Document:

Unassociated Document

    EXECUTION
      VERSION

    

     

    SIXTH
      AMENDMENT TO

    MASTER
      REPURCHASE AGREEMENT

    (Wachovia
      Transaction with the NorthStar Entities)

    

    

    THIS
      SIXTH AMENDMENT TO MASTER REPURCHASE AGREEMENT,
      dated
      as of November 6, 2006 (this “Amendment
      No. 6”),
      is
      entered into by and among NRFC
      WA HOLDINGS, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC”),
      NRFC
      WA HOLDINGS II, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC II”),
      NRFC
      WA HOLDINGS III, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC III”),
      NRFC
      WA HOLDINGS IV, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC IV”),
      NRFC
      WA HOLDINGS V, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC V”),
      NRFC
      WA HOLDINGS VI, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC VI”),
      NRFC
      WA HOLDINGS VII, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC VII”),
      NRFC
      WA HOLDINGS VIII, LLC,
      as a
      seller (together with its successors and permitted assigns, “NRFC VIII”
and,
      together with NRFC, NRFC II, NRFC III, NRFC IV, NRFC V,
      NRFC VI and NRFC VII, the “Sellers”),
      WACHOVIA
      BANK, NATIONAL ASSOCIATION,
      as the
      buyer (in such capacity, together with its successors and assigns, the
“Buyer”),
      NORTHSTAR
      REALTY FINANCE CORP.
      (together with its successors and permitted assigns, “NorthStar”),
      as a
      guarantor, and NORTHSTAR
      REALTY FINANCE L.P.,
      as a
      guarantor (together with its successors and permitted assigns, the “Operating
      Partnership”
and
      together with NorthStar, the “Guarantors”),
      NRFC
      SUB-REIT CORP.,
      as the
      pledgor (together with its successors and permitted assigns, the “Pledgor”),
      WELLS
      FARGO BANK, NATIONAL ASSOCIATION
      (f/k/a
      Wells Fargo Bank Minnesota, N.A.), as the custodian (in such capacity, together
      with its successors and permitted assigns, the “Custodian”),
      and
WACHOVIA
      BANK, NATIONAL ASSOCIATION,
      as the
      swap counterparty (in such capacity, together with its successors and assigns,
      the “Swap
      Counterparty”)
      and as
      the bank under the Account Agreement and the Securities Account Control
      Agreement (in such capacity, together with its successors and assigns, the
      “Bank”).
      Capitalized terms used and not otherwise defined herein shall have the meanings
      given to such terms in the Repurchase Agreement (as defined below).

    

    

    RECITALS

    

    WHEREAS,
      the
      Sellers, the Guarantors and the Buyer are parties to that certain Master
      Repurchase Agreement (including all annexes, exhibits and schedules thereto),
      dated as of July 13, 2005, as amended by that certain First Amendment to
      Master Repurchase Agreement, dated as of August 24, 2005 (“Amendment
      No. 1”),
      that
      certain Second Amendment to Master Repurchase Agreement, dated as of
      September 20, 2005 (“Amendment
      No. 2”),
      that
      certain Third Amendment to Master Repurchase Agreement, dated as of
      September 30, 2005 (“Amendment
      No. 3”),
      that
      certain Omnibus Amendment to Repurchase Documents and Joinder, dated as of
      October 21, 2005 (“Omnibus
      Amendment”),
      that
      certain Fourth Amendment to Master Repurchase Agreement, dated as of October
      28,
      2005 (“Amendment
      No. 4”),
      that
      certain Fifth Amendment to Master Repurchase Agreement, dated as of
      February 28, 2006 (“Amendment
      No. 5”)
      and
      that certain Second Omnibus Amendment to Repurchase Documents, dated as of
      June 6, 2006 (“Second
      Omnibus Amendment”)
      (as
      such Master Repurchase Agreement is amended,
      modified, restated, replaced, waived, substituted, supplemented or extended
      from
      time to time,
      including pursuant to Amendment No. 1, Amendment No. 2, Amendment
      No. 3, the Omnibus Amendment, Amendment No. 4, Amendment No. 5,
      the Second Omnibus Amendment and this Amendment No. 6, the “Repurchase
      Agreement”);
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    WHEREAS,
      the
      Sellers and the Guarantors desire to make certain modifications to the
      Repurchase Documents;

    

    WHEREAS,
      the
      Buyer is willing to modify the Repurchase Documents as requested by the Sellers
      and the Guarantors on the terms and conditions specified herein;
      and

    

    WHEREAS,
      the
      Custodian, the Swap Counterparty, the Pledgor and the Bank are parties to other
      Repurchase Documents and related agreements that may be affected, directly
      or
      indirectly, by this Amendment No. 6 and desire to evidence their agreement
      to the amendments and modifications set forth herein.

