**Exhibit3.4**

 

**CERTIFICATEOF DESIGNATIONS, PREFERENCES AND**

**RIGHTSOF SERIES E PREFERRED STOCK OF**

**STRATUSSERVICES GROUP, INC.**

 

The undersigned,the Executive Vice President and Chief Financial Officer of Stratus ServicesGroup, Inc. (the “Corporation”), a corporation organized and existing under theGeneral Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:

 

That, pursuant tothe authority conferred on the Board of Directors by the Amended and RestatedCertificate of Incorporation of the Corporation and Section 151 of the GeneralCorporation Law of the State of Delaware, on June 18, 2002, the Board ofDirectors of the Corporation did unanimously approve the adoption of thefollowing resolution providing for the designations, preferences and other rights,and the qualifications, limitations or restrictions thereof, of the Series EPreferred Stock of the Corporation:

 

**RESOLVED**,that there shall be a series of shares of the Corporation designated “Series EConvertible Preferred Stock”; that the number of shares of such series shall be50,000 and that the rights and preferences of such series (the “Series EPreferred”) and the limitations or restrictions thereon, shall be as set forthherein;

 

The following shall be adopted and incorporated by reference into theforegoing resolutions as if fully set forth therein:

 

1.             **Dividends.**

 

(a)    Theholders of the Series E Preferred shall be entitled to receive out of anyassets legally available therefor cumulative dividends at the rate of 6% perannum (each a “Dividend Payment Date”), accrued daily on a quarterly basis, andpayable every 120 days, the first such 120 day period being measured from thedate of Closing, in preference and priority to any payment of any dividend onthe Common Stock.  Such dividends shallaccrue on any given share from the day of original issuance of such share andshall accrue from day to day whether or not earned or declared.  If at any time dividends on the outstandingSeries E Preferred at the rate set forth above shall not have been paid ordeclared and set apart for payment with respect to all preceding periods, theamount of the deficiency shall be fully paid or declared and set apart forpayment, but without interest, before any distribution, whether by way ofdividend or otherwise, shall be declared or paid upon or set apart for theCommon Stock of the Corporation or any other series of the Preferred Stock ofthe Corporation.

 

(b)    Anydividend payable on a Dividend Payment Date shall be paid at the option of theCorporation, either (i) in cash or (ii) in shares of Common Stock, if theCommon Stock issuable upon conversion of such shares has been registered forresale under the Securities Act of 1933, as amended (the “Act”), and theregistration statement including a current

 

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prospectus with respect thereto remains in effect at the date ofdelivery of such shares or an exemption from such registration is availableunder the Act.

 

(c)    Nothingcontained herein shall be deemed to establish or require any payment or othercharges in excess of the maximum permitted by applicable law.  In the event that any payment required to bepaid or other charges hereunder exceed the maximum permitted by such law, anypayments in excess of such maximum shall be credited against amounts owed bythe Corporation, the holder and thus refunded to the Corporation.

 

2.             **Liquidation Preference; Redemption.**

 

(a)    In theevent of any liquidation, dissolution or winding up of the Corporation, eithervoluntary or involuntary, the holders of the Series E Preferred shall beentitled to receive, prior and in preference to any distribution of any assetsof the Corporation to the holders of the Common Stock, the amount of $100 pershare plus any and all accrued but unpaid dividends (the “Liquidation Preference”).

 

(b)    Aconsolidation or merger of the Corporation with or into any other corporationor corporations, or a sale of all or substantially all of the assets of theCorporation (other than a sale or transfer to a wholly owned subsidiary of theCorporation), shall, at the option of the holders of the Series E Preferred, bedeemed a liquidation, dissolution or winding up within the meaning of thisSection 2 if the shares of stock of the Corporation outstanding immediatelyprior to such transaction represent immediately after such transaction lessthan a majority of the voting power of the surviving corporation (or of theacquirer of the Corporation’s assets in the case of a sale of assets).  Such option may be exercised by the vote orwritten consent of holders of a majority of the Series E Preferred at any timewithin thirty (30) days after written notice (which shall be given promptly) ofthe essential terms of such transaction shall have been given to the holders ofthe Series E Preferred in the manner provided by law for the giving of noticeof meetings of shareholders.

