other property as theywould have received if all outstanding shares of Series A Preferred Stockand Series B Preferred Stock had been converted into Common Stock on thedate of such event.

#####  

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

#####  

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

 

16

----

 

##### in any event not later than 10days thereafter), furnish or cause to be furnished to such holder a certificatesetting forth (i) the Conversion Price then in effect, and (ii) thenumber 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 APreferred Stock or Series B Preferred Stock.

#####  

##### 4.10         Notice of Record Date.  In the event:

#####  

(a)           the Corporation shall take a recordof the holders of its Common Stock (or other capital stock or securities at thetime issuable upon conversion of the Series A Preferred Stock or Series BPreferred Stock) for the purpose of entitling or enabling them to receive anydividend or other distribution, or to receive any right to subscribe for orpurchase any shares of capital stock of any class or any other securities, orto receive any other security; or

 

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

 

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

 

then, and in each such case, the Corporation will send or cause to besent to the holders of the Series A Preferred Stock or Series BPreferred Stock a notice specifying, as the case may be, (i) the recorddate for such dividend, distribution or right, and the amount and character ofsuch dividend, distribution or right, or (ii) the effective date on whichsuch 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 (orsuch other capital stock or securities at the time issuable upon the conversionof the Series A Preferred Stock or Series B Preferred Stock) shall beentitled to exchange their shares of Common Stock (or such other capital stockor securities) for securities or other property deliverable upon suchreorganization, reclassification, consolidation, merger, transfer, dissolution,liquidation or winding-up, and the amount per share and character of suchexchange applicable to the Series A Preferred Stock, Series BPreferred Stock and the Common Stock. Such notice shall be sent at least 10 days prior to the record date oreffective date for the event specified in such notice.

 

#### 5.             Mandatory Conversion.

####  

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

#####  

##### 5.2           Procedural Requirements.  All holders of record of shares of Series APreferred Stock and Series B Preferred Stock shall be sent written noticeof the Mandatory Conversion Time and the place designated for mandatoryconversion of all such shares of Series A Preferred Stock and Series BPreferred Stock pursuant to this Section 5.  Such notice need not be sent in advance ofthe occurrence of the Mandatory Conversion Time.  Upon receipt of such notice, each holder ofshares of Series A Preferred Stock and Series B Preferred Stock shallsurrender 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 theCorporation to indemnify the Corporation against any claim that may be madeagainst the Corporation on account of the alleged loss, theft or destruction ofsuch certificate) to the Corporation at the place designated in such notice andshall 

 

17

----

 

##### thereafter receive certificatesfor the number of shares of Common Stock to which such holder is entitledpursuant to this Section 5. At the Mandatory Conversion Time, all outstanding shares of Series APreferred Stock and Series B Preferred Stock shall be deemed to have beenconverted into shares of Common Stock, which shall be deemed to be outstandingof record, and all rights with respect to the Series A Preferred Stock andSeries B Preferred Stock so converted, including the rights, if any, toreceive notices and vote (other than as a holder of Common Stock), willterminate notwithstanding the failure of the holder or holders thereof to surrenderthe certificates at or prior to such time, except only the rights of theholders thereof, upon surrender of their certificate or certificates (or lostcertificate affidavit and agreement) therefor, to receive the items providedfor in the last sentence of this Subsection 5.2.  If so required by the Corporation,certificates surrendered for conversion shall be endorsed or accompanied bywritten instrument or instruments of transfer, in form satisfactory to theCorporation, duly executed by the registered holder or by his, her or itsattorney duly authorized in writing.  Assoon as practicable after the Mandatory Conversion Time and the surrender ofthe certificate or certificates (or lost certificate affidavit and agreement)for Series A Preferred Stock and Series B Preferred Stock, theCorporation shall issue and deliver to such holder, or to his, her or itsnominees, a certificate or certificates for the number of full shares of CommonStock issuable on such conversion in accordance with the provisions hereof,together with cash as provided in Subsection 4.2 in lieu of any fractionof a share of Common Stock otherwise issuable upon such conversion and thepayment of any declared but unpaid dividends on the shares of Series APreferred Stock and Series B Preferred Stock converted.  Such converted Series A Preferred Stockand Series B Preferred Stock shall be retired and cancelled and may not bereissued as shares of such series, and the Corporation may thereafter take suchappropriate action (without the need for stockholder action) as may benecessary to reduce the authorized number of shares of Series A PreferredStock and Series B Preferred Stock accordingly.

#####  

#### 6.             Redemption.

####  

##### 6.1           Redemption.

#####  

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

#####  

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

 

18

----

 

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

#####  

##### 6.2           Redemption Notice.  The Corporation shall send written notice ofthe mandatory redemption (the “**RedemptionNotice**”) to each holder of record of Series A Preferred Stocknot less than 40 days prior to each Redemption Date.  Each Redemption Notice shall state:

#####  

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

 

(b)           the Redemption Date and theRedemption Price;

 

(c)           the date upon which the holder’sright to convert such shares terminates (as determined in accordance with Subsection4.1); and

 

(d)           that the holder is to surrender tothe Corporation, in the manner and at the place designated, his, her or itscertificate or certificates representing the shares of Series A PreferredStock 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 suchRedemption Date, unless such holder has exercised his, her or its right toconvert such shares as provided in Section 4, shall surrender thecertificate or certificates representing such shares (or, if such registeredholder alleges that such certificate has been lost, stolen or destroyed, a lostcertificate affidavit and agreement reasonably acceptable to the Corporation toindemnify the Corporation against any claim that may be made against theCorporation on account of the alleged loss, theft or destruction of suchcertificate) to the Corporation, in the manner and at the place designated inthe Redemption Notice, and thereupon the Redemption Price for such shares shallbe payable to the order of the person whose name appears on such certificate orcertificates as the owner thereof.  Inthe event less than all of the shares of Series A Preferred Stockrepresented by a certificate are redeemed, a new certificate representing theunredeemed shares of Series A Preferred Stock shall promptly be issued tosuch holder.