    

    NOW
      THEREFORE,
      in
      consideration of the foregoing recitals, and other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereto, intending to be legally bound, agree as follows:

    

    Section
      1. Amendments
      to Repurchase Agreement.
      

    

    (a) The
      following definitions in Section 1(a)
      of
Annex I
      to the
      Repurchase Agreement are hereby amended and restated in their entirety as
      follows:

    

    (1) “CDO
      Securitization Transaction:
      A CDO
      securitization transaction involving some or all of the Purchased Assets engaged
      in by N-Star REL CDO VIII.” 

    

    (2) “Maximum
      Amount:
      Means
      $200,000,000, provided that, during the Temporary Increase Period, upon the
      written request of the Sellers, the Buyer may, in its discretion (and in all
      cases subject to the Buyer obtaining internal credit approval), increase the
      Maximum Amount one (1) or more times to an aggregate amount not to exceed
      $750,000,000, which increase(s) shall be set forth in writing and acknowledged
      by the Sellers and the Guarantors; provided,
      however,
      after
      the Temporary Increase Period, (i) in the event Purchased Assets are
      repurchased and sold into the CDO Securitization Transaction on or prior to
      the
      Temporary Increase Expiration Date and the Sellers repay the Temporary Increase
      Indebtedness plus all accrued and unpaid Price Differential thereon and all
      related Breakage Costs on or before the Temporary Increase Expiration Date,
      the
      Maximum Amount shall be $200,000,000 and (ii) in the event the Sellers do
      not satisfy clause (i)
      of this
      definition, the Maximum Amount shall equal the lesser of (A) the sum of
      $200,000,000 and the highest Temporary Increase Amount and
      (B) $500,000,000; provided,
      further,
      however,
      on and
      after the Facility Maturity Date, the Maximum Amount shall mean the aggregate
      Purchase Price outstanding for all Transactions.”

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (3) “Temporary
      Increase Amount:
      An
      amount determined by the Buyer in its discretion, but in any event, not greater
      than $550,000,000.”

    

    (b) Clause (iv)
      of
Section 24
      of
Annex I
      to the
      Repurchase Agreement is amended and restated as follows:

    

    “(iv) the
      Maximum Amount shall thereafter equal the lesser of (A) the sum of
      $200,000,000 and the highest Temporary Increase Amount and
      (B) $500,000,000, in all cases subject to the definition of Maximum
      Amount,”.

    

    (c) Section 26
      of
Annex I
      to the
      Repurchase Agreement is amended by adding the following provision to the end
      thereof:

    

    “Notwithstanding
      anything contained in Section 26
      of this
Annex I
      to the
      contrary, the Buyer shall not apply the Over-Advance Advance Rate to any new
      Purchased Asset after the aggregate Purchase Price for all outstanding
      Transactions equals or exceeds $500,000,000 during the Temporary Increase
      Period.”

    

    Section
      2. Repurchase
      Documents in Full Force and Effect as Modified.

    

    Except
      as
      specifically modified hereby, the Repurchase Documents shall remain in full
      force and effect. All references to any Repurchase Document shall be deemed
      to
      mean each Repurchase Document as modified by this Amendment No. 6. This
      Amendment No. 6 shall not constitute a novation of the Repurchase
      Documents, but shall constitute a modification thereof. The parties hereto
      agree
      to be bound by the terms and conditions of the Repurchase Documents, as modified
      by this Amendment No. 6, as though such terms and conditions were set forth
      herein.

    

    Section
      3. Representations. 

