Document:

Performance Award Share Subplan 2006-2008

    PERFORMANCE
      SHARE AWARD SUBPLAN

                                    
      OF
      THE 2002 OMNIBUS LONG-TERM COMPENSATION PLAN

                   
      2006-2008 PERFORMANCE PERIOD

                                                                                                             
                   
      EFFECTIVE JANUARY 1, 2006

                                                                                                                           

     

                                             EASTMAN
      CHEMICAL COMPANY

    

    

    
 

    

    

    

    

    

    

     

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
          78

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        Compensation and Management Development
          Committee 

      

    

    PERFORMANCE
      SHARE AWARD SUBPLAN

    OF
      THE
      2002 OMNIBUS LONG-TERM COMPENSATION PLAN

    2006-2008
      PERFORMANCE PERIOD

    

    

    

    TABLE
      OF CONTENTS

    

    Section TitlePage

    

    Section
      1. Background
      1

    

    Section
      2. Definitions
      1

    

    Section
      3. Administration
      2

    

    Section
      4. Eligibility
      2

    

    Section
      5. Form of Awards
      3

    

    Section
      6. Size of Awards
      3

    

    Section
      7. Composition of Comparison Group
      4

    

    Section
      8. Preconditions to Receipt of an Award
      4

    

    Section
      9. Manner and Timing of Award Payments
      5

    

    Section
      10. No Rights as Stockholder
      6

    

    Section
      11. Application of Plan
      6

    

    Section
      12. Adjustment of Actual Grant Amount
      6

    

    Section
      13. Amendments
      6

    

    Exhibit
      A
7

    

    Exhibit
      B
8

    

    

    

    
      
        
          79

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        EXHIBIT 10.04

      

    

    EASTMAN
      CHEMICAL COMPANY

    PERFORMANCE
      SHARE AWARD SUBPLAN

    OF
      THE
      2002 OMNIBUS LONG-TERM COMPENSATION PLAN

    2006-2008
      PERFORMANCE PERIOD

    

    

    

    Section
      1. Background.
      Under
      Section 11 of the Eastman Chemical Company 2002 Omnibus Long-Term Compensation
      Plan (the "Plan"), the "Committee" (as defined in the Plan), may, among other
      things, award shares of the $.01 par value common stock ("Common Stock") of
      Eastman Chemical Company (the "Company") to "Employees" (as defined in the
      Plan), and such awards may take the form of performance shares, which are
      contingent upon the attainment of certain performance objectives during a
      specified period, and subject to such other terms, conditions, and restrictions
      as the Committee deems appropriate. The purpose of this Performance Share Award
      Subplan (this "Subplan") is to set forth the terms of the grant of performance
      shares for the 2006-2008 Performance Period specified herein, effective as
      of
      January 1, 2006 (the "Effective Date").

    

    Section
      2. Definitions.

    

    
      	
              (a)

            	
              The
                following definitions shall apply to this
                Subplan:

            

    

    

    
      	(i)  	
              "Actual
                Grant Amount" means the number of shares of Common Stock to which
                a
                participant is entitled under this Subplan, calculated in accordance
                with
                Section 6 of this Subplan.

            

    

    

    
      	(ii)  	
              “Award
                Amount” means the performance shares awarded to the participant under this
                Subplan at the beginning of the Performance
                Period.

            

    

    

    
      	 	
              (iii)

            	
              "Award
                Payment Date" means the date the Compensation Committee approves
                the
                payout of Common Stock covered by an award under this Subplan to
                a
                participant.

            

    

    

    
      	 	
              (iv)

            	
              "Comparison
                Group" is the group of companies comprising the “Materials Sector” from
                Standard and Poor’s Super Composite 1500 Index, identified as Global
                Industry Classification Standard (“GICS”) 15.

            

    

    

    
      	 	
              (v)
                

            	
              “Cost
                of Capital” reflects the cost of debt and the cost of equity, expressed as
                a percentage, reflecting the percentage of interest charged on debt
                and
                the percentage of expected return on
                equity.

            

    

    

    
      	 	
              (vi)

            	
              “Earnings
                from Continuing Operations” shall be defined as the total sales of the
                Company minus the costs of all operations of any nature used to produce
                such sales, including taxes, plus after-tax interest associated with
                the
                Company's capital debt.

            

    

    

    
      	(vii)  	
              "Maximum
                Deductible Amount" means the maximum amount deductible by the Company
                under Section 162(a), taking into consideration the limitations under
                Section 162(m), of the Internal Revenue Code of 1986, as amended,
                or any
                similar or successor provisions
                thereto.

            

    

    

    (viii) “Participation
      Date” means November 1, 2005. 

     

    (ix) “Performance
      Period" means January 1, 2006 through December 31, 2008.

     

    (x) “Performance
      Year” means one of the three calendar years in the Performance
      Period.