 

(c)    The Corporation shall have the right, butnot the obligation to redeem any or all of the shares of Series E Preferred atany time prior to the delivery of a conversion notice upon payment in cash ofan amount equal to 115% of the purchase price paid for the Series E Preferredstock on the Original Issue Date, plus all accumulated but unpaiddividends.  However, in the event thatthe Corporation does not within one hundred twenty (120) days of the OriginalIssue Date receive stockholder approval for its proposal to increase the numberof authorized shares of the Corporation’s Common Stock to 100,000,000, theSeries E Preferred Stock shall become immediately redeemable, in cash.

 

3.             **Optional Conversion**.  The holders of the Series E Preferred shallhave optional conversion rights as follows:

 

(a)    Right to Convert.  Shares of Series E Preferred shall beconvertible, at the option of the holder thereof, into such number of fullypaid and nonassessable shares of Common Stock as is determined by dividing (x)the Liquidation Preference of the Series E Preferred determined pursuant toSection 2 hereof on the date the notice of conversion is given, by (y) the

 

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Conversion Pricedetermined as hereinafter provided in effect on the applicable conversiondate.  Such conversion right will notbecome effective, however, until such time as the Corporation’s stockholdersshall approve an Amendment to its Amended and Restated Certificate ofIncorporation which will increase the number of the authorized shares of theCorporation’s Common Stock to 100,000,000. If such stockholder approval is not obtained, the Series E PreferredStock shall become immediately redeemable, in cash.

 

(b)    Mechanics of Conversion.  To convert shares of Series E Preferred intoshares of Common Stock under Section 3(a), the holder shall give written noticeto the Corporation (which notice may be given by facsimile transmission) thatsuch holder elects (with the right to revoke) to convert the shares and shallstate therein date of the conversion, the number of shares to be converted andthe name or names in which such holder wishes the certificate or certificatesfor shares of Common Stock to be issued. Promptly thereafter, the holder shall surrender the certificate orcertificates representing the shares to be converted, duly endorsed, at theoffice of the Corporation or of any transfer agent for such shares, or at such otherplace designated by the Corporation; *provided,*that the holder shall not be required to deliver the certificates representingsuch shares if the holder is waiting to receive all or part of suchcertificates from the Corporation.  TheCorporation shall immediately issue and deliver to or upon the order of suchholder, against delivery of the certificates representing the shares which havebeen converted, a certificate or certificates for the number of shares ofCommon Stock to which such holder shall be entitled.  The Corporation shall cause such issuance to be effected withinfive (5) business days and shall transmit the certificates by messenger orovernight delivery service to reach the address designated by such holderwithin three (3) business days after the receipt of such notice.  The notice of conversion may be given by aholder at any time during the day up to 5:00 p.m. New York time and suchconversion shall be deemed to have been made immediately prior to the close ofbusiness on the date such notice of conversion is given.  The person or persons entitled to receivethe shares of Common Stock issuable upon such conversion shall be treated forall purposes as the record holder or holders of such shares of Common Stock atthe close of business on such date.

 

(c)    Determination of Conversion Price.

 

(i)            The “Conversion Price” shall beequal to the average of the closing bid prices of the Common Stock as reportedby the OTC Bulletin Board during the five (5) consecutive trading dayspreceding the conversion date multiplied by 75%.

 

(ii)           The “closing bid price” of the CommonStock on a trading day shall be the closing bid price of the Common Stock onOTC Bulletin Board or any other principal securities price quotation system ormarket on which prices of the Common Stock are reported.  The term “trading day” means a day on whichtrading is reported on the principal quotation system or market on which pricesof the Common Stock are reported.

 

(iii)          If, during the period of consecutivetrading days provided for above, the Corporation shall declare or pay anydividend on the Common Stock payable in Common Stock or in rights to acquireCommon Stock, or shall effect a stock split or reverse stock split, or acombination, consolidation or reclassification of the Common Stock, the

 

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 Conversion Price shall be proportionatelydecreased or increased, as appropriate, to give effect to such event.

 

(d)    Distributions.  If the Corporation shall at any time or fromtime to time make or issue, or fix a record date for the determination ofholders of Common Stock entitled to receive, a dividend or other distributionpayable in securities of the Corporation or any of its subsidiaries other thanadditional shares of Common Stock, then in each such event provision shall bemade so that the holders of Series E Preferred shall receive, upon theconversion thereof, the securities of the Corporation which they would havereceived had they been the owners on the date of such event of the number ofshares of Common Stock issuable to them upon conversion.