    

    Each
      of
      the Sellers, each of the Guarantors and the Pledgor represent and warrant,
      as of
      the date of this Amendment No. 6, as follows:

    

    (a) it
      is
      duly incorporated or organized, validly existing and in good standing under
      the
      laws of its jurisdiction of organization and each jurisdiction where it conducts
      business;

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (b) the
      execution, delivery and performance by it of this Amendment No. 6 is within
      its corporate, company or partnership powers, has been duly authorized and
      does
      not contravene (1) its Governing Documents or its applicable resolutions,
      (2) any Applicable Law or (3) any Contractual Obligation, Indebtedness
      or Guarantee Obligation;

    

    (c) no
      consent, license, permit, approval or authorization of, or registration, filing
      or declaration with, any Governmental Authority or other Person is required
      in
      connection with the execution, delivery, performance, validity or enforceability
      by or against it of this Amendment No. 6;

    

    (d) this
      Amendment No. 6 has been duly executed and delivered by it;

    

    (e) this
      Amendment No. 6, as well as each of the Repurchase Documents as modified by
      this Amendment No. 6, constitutes its legal, valid and binding obligation,
      enforceable against it in accordance with its terms, except as enforceability
      may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
      or similar laws affecting the enforcement of creditors’ rights generally or by
      general principles of equity; 

    

    (f) no
      Default or Event of Default exists or will exist after giving effect to this
      Amendment No. 6; and

    

    (g) each
      of
      the Repurchase Documents is in full force and effect and no Seller, no Guarantor
      or the Pledgor has any defense, offset, counterclaim, abatement, right of
      rescission or other claims, legal or equitable, available to any Seller, any
      Guarantor, the Pledgor or any other Person with respect to this Amendment
      No. 6, the Repurchase Agreement, the Repurchase Documents or any other
      instrument, document and/or agreement described herein or therein, as modified
      and amended hereby, or with respect to the obligation of the Sellers and the
      Guarantors to repay the Obligations and other amounts due under the Repurchase
      Documents.

    

    Section
      4. Conditions
      Precedent.

    

    The
      effectiveness of this Amendment No. 6 is subject to the following
      conditions precedent: (i) delivery to the Buyer of this Amendment
      No. 6 duly executed by each of the parties hereto and consented to by the
      Swap Counterparty and the Custodian; (ii) delivery to the Buyer of a
      Compliance Certificate executed by the Sellers and the Guarantors acceptable
      to
      the Buyer in its discretion; (iii) delivery by the Sellers and the
      Guarantors to the Buyer of a certification of Purchased Assets intended to
      be
      repurchased and sold into the up-coming CDO Securitization Transaction;
      (iv) the payment of all reasonable legal fees and expenses of Moore &
Van Allen PLLC, as counsel to the Buyer, in the amount to be set forth on a
      separate invoice; and (v) such other documents, agreements or
      certifications as the Buyer may reasonably require. 

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Section
      5. Miscellaneous.

    

    (a) This
      Amendment No. 6 may be executed in any number of counterparts (including by
      facsimile), and by the different parties hereto on the same or separate
      counterparts, each of which shall be deemed to be an original instrument but
      all
      of which together shall constitute one and the same agreement.

    

    (b) The
      descriptive headings of the various sections of this Amendment No. 6 are
      inserted for convenience of reference only and shall not be deemed to affect
      the
      meaning or construction of any of the provisions hereof.

    

    (c) This
      Amendment No. 6 may not be amended or otherwise modified, waived or
      supplemented except as provided in the Repurchase Agreement.

    

    (d) The
      interpretive provisions of Section 1(b)
      of
Annex I
      of the
      Repurchase Agreement are incorporated herein mutatis mutandis.

    

    (e) This
      Amendment No. 6 represents the final agreement among the parties and may
      not be contradicted by evidence of prior, contemporaneous or subsequent oral
      agreements between the parties. There are no unwritten oral agreements between
      the parties.

    

    (f) THIS
      AMENDMENT NO. 6 AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
      AMENDMENT NO. 6 SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
      ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
      CONFLICT OF LAWS PROVISIONS.

    

    

    [REMAINDER
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        5

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Amendment No. 6 to be executed by their respective
      officers thereunto duly authorized, as of the date first above
      written.