    

    
      
        
          80

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              (xi)

            	
              “Return
                on Capital” shall mean the return produced by funds invested in the
                Company and shall be determined as Earnings from Continuing Operations,
                as
                defined in Section 2.a.(vi), divided by the Average Capital Employed.
                Average Capital Employed shall be derived by adding the Company's
                capital
                debt plus equity at the close of the last day of the year preceding
                the
                Performance Year, to the Company's capital debt plus equity at the
                close
                of the last day of the present Performance Year, with the resulting
                sum
                being divided by two. Capital debt is defined as the sum of borrowing
                by
                the Company due within one year and long-term borrowing, as designated
                on
                the Company's balance sheet. The resulting ratio shall be multiplied
                by
                One Hundred (100) in order to convert such to a percentage. Such
                percentage shall be calculated to the third place after the decimal
                point
                (i.e., xx.xxx%), and then rounded to the second place after the decimal
                point (i.e., xx.xx%).

            

    

    

    
      	 	
              (xii)

            	
              "Target
                Award Range" means, with respect to any eligible Employee, the number
                of
                performance shares within the range specified on Exhibit A hereto
                for the
                Salary Grade applicable to such
                Employee.

            

    

    
      	 	
              (xiii)

            	
              “TSR”
                means total stockholder return, as reflected by the sum of (A) change
                in
                stock price (measured as the difference between (I) the average of
                the
                closing prices of a company’s common stock on the New York Stock Exchange,
                or of the last sale prices or closing prices of such stock on another
                national trading exchange, as applicable, in the period beginning
                on the
                tenth trading day preceding the beginning of the Performance Period
                and
                ending on the tenth trading day of the Performance Period and (II)
                the
                average of such closing or last sale prices for such stock in the
                period
                beginning on the tenth trading day preceding the end of the Performance
                Period and ending on the tenth trading day following the end of the
                Performance Period) plus (B) dividends declared, assuming reinvestment
                of
                dividends, and expressed as a percentage return on a stockholder’s
                hypothetical investment.

            

    

    

    
      	
              (b)

            	
              Any
                capitalized terms used but not otherwise defined in this Subplan
                shall
                have the respective meanings set forth in the Plan.
                

            

    

    

    Section
      3. Administration.
      This
      Subplan shall be administered by the Committee. The Committee shall have
      authority to interpret this Subplan, to prescribe rules and regulations relating
      to this Subplan, and to take any other actions it deems necessary or advisable
      for the administration of this Subplan, and shall retain all general authority
      granted to it under Section 3 of the Plan. At the end of the Performance
      Period, the Committee shall approve Actual Grant Amounts awarded to participants
      under this Subplan. 

    

    Section
      4. Eligibility.
      The
      Employees who are eligible to participate in this Subplan are those Employees
      who, as of the Participation Date, are at Salary Grade 120 and above. These
      Salary Grades generally include Employees who, as of the Participation Date,
      have been designated as "officers" of the Company for purposes of Section 16
      of
      the Exchange Act, and held positions with the Company considered carrying
      responsibilities and functions generally associated with a vice-president-level
      position. Employees who are promoted during the Performance Period to a position
      that would meet the above criteria, but who do not hold such position as of
      the
      Participation Date, are not
      eligible
      to participate in this Subplan. 

    

    Section
      5. Form of Awards.
      Subject
      to the terms and conditions of the Plan and this Subplan, Awards under this
      Subplan shall be paid in the form of unrestricted shares of Common Stock, except
      for conversions to cash and deferrals under Section 9 of this Subplan, and
      except that if a participant is entitled to any fraction of a share of Common
      Stock, as a result of Section 10 of this Subplan or otherwise, then in lieu
      of
      receiving such fraction of a share, the participant shall be paid a cash amount
      representing the market value, as determined by the Committee, of such fraction
      of a share at the time of payment.

    

    Section
      6. Size of Awards.
      

    

    (a) Target
      Award Range.
      Exhibit
      A hereto shows by Salary Grade the Target Award Range. The Salary Grade to
      be
      used in determining the size of any Award Amount to a participant under this
      Subplan shall be the Salary Grade applicable to the position held by the
      participant on the Participation Date. The actual size of the Award Amount
      to
      the participant shall be determined based on an assessment by his or her senior
      management of the participant’s past performance and potential for contributions
      to the Company’s future long term success. Based on this assessment, the
      participant may receive no award, the target award amount, or any amount within
      the Target Award Range to the nearest 10 performance shares. Each member of
      senior management will have a performance share budget, based on the cumulative
      award targets for their reports, which must be balanced for their organizations.
      

    

    
      
        
          81

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	(b)  	
              Stock
                Option Grants for Employees Named After the Participation
                Date.
                Employees who are hired into, or promoted to a Salary Grade 120 or
                above
                position after the Participation Date but prior to the Performance
                Period,
                will be eligible to receive an additional number of options to purchase
                Company stock as of the next scheduled meeting of the Compensation
                Committee following their hire or promotion. The additional grant
                of
                options will be determined based on several factors, including timing
                of
                the promotion or hire, number of options received in the previous
                assignment, stock option target ranges for the employee’s new salary
                grade, and considerations of performance assessment. The amount of
                the
                award will be recommended by the Company’s Chief Executive Officer for
                approval by the Compensation Committee. The option grant price will
                be the
                closing price of Company common stock on the New York Stock Exchange
                on
                the meeting date of the Compensation
                Committee.