 

(e)    Certificates as to Adjustments.  Upon the occurrence of any adjustment orreadjustment of the Conversion Price pursuant to this Section 3, theCorporation at its expense shall promptly compute such adjustment orreadjustment in accordance with the terms hereof and cause the independentpublic accountants regularly employed to audit the financial statements of theCorporation to verify such computation and prepare and furnish to each holderof Series E Preferred a certificate setting forth such adjustment orreadjustment and showing in detail the facts upon which such adjustment orreadjustment is based.  The Corporationshall, upon the reasonable written request at any time of any holder of SeriesE Preferred, furnish or cause to be furnished to such holder a like certificateprepared by the Corporation setting forth (i) such adjustments andreadjustments, and (ii) the number of other securities and the amount, if any,of other property which at the time would be received upon the conversion ofSeries E Preferred with respect to each share of Common Stock received uponsuch conversion.

 

(f)    Notice of Record Date.  In the event of any taking by theCorporation of a record of the holders of any class of securities for thepurpose of determining the holders thereof who are entitled to receive anydividend (other than a cash dividend) or other distribution, any security orright convertible into or entitling the holder thereof to receive additionalshares of Common Stock, or any right to subscribe for, purchase or otherwiseacquire any shares of stock of any class or any other securities or property,or to receive any other right, the Corporation shall mail to each holder of SeriesE Preferred at least ten (10) days prior to the date specified therein, anotice specifying the date on which any such record is to be taken for thepurpose of such dividend, distribution, security or right and the amount andcharacter of such dividend, distribution, security or right.

 

(g)    Issue Taxes.  The Corporation shall pay any and all issueand other taxes, excluding any income, franchise or similar taxes, that may bepayable in respect of any issue or delivery of shares of Common Stock on conversionof shares of Series E Preferred pursuant hereto; provided, however, that theCorporation shall not be obligated to pay any transfer taxes resulting from anytransfer requested by any holder in connection with any such conversion.

 

(h)    Reservation of Stock Issuable UponConversion.  Upon amendment of theCorporation’s Amended and Restated Certificate of Incorporation to increase thenumber of authorized shares of Common Stock to 100,000,000, the Corporationshall at all times reserve and keep available out of its authorized butunissued shares of Common Stock, solely for the

 

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purpose of effecting theconversion of the shares of the Series E Preferred, such number of its sharesof Common Stock as shall from time to time be sufficient to effect theconversion of all outstanding shares of the Series E Preferred, and if at anytime the number of authorized but unissued shares of Common Stock shall not besufficient to effect the conversion of all then outstanding shares of theSeries E Preferred, the Corporation will take such corporate action as may benecessary to increase its authorized but unissued shares of Common Stock tosuch number of shares as shall be sufficient for such purpose, including, withoutlimitation, engaging in best efforts to obtain any requisite shareholderapproval.

 

(i)    Fractional Shares.  No fractional shares shall be issued uponthe conversion of any share or shares of Series E Preferred.  All shares of Common Stock (includingfractions thereof) issuable upon conversion of more than one share of Series EPreferred by a holder thereof shall be aggregated for purposes of determiningwhether the conversion would result in the issuance of any fractional share.  If, after the aforementioned aggregation,the conversion would result in the issuance of a fraction of a share of CommonStock, the Corporation shall, in lieu of issuing any fractional share, pay theholder otherwise entitled to such fraction a sum in cash equal to the fairmarket value of such fraction on the date of conversion (as determined in goodfaith by the Board of Directors of the Corporation or an authorized Committeethereof).

Notices.    Any notice or other communication required or permitted to begiven hereunder shall be in writing and shall be effective (a) upon handdelivery or delivery by telex (with correct answer back received), telecopy orfacsimile at the address or number designated below (if delivered on a businessday during normal business hours where such notice is to be received), or thefirst business day following such delivery (if delivered other than on abusiness day during normal business hours where such notice is to be received)or (b) on the second (2nd) business day following the date of mailing byexpress courier service, fully****prepaid,addressed to such address, or upon actual receipt of such mailing, whichevershall first occur.  The addresses forsuch communications shall be:

 
| to the Corporation |   | Stratus Services Group, Inc.                                                                            |
|--------------------|--------|---------------------------------------------------------------------------------------------------------|
|               |   | 500 Craig Road, Suite 201                                                                               |
|               |   | Manalapan, NJ   07726                                                                              |
|               |   | Attention: Suzette Nanovic Berrios, Esq.                                                                |
|               |   |                                                                                                    |
| to the Holder:     |   | At the address set forth on the books and records of  the Company or as specified in writing by Holder. |

 

Any party hereto may from time to time change its address for noticesby giving at least ten (10) days’ written notice of such changed address to theother party hereto.