     

    
      	THE
              SELLERS:	
              NRFC
                WA HOLDINGS, LLC,

              a
                Delaware limited liability company

              

              By:
                /s/ Daniel Gilbert

              Name:
                Daniel Gilbert

              Title:
                Executive Vice President

              

              Address
                for Notices:

              

              NRFC
                WA Holdings, LLC

              c/o
                NorthStar Realty Finance Corp.

              527
                Madison Avenue

              New
                York, New York 10022

               

            

    

    
      	 	
              Attention:

            	Andy Richardson
Richard
              McCready
              Daniel
                R. Gilbert

            
	 	
              Facsimile
                No.: 

            	
              (212)
                208-2651

              (212)
                319-4558

            
	 	
              
                Confirmation
                No.:

               

               

            	
              
                (212)
                  319-2618

                (212)
                  319-2623

                (212)
                  319-3679

              

            
	 	 	 
	 	
              with a copy to:

               

              
                Paul
                  Hastings Janofsky & Walker LLP

                75
                  East 55th
                  Street

                New
                  York, New York 10022

              

            
	 	
              Attention: 

            	
              Robert
                J. Grados, Esq.

            
	 	Facsimile No.:	(212) 230-7830
	 	Confirmation No.:	
              (212)
                318-6923

            

    

        

    

    

    [SIGNATURES
      CONTINUED ON FOLLOWING PAGE]

    

    
      
         

      

      
        S-1

        
          

        

      

      
         

      

    

     

     

    
      	THE BUYER:	
              WACHOVIA BANK, NATIONAL

              ASSOCIATION,
                a
                national banking association

            
	 	
              By:
                /s/
                Joseph F. Cannon

              Name:
                 Joseph
                F. Cannon

              Title:
                Vice President

              

              Wachovia
                Bank, National Association

              One
                Wachovia Center, Mail Code: NC0166

              301
                South College Street

              Charlotte,
                North Carolina 28288

            
	
            	Attention: 	
              Joseph F. Cannon,

              Vice President

            
	 	Facsimile No.:	(704) 715-0066
	 	Confirmation No.:	 (704)
              383-2324

    

      

     

    [ADDITIONAL
      SIGNATURE PAGES INTENTIONALLY OMITTED]

    

    
      
         

      

      
        S-2Exhibit
      4.1.1

     

    RONCO
      CORPORATION 

     

    
      
        

      

    

    

    AMENDED
      AND RESTATED 

    DESIGNATION
      OF

    POWERS,
      PREFERENCES AND RIGHTS OF

    SERIES
      A
      CONVERTIBLE PREFERRED STOCK,

    PAR
      VALUE
      $0.00001 PER SHARE

     

    
      

    

    

    Pursuant
      to Section 151(g) of the Delaware General

    Corporation
      Law

    

    
      

    

     

    IT
      IS
      HEREBY CERTIFIED that:

    

    1.
      The
      name of the company (hereinafter called this "Corporation") is Ronco
      Corporation, a corporation organized and now existing under the Delaware General
      Corporation Law (the "DGCL").

    

    2.
      The
      certificate of incorporation of this Corporation (the "Certificate of
      Incorporation") authorizes the issuance of Twenty Million (20,000,000) shares
      of
      preferred stock, par value $0.00001 per share (the "Preferred Stock"), and
      expressly vests in the Board of Directors of this Corporation the authority
      to
      issue any or all of said shares in one or more series by resolution or
      resolutions, to establish from time to time the number of shares to be included
      in such series and to fix the designations, powers, preferences and rights
      of
      the shares of each such series and the qualifications, limitations or
      restrictions of each series to be issued.

    

    3.
      The
      Board of Directors of this Corporation, pursuant to the authority expressly
      vested in it pursuant to the Certificate of Incorporation and pursuant to the
      provisions of Section 151(g) of the DGCL, adopted a resolution authorizing
      Twenty Million (20,000,000) shares of Series A Convertible Preferred Stock
      (the
      "Series A Preferred"), of which Thirteen Million Two Hundred Sixty-Two Thousand
      Six Hundred Four (13,262,604) shares are outstanding as of the date
      hereof.

    

    4.
      The
      Board of Directors of this Corporation and the requisite number of holders
      of
      the outstanding shares of the Series A Convertible Preferred Stock desire to
      amend the existing Designation of Powers, Preferences and Rights of the Series
      A
      Convertible Preferred Stock (the "Original Certificate of Designation"),
      pursuant to this Amended and Restated Designation of Powers, Preferences and
      Rights of the of Series A Convertible Preferred Stock (this "Certificate of
      Designation").