            

    

    

    
      	(c)  	
              Actual
                Grant Amount.
                Subject to the Committee’s authority to adjust the Actual Grant Amount
                described in Section 12, the Actual Grant Amount awarded to the
                participant at the end of the Performance Period is determined by
                applying
                a multiplier to the participant’s Award Amount. The multiplier shall be
                determined by comparing Company performance relative to two
                measures:

            

    

    

    
      	(i)  	
              The
                Company's TSR during the Performance Period relative to the TSRs
                of the
                companies in the Comparison Group during the Performance
                Period.
                The Company and each company in the Comparison Group shall be ranked
                by
                TSR, in descending order, with the company having the highest TSR
                during
                the Performance Period being ranked number one. The Comparison Group
                shall
                further be separated into quintiles (first 20%, second 20%, etc.)
                and the
                Company's position, in relation to the Comparison Group, shall be
                expressed as a position in the applicable quintile ranking;
                and

            

    

    

    
      	 	 	
              (ii)
                

            	
              The
                arithmetic average, for each of the Performance Years during the
                Performance Period, of the Company’s average Return on Capital minus a
                Return on Capital target.
                The Return on Capital target will be determined by the Committee.
                 

            

    

    

    An
      award
      multiplier table is shown in Exhibit B. The award multiplier is based on the
      Company’s performance relative to its quintile ranking relative to the
      Comparison Group, and its average Return on Capital relative to a target during
      the Performance Period. The award multipliers range from 3.0 (i.e. 300%), if
      the
      Company's TSR is in the top performing quintile (top 20%) of companies in the
      Comparison Group, and the average Return on Capital minus the target Return
      on
      Capital is greater than 10 percentage points, to 0.0 (with no shares of Common
      Stock being delivered to participants under this Subplan), if the Company does
      not meet certain levels of performance relative to the two measures.

    

    Section
      7. Composition of Comparison Group.
      The
      Comparison Group is composed of companies relevant for purposes of TSR
      comparisons under this Subplan. However, during the Performance Period, a
      company in the Comparison Group may be dropped from the Comparison Group if
      a
      company's common stock ceases to be publicly traded on a national stock exchange
      or market; or a company is a party to a significant merger, acquisition, or
      other reorganization. Under these, or similar circumstances, the company or
      companies may be removed from the Comparison Group, and may be replaced with
      another company or companies by Standard & Poor’s, consistent with their
      established criteria for selection of companies for the Comparison Group. In
      any
      case where the Comparison Group ceases to exist, or is otherwise determined
      to
      no longer be appropriate as the basis for a measure under this Subplan, the
      Committee may designate a replacement Comparison Group. In any such case, the
      Committee shall have authority to determine the appropriate method of
      calculating the TSR of such former and/or replacement Comparison Group, whether
      by complete substitution of the replacement Comparison Group (and disregard
      of
      the former Comparison Group) over the entire Performance Period or by pro rata
      calculations for each Comparison Group or otherwise. 

    

    Section
      8. Preconditions to Receipt of an Award.

    

    
      	
              (a)

            	
              Continuous
                Employment.
                Except as specified in paragraph (b) below, to remain eligible for
                an
                Award under this Subplan, an eligible Employee must remain continuously
                employed with the Company or a Subsidiary at all times from the Effective
                Date through the Award Payment
                Date.

            

    

    

    
      
        
          82

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              (b)

            	
              Death,
                Disability, Retirement, or Termination for an Approved Reason Before
                the
                Award Payment Date.
                If
                a participant's employment with the Company or a Subsidiary is terminated
                due to death, disability, retirement, or any approved reason prior
                to the
                Award Payment Date, the participant shall receive, subject to the
                terms
                and conditions of the Plan and this Subplan, an Award representing
                a
                prorated portion of the Actual Grant Amount to which such participant
                otherwise would be entitled, with the precise amount of such Award
                to be
                determined by multiplying the Actual Grant Amount by a fraction,
                the
                numerator of which is the number of full calendar months employed
                in the
                Performance Period from the Effective Date through and including
                the
                effective date of such termination, and the denominator of which
                is 36
                (the total number of months in the Performance Period).
                

            

    

    

    Section
      9. Manner and Timing of Award Payments.

    

    
      	
              (a)

            	
              Timing
                of Award Payment.
                Except for deferrals under Sections 9(c) and 9(d), if any Awards
                are
                payable under this Subplan, the payment of such Awards to eligible
                Employees shall be made as soon as is administratively practicable
                after
                the end of the Performance Period and final approval by the
                Committee.

            

    

    

    
      	
              (b)

            	
              Tax
                Withholding.
                The Company may withhold or require the grantee to remit a cash amount
                sufficient to satisfy federal, state, and local taxes (including
                the
                participant’s FICA obligation) required by law to be withheld. Further,
                either the Company or the grantee may elect to satisfy the withholding
                requirement by having the Company withhold shares of common stock
                having a
                Fair
                Market
                Value
                on the date the tax is to be determined equal to the minimum statutory
                total tax which could be imposed on the
                transaction.