 

(j)    Reorganization or Merger.  In case of any reorganization or anyreclassification of the capital stock of the Corporation or any consolidationor merger of the Corporation with or into any other corporation or corporationsor a sale of all or substantially all of the assets of the Corporation to anyother person (other than a sale or transfer to a wholly owned subsidiary of theCorporation), and the holders of Series E Preferred do not elect to treat suchtransaction as a liquidation, dissolution or winding up as provided in Section2 hereof, then, as part of such reorganization, consolidation, merger or sale,provision shall be made so that each 

 

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share of Series EPreferred shall thereafter be convertible into the number of shares of stock orother securities or property (including cash) to which a holder of the numberof shares of Common Stock deliverable upon conversion of such share of Series EPreferred would have been entitled upon the record date of (or date of, if norecord date is fixed) such event and, in any case, appropriate adjustment (asdetermined by the Board of Directors) shall be made in the application of theprovisions herein set forth with respect to the rights and interests thereafterof the holders of the Series E Preferred, to the end that the provisions setforth herein shall thereafter be applicable, as nearly as equivalent as ispracticable, in relation to any shares of stock or the securities or property(including cash) thereafter deliverable upon the conversion of the shares ofSeries E Preferred.

 

4.             **Re-issuance of Certificates**.  In the event of a conversion (or, ifapplicable, redemption) of Series E Preferred in which less than all of theshares of Series E Preferred of a particular certificate are converted orredeemed, as the case may be, the Corporation shall promptly cause to be issuedand delivered to the holder of such certificate, a certificate representing theremaining shares of Series E Preferred which have not been so converted orredeemed.

 

5.             **Other Provisions**.  For all purposes of this Resolution, theterm “date of issuance” and the terms “Closing” or “Closing Date” shall meanthe day on which Shares are first issued by the Corporation.  Any provision herein which conflicts with orviolates any applicable usury law shall be deemed modified to the extentnecessary to avoid such conflict or violation. The term “OTC Bulletin Board” herein refers to the principal market onwhich the Common Stock of the Corporation is traded.  If the Common Stock is listed on a securities exchange, or ifanother market becomes the principal market on which the Common Stock is tradedor through which price quotations for the Common Stock are reported, the term“OTC Bulletin Board” shall be deemed to refer to such exchange or otherprincipal market.  The term “conversiondate” shall mean the date on which the notice of conversion is received by theCorporation.

 

6.             **No Adverse Actions**.  The Corporation shall not in any manner,whether by amendment of the Certificate of Incorporation (including, withoutlimitation, any Certificate of Designation), merger, reorganization,re-capitalization, consolidation, sales of assets, sale of stock, tender offer,dissolution or otherwise, take any action, or permit any action to be taken,solely or primarily for the purpose of increasing the value of any class ofstock of the Corporation if the effect of such action is to reduce the value orsecurity of the Series E Preferred.

 

7.             **Voting Rights.**  The Series E Preferred shall not have theright to vote, except as required by law.

 

8.             **Attorneys’ Fees**.  Any holder of Series E Preferred shall beentitled to recover from the Corporation the reasonable attorneys’ fees andexpenses incurred by such holder in connection with enforcement by such holderof any obligation of the Corporation hereunder.

 

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9.             **Additional Restrictions**.  For as long as any shares of the Series EPreferred Stock are outstanding, the corporation will not amend the terms ofthe Series E Preferred Stock without the consent of the holders of the Series EPreferred Stock.

** **

**INWITNESS WHEREOF**, the Corporation has caused this Certificateof Designations, Preferences and Rights to be signed by Michael A. Maltzman,Executive Vice President and Chief Financial Officer, this 16th day of July2002.

 
|   | Stratus Services  Group, Inc.             |                     |
|--------|-------------------------------------------|--------------------------|
|   |                                      |                     |   |
|   | By:                                       | /s/ Michael A.  Maltzman |   |
|   | Name:  Michael A. Maltzman           |                     |
|   | Title:  Executive Vice President and |
|   | Chief Financial Officer                   |                     |

 

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