    

    5. The
      following resolutions were duly adopted by the Board of Directors of the
      Corporation and by the requisite number of holders of the Corporation’s Series A
      Convertible Preferred Stock:

    

    "RESOLVED,
      that the Board of Directors (the "Board of Directors") of Ronco Corporation
      (this "Corporation") hereby authorizes the issuance of a series of preferred
      stock and fixes its designation, powers, preferences and relative,
      participating, optional or other special rights, and qualifications, limitations
      and restrictions thereof, as follows:

    

    1.
      Designation and Amount. Twenty Million (20,000,000) shares of the Twenty Million
      (20,000,000) authorized shares of Preferred Stock of this Corporation are
      designated as shares of Series A Convertible Preferred Stock (the "Series A
      Preferred"). The Series A Preferred shall be issued or offered at a purchase
      price determined by the Board of Directors in its sole discretion. The holders
      of record of the Series A Preferred are sometimes referred to herein as the
      "Series A Holders." Capitalized terms used herein without definition shall
      have
      the respective meanings given them in Section 10.

    

    2.
      Dividends.

    

    (a)
      The
      Series A Holders of record, as of the Record Date (as defined below) therefor,
      shall be entitled to receive, out of funds legally available therefor,
      cumulative dividends on the Series A Preferred at a rate equal to $0.1885 per
      annum per share (equivalent to 5% of the Series A Original Issue Price annually)
      (the "Dividend Rate"), payable quarterly in arrears in cash or, at the option
      of
      this Corporation, in additional shares of the Series A Preferred. If and when
      this Corporation shall elect from time to time to pay such dividends in shares
      of the Series A Preferred, such shares will be valued at the then fair market
      value of the Series A Preferred as determined in good faith by the Board of
      Directors. Shares of Series A Preferred issued in payment of dividends may
      be
      fractional shares (rounded to the nearest one-tenth (0.1) of a
      share).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b)
      If
      the Board of Directors elects in the exercise of its sole discretion to issue
      shares of Series A Preferred in payment of dividends on the Series A Preferred
      with respect to any Dividend Payment Date (as defined below), this Corporation
      shall (1) give notice to the Series A Holders of this Corporation's election
      to
      exercise such right and (2) deliver, or cause to be delivered promptly after
      such Dividend Payment Date to each Series A Holder of record at the close of
      business on the Record Date for such dividend a stock certificate that evidences
      the number of shares of Series A Preferred arrived at in accordance with Section
      2(a). Notwithstanding the foregoing, this Corporation may not exercise its
      right
      to issue shares of Series A Preferred in payment of dividends on Series A
      Preferred if:

    

    (1)
      the
      number of shares of Series A Preferred at the time authorized, unissued and
      unreserved for all purposes, together with the number of shares of the Series
      A
      Preferred held in this Corporation's treasury, is insufficient to pay the
      dividends to be paid in shares of the Series A Preferred; or

    

    (2)
      the
      issuance or delivery of shares of the Series A Preferred as a dividend payment
      would require registration with or approval of any governmental authority under
      any law or regulation, and such registration or approval has not been effected
      or obtained.

    

    Shares
      of
      the Series A Preferred issued in payment of dividends on the Series A Preferred
      pursuant to this Section shall be, and for all purposes shall be deemed to
      be,
      validly issued, fully paid and nonassessable shares of Series A Preferred of
      this Corporation and shall be entitled to receive and be paid dividends in
      accordance with this Section 2; the issuance and delivery thereof is hereby
      authorized; and the dispatch in full thereof will be, and for all purposes
      shall
      be deemed to be, payment in full of the cumulative dividends to which holders
      are entitled on the applicable Dividend Payment Date.