            

    

    

    
      	
              (c)

            	
              Deferral
                of Award in Excess of the Maximum Deductible Amount.
                If payment of the Award would, or could in the reasonable estimation
                of
                the Committee, result in the participant's receiving compensation
                in
                excess of the Maximum Deductible Amount in a given year, then such
                portion
                (or all, as applicable) of the Award as would, or could in the reasonable
                estimation of the Committee, cause such participant to receive
                compensation from the Company in excess of the Maximum Deductible
                Amount
                may, at the sole discretion of the Committee, be converted into the
                right
                to receive a cash payment, which shall be deferred until after the
                participant retires or otherwise terminates employment with the Company
                and its Subsidiaries, provided that such deferral is compliant with
                the
                requirements of Internal Revenue Code Section 409A and Treasury
                Regulations and guidance
                thereunder.

            

    

    

    
      	
              (d)
                

            	
              Election
                to Defer the Award.
                Any participant in this Subplan may elect to defer the Award until
                after
                the participant retires or otherwise terminates employment with the
                Company and its Subsidiaries under the terms and subject to the conditions
                of the Eastman Executive Deferred Compensation Plan, as the same
                now
                exists or may be amended hereafter (the "EDCP"). If the participant
                chooses to defer the Award, the Award shall be converted into the
                right to
                receive a cash payment.

            

    

    

    
      	
              (e)
                

            	
              Award
                Deferral to the EDCP.
                In the event that all or any portion of an Award is converted into
                a right
                to receive a cash payment pursuant to Sections 9(c) or 9(d), except
                as
                otherwise provided in this Section with respect to Section 16 insiders,
                an
                amount representing the Fair Market Value, as of the date the Common
                Stock
                covered by the Award otherwise would be delivered to the participant,
                of
                the Actual Grant Amount (or the deferred portion thereof) will be
                credited
                to the Stock Account of the EDCP, and hypothetically invested in
                units of
                Common Stock. Notwithstanding
                the foregoing, for each Section 16 insider electing to defer the
                Award,
                the deferrable amount, when initially credited to the participant's
                EDCP
                Account, shall be held in a participant's Interest Account until
                the next
                date that dividends are paid on Common Stock, and on such date the
                deferrable amount that would have been initially credited to the
                participant's Stock Account but for this sentence shall be transferred,
                together with allocable interest thereon, to the participant's Stock
                Account, subject to provisions set forth in the EDCP. Thereafter,
                such amount shall be treated in the same manner as other investments
                in
                the EDCP and shall be subject to the terms and conditions
                thereof.

            

    

    

    Section
      10. No Rights as Stockholder.
      No
      certificates for shares of Common Stock shall be issued under this Subplan
      nor
      shall any participant have any rights as a stockholder as a result of
      participation in this Subplan, until the Actual Grant Amount has been determined
      and such participant has otherwise become entitled to an Award under the terms
      of the Plan and this Subplan. In particular, no participant shall have any
      right
      to vote or to receive dividends on any shares of Common Stock under this
      Subplan, until certificates for such shares have been issued as described above;
      provided, however, that if payment of all or any portion of an Award under
      this
      Subplan has been deferred pursuant to Section 9 of this Subplan or
      otherwise, but such Award otherwise has become payable hereunder, then during
      the period during which payment is deferred, the deferred Award shall be
      credited with additional units of Common Stock, and (if applicable) fractions
      thereof, based on any dividends declared on the Common Stock, in accordance
      with
      the terms of the EDCP.

    

    
      
        
          83

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      11. Application of Plan.
      The
      provisions of the Plan shall apply to this Subplan, except to the extent that
      any such provisions are inconsistent with specific provisions of this Subplan.
      In particular, and without limitation, Section 11 (relating to performance
      shares), Section 12 (relating to qualification of Awards as "performance-based"
      under Code Section 162(m)), Section 17 (relating to nonassignability),
      Section 18 (relating to adjustment of shares available), Section 19 (relating
      to
      withholding taxes), Section 20 (relating to noncompetition and confidentiality),
      Section 21 (relating to regulatory approvals and listings), Section 24 (relating
      to the governing law), Section 25 (relating to changes in ownership), Section
      26
      (relating to changes in control), Section 27 (relating to no rights to
      employment or participation), Section 28 (relating to no rights, title, or
      interest in Company assets), and Section 29 (relating to securities laws) shall
      apply to this Subplan. 

    

    Section
      12. Adjustment of Actual Grant Amount.
      The
      Committee may, in its sole discretion, adjust the Actual Grant Amount to reflect
      overall Company performance and business and financial conditions. 

    

    Section
      13. Amendments.
      The
      Committee may, from time to time, amend this Subplan in any manner.