#####  

##### 6.4           Rights Subsequent to Redemption.  If the Redemption Notice shall have been dulygiven, and if on the applicable Redemption Date the Redemption Price payableupon redemption of the shares of Series A Preferred Stock to be redeemedon such Redemption Date is paid or tendered for payment or deposited with anindependent payment agent so as to be available therefor in a timely manner,then notwithstanding that the certificates evidencing any of the shares of Series APreferred Stock so called for redemption shall not have been surrendered,dividends with respect to such shares of Series A Preferred Stock shallcease to accrue after such Redemption Date and all rights with respect to suchshares shall forthwith after the Redemption Date terminate, except only theright of the holders to receive the Redemption Price without interest uponsurrender of their certificate or certificates therefor.

#####  

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

 

19

----

 

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

####  

#### 9.             Notices. Any notice required or permitted by the provisions of this Article Fourthto be given to a holder of shares of Series A Preferred Stock or Series BPreferred Stock shall be mailed, postage prepaid, to the post office addresslast shown on the records of the Corporation, or given by electroniccommunication 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 notrecognize any transfer of any of the securities issued by the Corporationunless 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, deviseor descent, or other transfer or disposition of any kind, including but notlimited to transfers to receivers, levying creditors, trustees or receivers inbankruptcy proceedings or general assignees for the benefit of creditors,whether voluntary or by operation of law, directly or indirectly, exceptfor:  (i) any repurchase ofsecurities by the Corporation; (ii) any Transfer, other than pursuant todivorce decree, dissolution, or property settlement, of Shares to a holder’sspouse, sibling, lineal descendant or ancestor or to a trust established forthe benefit of any such individual; (iii) any Transfer of securities on aholder’s death by will or intestacy; (iv) *bonafide* gifts of up to 10% in the aggregate of the securities held bythe transferring holder as of the date hereof or (v) any Transfer ofsecurities by a holder to an affiliate.

##  

## **THIRD: **Subject to any additionalvote required by the Certificate of Incorporation or Bylaws, in furtherance andnot in limitation of the powers conferred by statute, the Board of Directors isexpressly authorized to make, repeal, alter, amend and rescind any or all ofthe Bylaws of the Corporation.

##  

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

##  

## **FIFTH: **Elections of directors neednot be by written ballot unless the Bylaws of the Corporation shall so provide.

##  

## **SIXTH: **Meetings of stockholders maybe held within or without the State of Delaware, as the Bylaws of theCorporation may provide.  The books ofthe Corporation may be kept outside the State of Delaware at such place orplaces as may be designated from time to time by the Board of Directors or inthe Bylaws of the Corporation.

##  

## **SEVENTH: **To the fullest extentpermitted by law, a director of the Corporation shall not be personally liableto the Corporation or its stockholders for monetary damages for breach offiduciary duty as a director.  If theGeneral Corporation Law or any other law of the State of Delaware is amendedafter approval by the stockholders of this Article Tenth to authorizecorporate action further eliminating or limiting the personal liability ofdirectors, then the liability of a director of the Corporation shall beeliminated or limited to the fullest extent permitted by the GeneralCorporation Law as so amended.

 

20

----

 

Any repeal or modification of the foregoing provisions of this Article Tenthby the stockholders of the Corporation shall not adversely affect any right orprotection of a director of the Corporation existing at the time of, orincrease the liability of any director of the Corporation with respect to anyacts or omissions of such director occurring prior to, such repeal ormodification.

 

## Tothe fullest extent permitted by applicable law, the Corporation is authorizedto provide indemnification of (and advancement of expenses to) directors,officers and agents of the Corporation (and any other persons to which GeneralCorporation Law permits the Corporation to provide indemnification) throughBylaw provisions, agreements with such agents or other persons, vote ofstockholders or disinterested directors or otherwise, in excess of theindemnification and advancement otherwise permitted by Section 145 of theGeneral Corporation Law.  Any amendment,repeal or modification of the foregoing provisions of this Article Tenthshall not adversely affect any right or protection of any director, officer orother agent of the Corporation existing at the time of such amendment, repealor modification.

##  

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

##  

*     *    *

 

**3.**             That the foregoing amendment and restatement wasapproved by the holders of the requisite number of shares of this corporationin accordance with Section 228 of the General Corporation Law.

 

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

 

**IN WITNESS WHEREOF**, this Second Amended andRestated Certificate of Incorporation has been executed by a duly authorizedofficer of this corporation on this 14th day of May, 2009.

 

 
|   | By:    |                                         |
|--------|--------|----------------------------------------------|
|   |   | Jeffrey  L. Feldman, Chief Executive Officer |

 

21

----