    

    (c)
      All
      dividends shall accrue on any given share of Series A Preferred from the most
      recent date on which a dividend has been paid with respect to such share of
      Series A Preferred or, if no dividends have been paid, from the date of original
      issuance of such share of Series A Preferred. All dividends shall accrue from
      day to day, whether or not declared, based on the actual
      number of days elapsed and shall be payable quarterly in arrears on January
      1,
      April 1, July 1 and October 1 of each year (each a "Dividend Payment Date"),
      commencing on October 1, 2005; provided, that if a Dividend Payment Date is
      not
      a Trading Day, then the dividend shall be payable on the first immediately
      succeeding Trading Day. Dividends shall be paid to the holders of record of
      the
      Series A Preferred as their names appear on the stock transfer records of this
      Corporation on the date (the "Record Date") designated by the Board of Directors
      as the date of record for the payment of such dividend; and, further provided,
      that such Record Date may not precede the date upon which the resolution fixing
      the Record Date is adopted and may not be more than sixty (60) days prior to
      the
      Dividend Payment Date.

    

    (d)
      No
      dividends may be paid or set apart for such payment on any Junior Securities,
      as
      defined below, and no Junior Securities may be repurchased or otherwise retired
      for value nor may funds be set apart for payment with respect thereto, if
      dividends have not been paid in full on the Series A Preferred as provided
      in
      this Section 2.

    

    3.
      Rank.
      The Series A Preferred shall rank (i) senior to all shares of the Common Stock
      and (ii) senior to any class or series of capital stock of this Corporation
      hereafter created (collectively, with the Common Stock, the "Junior
      Securities"), in each case, as to any distribution of assets upon any
      liquidation, dissolution or winding up of this Corporation, whether voluntary
      or
      involuntary (all such distributions being referred to collectively as
      "Distributions").

    

    4.
      Liquidation Preference.

    

    (a)
      If
      any Distribution, occurs, the Series A Holders shall be entitled to receive,
      prior in preference to any Distribution to the holders of the Junior Securities,
      an amount per share equal to the greater of (i) the Series A Original Issue
      Price together with unpaid and accrued dividends (whether or not earned or
      declared) on the Series A Preferred, or (ii) the amount that such Series A
      Holder would have received if such Series A Holder converted its shares of
      Series A Preferred to shares of Common Stock immediately prior to the occurrence
      of the event giving rise to the Distribution. If upon any such Distribution,
      and
      after payment in full of any amounts due the creditors of this Corporation,
      the
      assets available to be distributed to the Series A Holders shall be insufficient
      to pay to the Series A Holders the full preferential amounts due to the Series
      A
      Holders, then the entire assets of this Corporation legally available for
      distribution shall be distributed among the Series A Holders pro
      rata.

    

    (b)
      Upon
      the completion of the Distribution required by Section 4(a), if assets remain
      in
      this Corporation, they shall be distributed to holders of Junior Securities
      in
      accordance with this Corporation's Certificate of Incorporation, including
      any
      duly adopted certificate(s) of designation.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c)
      At
      the option of each Series A Holder, (i) a sale, conveyance or disposition of
      all
      or substantially all the assets of this Corporation to any entity other than
      an
      Affiliate of this Corporation (a "Liquidating Transaction") or (ii) any
      Fundamental Change shall be deemed to be a liquidation, dissolution or winding
      up within the meaning of this Section 4; provided, that any Liquidating
      Transaction or any Fundamental Change that a Series A Holder elects in writing
      not to treat as a liquidation, dissolution or winding up of this Corporation
      shall not be treated as a liquidation, dissolution or winding up within the
      meaning of this Section 4(c), but instead shall be subject to Section 5(f).
      Any
      Series A Holder as to which any Liquidating Transaction or any Fundamental
      Change is treated as a liquidation, dissolution or winding up of this
      Corporation under this Section 4(c) is referred to herein as a "Series A
      Liquidating Holder."

    

    (d)
      Prior
      to the closing of a transaction described in Section 4(c) which would constitute
      a Liquidating Transaction or a Fundamental Change, this Corporation shall either
      (i) make all cash distributions it is required to make to the Series A
      Liquidating Holders pursuant to the first sentence of Section 4(a), (ii) set
      aside sufficient funds from which the cash distributions required to be made
      to
      the Series A Liquidating Holders can be made or (iii) establish an escrow or
      other similar arrangement with a third party pursuant to which the proceeds
      payable to this Corporation from a sale of all or substantially all the assets
      of this Corporation will be used to make the liquidating payments to the Series
      A Liquidating Holders immediately after the consummation of such sale. If this
      Corporation has not fully complied with any of the foregoing alternatives,
      this
      Corporation shall either: (x) cause such closing to be postponed until such
      cash
      distributions have been made or (y) cancel such transaction, in which event
      the
      rights of the Series A Holders or other arrangements shall be the same as
      existing immediately prior to such proposed transaction.