    

    
      
        
          84

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        EXHIBIT 10.04

      

    

    

    EXHIBIT
      A

    

    

    Eastman
      Chemical Company

    Performance
      Share Award Grant Table

    2006-2008
      Cycle

    

    

    

    

    ON
      FILE
      IN GLOBAL COMPENSATIION

    

    
      
        
          85

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          EXHIBIT
            10.04

        

      

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    EXHIBIT
      B

    

    

    Award
      Multiplier Table

    

    
      	
              Eastman
                TSR Relative to Comparison Companies

            	
               

              Differential
                from Target Return on Capital

            
	 	
              <-7%

            	
              -5%
                to 

              -7%

            	
              -3
                to 

              -5%

            	
              -1
                to 

              -3%

            	
              -1
                to +1%

            	
              +1
                to +3%

            	
              +3
                to +5%

            	
              +5
                to +7%

            	
              +7
                to +10%

            	
              >10%

            
	
              0-19%(
                5th
                quintile)

            	
              0.0

            	
              0.0

            	
              0.0

            	
              0.0

            	
              0.6

            	
              0.8

            	
              1.0

            	
              1.3

            	
              1.6

            	
              1.9

            
	
              20-39%(4th
                quintile)

            	
              0.0

            	
              0.0

            	
              0.0

            	
              0.4

            	
              0.8

            	
              1.0

            	
              1.3

            	
              1.6

            	
              1.9

            	
              2.2

            
	
              40-59%(3rd
                quintile)

            	
              0.0

            	
              0.0

            	
              0.4

            	
              0.6

            	
              1.0

            	
              1.3

            	
              1.6

            	
              1.9

            	
              2.2

            	
              2.5

            
	
              60-79%(2nd
                quintile)

            	
              0.0

            	
              0.4

            	
              0.6

            	
              1.0

            	
              1.3

            	
              1.6

            	
              1.9

            	
              2.2

            	
              2.5

            	
              2.8

            
	
              80-99%(1st
                quintile)

            	
              0.0

            	
              0.6

            	
              0.8

            	
              1.3

            	
              1.6

            	
              1.9

            	
              2.2

            	
              2.5

            	
              2.8

            	
              3.0

            

    

    

    

      
        
          
            86sec document

                                                                     EXHIBIT 4.1

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                     AND OTHER RIGHTS AND QUALIFICATIONS OF
                            SERIES A PREFERRED STOCK

         WHX CS Corp.,  a corporation  organized and existing  under the General
Corporation Law of the State of Delaware (the "CORPORATION"),

         DOES HEREBY CERTIFY:

         That pursuant to authority conferred upon the Board of Directors of the
Corporation   (the  "BOARD")  by  the  Certificate  of   Incorporation  of  said
Corporation,  and pursuant to the  provisions of Section  151(g) of the Delaware
General Corporation Law, the Board has duly determined that one thousand (1,000)
shares of  preferred  stock,  $0.01 par value  per  share,  shall be  designated
"Series A Preferred  Stock," and to that end the Board has adopted a  resolution
providing  for  the  designations,   preferences  and  relative,  participating,
optional or other rights, and the qualifications,  limitations and restrictions,
of the Series A Preferred Stock, which resolution is as follows:

         RESOLVED,  that the Certificate of Designations,  Preferences and Other
Rights and  Qualifications  of Series A Preferred  Stock dated  October 25, 2005
(the "CERTIFICATE OF DESIGNATIONS")  be, and hereby is, authorized and approved,
which Certificate of Designations  shall be filed with the Secretary of State of
the State of Delaware in the form as follows:

         1. DESIGNATION AND AMOUNT. One thousand (1,000) shares of the preferred
stock of the Corporation, $0.01 par value per share, shall constitute a class of
preferred  stock  designated  as  "Series  A  Preferred  Stock"  (the  "SERIES A
PREFERRED  STOCK").  The relative  rights,  preferences  and  limitations of the
Series A Preferred Stock shall be in all respects identical, share for share, to
the Common Stock of the Corporation, except as otherwise provided herein.

         2. DIVIDENDS.

            (a) The  holders  of  shares of Series A  Preferred  Stock  shall be
entitled to receive,  out of assets of the  Corporation  legally  available  for
payment,  an annual cash dividend at the rate of 6% of the Original  Issue Price
(as  hereinafter  defined) (or $306) per share of Series A Preferred  Stock (the
"PREFERRED  DIVIDENDS"),  payable  as  provided  in  Section  2(b)  hereof.  The
Preferred  Dividends shall accrue and compound  annually and shall be cumulative
from the date of initial  issuance  of shares of Series A  Preferred  Stock (the
"SERIES A ISSUANCE Date"),  whether or not declared by the Board of Directors of
the  Corporation  (the  "BOARD").  The amount of the Preferred  Dividends  shall
accrue and be computed on the basis of the actual  number of days elapsed in any
period.  The dividend rights of the holders of Series A Preferred Stock shall be
senior in all  respects to the dividend  rights of all other  holders of capital
stock now or hereafter outstanding of the Corporation.

            (b) The  Preferred  Dividends  shall be  payable in cash or in kind,
whether or not declared by the Board, upon the effective date of the earliest of
(i) a Liquidation (as hereinafter defined) or (ii) a Disposition Transaction (as
hereinafter defined) or (iii) a Redemption pursuant to Section 5.

            (c) The  Corporation may not declare or pay any dividend or make any
distribution of assets on, or redeem,  purchase or otherwise acquire,  shares of
capital  stock of the  Corporation  ranking pari passu or junior to the Series A
Preferred  Stock as to the payment of  dividends or the  distribution  of assets
upon  liquidation,  dissolution  or winding  up,  unless all  accrued but unpaid
Preferred Dividends have been or are contemporaneously paid.

          3. RIGHTS ON LIQUIDATION, MERGER, SALE, ETC.

            (a) In  the  event  of any  voluntary  or  involuntary  liquidation,
dissolution or winding up of the Corporation (each, a "LIQUIDATION"), the assets
of the Corporation available for distribution to its stockholders,  whether from
capital,  surplus or earnings,  shall be distributed  in the following  order of
priority:

                (i) The holders of Series A Preferred Stock shall be entitled to
          receive, prior and in preference to any distribution to the holders of
          Common Stock or any other class of the  Corporation's  capital  stock,
          whether now existing or hereafter created,  for each share of Series A
          Preferred  Stock held by such  holders,  an amount equal to the sum of
          (A) $5,100 (the  "ORIGINAL  ISSUE  PRICE"),  subject to  adjustment as
          provided  below,  plus (B) an amount  equal to all  accrued but unpaid
          Preferred Dividends on such share of Series A Preferred Stock (whether
          or not  declared by the Board) as of the date such  payment is made to
          the  holders  thereof.  If upon any  Liquidation,  the  assets  of the
          Corporation   available  for  distribution  to  its  stockholders  are
          insufficient  to pay the holders of Series A Preferred  Stock the full
          preference  amount to which they  shall be  entitled,  the  holders of
          Series A Preferred  Stock shall share pro rata in any  distribution of
          assets in accordance with their applicable full preference amounts.

                (ii)  After  distribution  of the  amounts  set forth in Section
          3(a)(i) hereof, the remaining assets of the Corporation  available for
          distribution,  if any, to the stockholders of the Corporation shall be
          distributed to the holders of issued and outstanding  shares of Common
          Stock.

            (b) For purposes of this Section 3, any of the  following  (each,  a
"DISPOSITION  TRANSACTION")  shall be treated as a Liquidation (unless otherwise
determined  by the holders of at least a majority of the  outstanding  shares of
Series  A  Preferred  Stock,  voting  as a  separate  class):  (i) a  merger  or
consolidation  of the Corporation  with or into any other Person (as hereinafter
defined)  (but  excluding  any  merger   effected  solely  for  the  purpose  of
reincorporating  into another  state) or the merger of any other Person into the
Corporation, in either case in which the stockholders of the Corporation receive
distributions  in cash or  securities  of  another  Person  as a result  of such
consolidation or merger,  or a sale of capital stock of the Corporation,  and in
which the stockholders of the Corporation  immediately prior to such event hold,
immediately after such event, less than a majority of the outstanding  shares of
capital  stock  or a  majority  of the  outstanding  voting  power  of the  then
outstanding  securities  ordinarily  (apart from rights  occurring under special
circumstances)  having the right to vote in the  election  of  directors  of the
surviving  or  successor  entity or its  parent,  or (ii) the direct or indirect
sale,  lease,  exchange  or other  transfer of all or  substantially  all of the
property  and assets of the  Corporation.  For purposes of this  Certificate  of

                                       2

this Certificate of Designatons, "PERSON" shall mean an individual, partnership,
corporation,  limited liability  company,  business trust,  joint stock company,
trust,  unincorporated  association,  joint venture,  governmental  authority or
other entity of whatever nature.

            (c) Upon consummation of a Disposition Transaction,  the Corporation
shall  pay or cause to be paid to the  holders  of Series A  Preferred  Stock an
amount equal to the amount they would be entitled to receive pursuant to Section
3(a)  hereof  out  of any  and  all  assets  of the  Corporation  available  for
distribution,  including but not limited to amounts paid to the  Corporation  in
connection with such  Disposition  Transaction.  The amount payable  pursuant to
this  Section  3(c)  shall be  payable  in full to the  holders  of the Series A
Preferred   Stock   immediately   following  the  closing  of  the   Disposition
Transaction,  notwithstanding  any  delay  in the  receipt  of  the  Disposition
Proceeds  or any part  thereof by virtue of any escrow  arrangement,  promissory
note, deferred payment of proceeds or otherwise;  PROVIDED, HOWEVER, that in the
event the Corporation does not have sufficient assets available for distribution
to pay the  holders of Series A Preferred  Stock the entire  amount owed to them
pursuant  to Section  3(a),  then the  Corporation  shall pay such  holders  the
maximum amount  available to the Corporation for distribution at the time of the
closing and the  remaining  amounts owed to such holders shall be payable by the
Corporation as soon as such funds become available for distribution.