    

    5.
      Conversion. The holders of Series A Preferred have conversion rights (the
      "Conversion Rights") as follows:

    

    (a)
      Right
      to Convert. On and after the effective date of the Reverse Stock Split, each
      share of Series A Preferred shall be convertible into a share or shares of
      Common Stock at the office of this Corporation or any transfer agent for the
      Series A Preferred, without the payment of any additional consideration at
      the
      option of the Series A Holder thereof, into the number of fully paid and
      nonassessable shares of Common Stock which results from dividing the Series
      A
      Original Issue Price by the conversion value per share in effect for each share
      of Series A Preferred (the "Series A Conversion Value") at the time of
      conversion. The Series A Conversion Value shall initially be equal to the Series
      A Original Issue Price and shall be adjusted from time to time pursuant to
      the
      provisions of Section 5(d) and Section 5(e) and shall be subject to adjustment
      from time to time as provided below. The number of shares of Common Stock into
      which a share of Series A Preferred is convertible is hereinafter referred
      to as
      the "Series A Conversion Rate." Upon conversion of shares of Series A Preferred,
      any accrued and unpaid dividends thereon (whether or not earned or declared)
      shall be converted into shares of Common Stock at the then Market Price of
      the
      Common Stock.

    .

    (b)
      Mechanics of Conversion.

    

    (i)
      Before any holder of Series A Preferred shall be entitled to convert such shares
      into full shares of Common Stock and to receive certificates therefor, such
      holder shall surrender the certificate or certificates therefor, duly endorsed,
      at the office of this Corporation or of any transfer agent for the Series A
      Preferred, as the case may be, and shall give written notice to this Corporation
      at such office that such holder elects to convert the same. This Corporation
      shall, as soon as practicable thereafter, issue and deliver at such office
      to
      such holder a certificate or certificates for the number of shares of Common
      Stock to which such holder shall be entitled as aforesaid and a check payable
      to
      such holder in the amount of any cash amounts payable as the result of a
      conversion into fractional shares of Common Stock. Such conversion shall be
      deemed to have been made immediately prior to the close of business on the
      date
      of such surrender of the shares of Series A Preferred to be converted, and
      the
      person or persons entitled to receive the shares of Common Stock issuable upon
      such conversion shall be treated for all purposes as the record holder or
      holders of such shares of Common Stock on such date.

    

    (ii)
      No
      fractional shares of Common Stock shall be issued upon conversion of Series
      A
      Preferred. In lieu of any fractional shares to which the holder would otherwise
      be entitled, this Corporation shall pay cash equal to such fraction multiplied
      by the then effective Series A Conversion Value.

    

    (iii)
      This Corporation shall pay any and all issue and other taxes that may be payable
      in respect of any issuance or delivery of shares of Common Stock upon conversion
      of shares of Series A Preferred pursuant to this Section 5. This Corporation
      shall not, however, be required to pay any tax which may be payable in respect
      of any transfer involving the issuance and delivery of shares of Common Stock
      in
      a name other than that in which the shares of Series A Preferred so converted
      were registered, and no such issuance or delivery shall be made unless and
      until
      the person or entity requesting such issuance has paid to this Corporation
      the
      amount of any tax or has established, to the satisfaction of this Corporation,
      that such tax has been paid.

    

    (c)
      Reservation of Stock Issuable Upon Conversion. This Corporation shall at all
      times reserve and keep available out of its authorized but unissued shares
      of
      Common Stock solely for the purpose of effecting the conversion of the shares
      of
      Series A Preferred such number of its shares of Common Stock as shall from
      time
      to time be sufficient to effect the conversion of all outstanding shares of
      Series A Preferred. If at any time the number of authorized but unissued shares
      of Common Stock shall not be sufficient to effect the conversion of all then
      outstanding shares of Series A Preferred, this Corporation shall take such
      corporate action as may, in the opinion of its counsel, be necessary to increase
      its authorized but unissued shares of Common Stock to such number of shares
      as
      shall be sufficient for such purposes.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (d)
      Adjustments to Series A Conversion Value for Dilutive Issuances.