4. VOTING RIGHTS.  (a) So long as any shares of Series A Preferred  Stock remain
outstanding,  in addition to the rights  specified in Section  4(b) hereof,  the
holders  of  shares  of  Series  A  Preferred  Stock  shall be  entitled  voting
separately  as a class  (with no other  stockholders  voting),  to  approve  all
matters  that  affect the  rights,  value,  or ranking of the Series A Preferred
Stock.

            (b) The  Corporation  shall  not,  so long as any shares of Series A
Preferred Stock remain outstanding,  without the affirmative consent or approval
of the holders of a majority of the shares of the Series A Preferred  Stock then
outstanding,  voting as a  separate  class,  given at a meeting  called for such
purpose,  for which  notice  shall  have been  given to the  holders of Series A
Preferred Stock, or by written consent:

                (i) in any  manner  alter or change  the  designations,  powers,
            preferences  or  rights,  or  the  qualifications,   limitations  or
            restrictions of the Series A Preferred Stock;

                (ii) take any  action to  increase  or  decrease  the  number of
            authorized shares of any preferred stock of the Corporation;

                (iii) in any  manner  authorize,  create  or issue  any class or
            series of capital stock ranking,  in any respect including,  without
            limitation,  as to payment of dividends,  distribution  of assets or
            redemptions,  senior to or PARI PASSU  with the  Series A  Preferred
            Stock;  or  authorize,  create or issue  any  shares of any class or
            series  of  any  bonds,  debentures,   notes  or  other  obligations
            convertible  into or exchangeable  for, or having optional rights to
            purchase,  or any options,  warrants or other rights to acquire, any
            shares having any such preference or priority;

                (iv) set aside  assets for a sinking or other  similar  fund for
            the purchase,  redemption,  or retirement  of, or redeem,  purchase,
            retire,  or  otherwise  acquire any shares of the Common Stock or of

                                       3

            any other capital stock of the Corporation, whether now or hereafter
            outstanding;

                (v) make or declare,  directly or  indirectly,  any dividend (in
            cash,  return of  capital,  or any other form of assets) on, or make
            any other payment or distribution on account of, the Common Stock or
            of any other capital stock of the Corporation  ranking junior to the
            Series A  Preferred  Stock as to the  payment  of  dividends  or the
            distribution of assets upon liquidation,  dissolution or winding up,
            whether now or hereafter outstanding;

                (vi)  take any  action  to amend,  modify,  alter or repeal  any
            provision of its Certificate of  Incorporation or By-laws that would
            in any way adversely affect the holders of Series A Preferred Stock;

                (vii)  reclassify the shares of Common Stock or any other shares
            or any class or series of capital stock hereafter  created junior to
            the Series A  Preferred  Stock into shares of any class or series of
            capital  stock (A)  ranking,  either  as to  payment  of  dividends,
            distribution of assets or redemptions,  senior to or PARI PASSU with
            the Series A Preferred  Stock, or (B) which in any manner  adversely
            affects the holders of Series A Preferred Stock;

                (viii) make or permit to remain  outstanding  any  investment in
            any Person,  except  investments  in (x) direct  obligations  of the
            United States of America or any agency thereof;  (y) certificates of
            deposit  issued by any commercial  bank operating  within the United
            States  of  America   having   capital  and  surplus  in  excess  of
            $500,000,000;   and  (z)  money  market  instruments  (or  interests
            therein)  or money  market fund units  purchased  through a national
            bank or securities brokerage firm registered with the SEC and SIPC;

                (ix) directly or indirectly, create, incur, assume, or permit to
            continue in existence,  any mortgage, deed of trust, lien, charge or
            encumbrance on, or security interest in, or pledge or deposit of, or
            conditional sale or other title retention agreement with respect to,
            any property or asset now owned or leased or  hereafter  acquired or
            leased by the Corporation or any subsidiary, except:

                     (A)  liens in  connection  with  indebtedness  or for which
            approval  of the  holders of the Series A  Preferred  Stock has been
            obtained;

                     (B) liens for taxes,  assessments and governmental charges,
            the payment of which is being  contested by the  Corporation in good
            faith by  appropriate  proceeds  promptly  instituted and diligently
            conducted  and  for  which  the  Corporation  has  established  such
            reserves  as shall be  required  by  generally  accepted  accounting
            principles and approved by the Corporation's auditors;

                     (C)  liens  in  connection   with  workers'   compensation,
            unemployment insurance or other social security obligations;

                                       4

                     (D) statutory mechanic's, workmen's, materialmen's or other
            like  liens  arising  in the  ordinary  course  of  business  of the
            Corporation in respect of obligations which are not yet due or which
            are being contested in good faith with  appropriate  reserves having
            been established therefor;

                     (E)  other  liens or  encumbrances  upon the  assets of the
            Corporation  incidental  to  the  conduct  of  the  business  of the
            Corporation  or to the ownership of the  properties or assets of the
            Corporation,   which  were  not  incurred  in  connection  with  the
            borrowing  of money or the  obtaining  of  credit  and  which do not
            materially detract from the value of the properties or assets of the
            Corporation  or materially  adversely  affect the  operations of the
            Corporation;

                (x)  enter  into or  permit  any  subsidiary  to enter  into any
            transaction  with any of the  Corporation's  officers,  directors or
            employees  or any Person  directly or  indirectly  controlled  by or
            under common  control with the  Corporation  or any of its officers,
            directors  or  employees  (a  "RELATED  PARTY")  including,  without
            limitation,  any transaction  for the purchase,  sale or exchange of
            property or the rendering of any service to or by any Related Party,
            except  for  transactions  entered  into in the  ordinary  course to
            employees approved by the Board; and

                (xi) engage in any activity  other than  purchasing,  holding or
            selling   shares  of  CoSine   Communications,   Inc.,   a  Delaware
            Corporation;

5.   REDEMPTION.

            (a)  REDEMPTION.  Series A Preferred  Stock shall be redeemed by the
Corporation out of funds lawfully available therefor at a price (the "REDEMPTION
PRICE") equal to the Original  Issuance Price per share, plus an amount equal to
all accrued but unpaid Preferred  Dividends thereon (whether or not declared) on
the first  anniversary  of the Series A Issuance  Date, or at the sole option of
the Board of  Directors,  on any earlier  date.  The  Redemption  Price shall be
payable on the date of redemption.  Except as provided in the next sentence, the
redemption  shall  be of  all  outstanding  Series  A  Preferred  Stock.  If the
Corporation  does not have sufficient  funds legally  available to redeem on any
redemption date all Series A Preferred Stock and of any other class or series of
stock to be redeemed on such redemption date, the Corporation shall redeem a pro
rata  portion  of each  holder's  redeemable  shares of such  stock out of funds
legally  available  therefor,  based  on  the  respective  amounts  which  would
otherwise  be payable in respect  of the shares to be  redeemed  if the  legally
available funds were sufficient to redeem all such shares,  and shall redeem the
remaining  shares  to  have  been  redeemed  as soon as  practicable  after  the
Corporation  has  funds  legally  available  therefor.  At any time at which the
Corporation is obligated to redeem any shares hereunder and fails to redeem such
shares  (whether as a result of legal  prohibition  or otherwise) the holders of
majority of the then outstanding  Series A Preferred Stock shall  immediately be
entitled, by written action and without need for notice of meeting, to elect and
add to the Board of  Directors  such  number of  directors  as is  necessary  to
constitute a majority of the board, which directors shall serve until all future
redemption payments have been made.

                                       5

            (b)  REDEMPTION  NOTICE.  Written  notice  of  the  redemption  (the
"REDEMPTION NOTICE") shall be mailed,  postage prepaid, to each holder of record
of Series A  Preferred  Stock,  at its post  office  address  last  shown on the
records of the Corporation,  or given by electronic  communication in compliance
with the provisions of the General Corporation Law of the State of Delaware, not
less than 10 days prior to the redemption  date.  Each  Redemption  Notice shall
state:

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

                (ii) the redemption date and the Redemption Price; and

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

            (c) SURRENDER OF CERTIFICATES;  PAYMENT. On or before the redemption
date, each holder of Series A Preferred Stock to be redeemed shall surrender the
certificate or certificates representing such shares to the Corporation,  in the
manner and at the place designated in the Redemption  Notice,  and thereupon the
Redemption  Price for such  shares  shall be  payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered  certificate  shall be canceled and retired.  In the event that
less than all of the Series A Preferred  Stock  represented by a certificate are
redeemed, a new certificate representing the unredeemed Series A Preferred Stock
shall promptly be issued to such holder.

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

            (e) REDEEMED OR OTHERWISE  ACQUIRED  SHARES.  Any shares of Series A
Preferred  Stock that are redeemed or otherwise  acquired by the  Corporation or
any of its  subsidiaries  shall be  automatically  and immediately  canceled and
shall not be reissued,  sold or transferred.  Neither the Corporation nor any of
its  subsidiaries may exercise any voting or other rights granted to the holders
of Series A Preferred Stock following redemption.

(6) WAIVER. Any right or privilege of the Series A Preferred Stock may be waived
(either  generally  or in a  particular  instance  and either  retroactively  or
prospectively)  by the written  consent of the holders of at least a majority of

                                       6

the Series A  Preferred  Stock then  outstanding  and any such  waiver  shall be
binding upon each holder of Series A Preferred Stock.

                            [SIGNATURE PAGE FOLLOWS]

                                       7

        [SIGNATURE PAGE TO THE CERTIFICATE OF DESIGNATIONS, PREFERENCES
        AND OTHER RIGHTS AND QUALIFICATIONS OF SERIES A PREFERRED STOCK]

         IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate of
Designations as of this 25th day of October, 2005.

                                       WHX CS CORP.

                                       By: /s/ Glen M. Kassan
                                           -------------------------------
                                           Name:  Glen M. Kassan
                                           Title: President

                                       8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]