    

    (i)
      No
      Adjustment of Conversion Price. No adjustment in the Series A Conversion Value
      shall be made in respect of the issuance of Additional Shares of Common Stock
      unless the consideration per share for an Additional Share of Common Stock
      issued or deemed to be issued by this Corporation is less than the Series A
      Conversion Value in effect on the date of, and immediately prior to, such issue.
      No adjustment in the Series A Conversion Value shall be made pursuant to Section
      5(d)(iv) as a result of any stock dividend or subdivision which causes an
      adjustment in the Series A Conversion Value pursuant to Section 5(e) or any
      event which is subject to the provisions of Section 5(f).

    

    (ii)
      Deemed Issuance of Additional Shares of Common Stock. If this Corporation at
      any
      time or from time to time after the Series A Original Issue Date shall issue any
      Options or Convertible Securities or shall fix a record date for the
      determination of holders of any class of securities entitled to receive any
      such
      Options or Convertible Securities, then the maximum number of shares (as set
      forth in the instrument relating thereto without regard to any provisions
      contained therein for a subsequent adjustment of such number) of Common Stock
      issuable upon the exercise of such Options or, in the case of Convertible
      Securities and Options therefor, the conversion or exchange of such Convertible
      Securities, shall be deemed to be Additional Shares of Common Stock issued
      as of
      the time of such issue or, in case such a record date shall have been fixed,
      as
      of the close of business on such record date; provided, that Additional Shares
      of Common Stock shall not be deemed to have been issued unless the consideration
      per share (determined pursuant to Section 5(d)(iv)) of such Additional Shares
      of
      Common Stock would be less than the Series A Conversion Value in effect on
      the
      date of and immediately prior to such issue, or such record date, as the case
      may be; and provided, further, that in any case in which Additional Shares
      of
      Common Stock are deemed to be issued:

    

    (A)
      no
      further adjustment in the Series A Conversion Value shall be made upon the
      subsequent issue of Convertible Securities or shares of Common Stock upon the
      exercise of such Options or conversion or exchange of such Convertible
      Securities;

    

    (B)
      if
      such Options or Convertible Securities by their terms provide, with the passage
      of time or otherwise, for any increase or decrease in the consideration payable
      to this Corporation, or any increase or decrease in the number of shares of
      Common Stock issuable, upon the exercise, conversion or exchange thereof, the
      Series A Conversion Value computed upon the original issueof such Options or
      Convertible Securities (or upon the occurrence of a record date with respect
      to
      the issuance of such Options or Convertible Securities), and any subsequent
      adjustments based thereon shall, upon any such increase or decrease becoming
      effective, be recomputed to reflect such increase or decrease insofar as it
      affects such Options or the rights of conversion or exchange under such
      Convertible Securities; and

    

    (C)
      on
      the expiration or cancellation of any Options or the termination of the right
      to
      convert or exchange any Convertible Securities which shall have not been
      exercised, if the Series A Conversion Value shall have been adjusted upon the
      original issuance of such Options or Convertible Securities or shall have been
      subsequently adjusted pursuant to clause (B) above, the Series A Conversion
      Value shall be recomputed as if:

    

    (1)
      in
      the case of Convertible Securities or Options for Common Stock, the only
      Additional Shares of Common Stock issued were the shares of Common Stock, if
      any, actually issued upon the exercise of such Options or the conversion or
      exchange of such Convertible Securities, and the consideration received therefor
      was the consideration actually received by this Corporation for the issuance
      of
      all such Options, whether or not exercised, plus the consideration actually
      received by this Corporation upon such exercise, if any, or for the issuance
      of
      all such Convertible Securities, whether or not actually converted or exchanged,
      plus the consideration actually received by this Corporation upon such
      conversion or exchange, if any; and

    

    (2)
      in
      the case of Options for Convertible Securities, only the Convertible Securities,
      if any, actually issued upon the exercise of such Options were issued at the
      time of issuance of such Options and the consideration received by this
      Corporation for the Additional Shares of Common Stock deemed to have been then
      issued was the consideration actually received by this Corporation for the
      issuance of all such Options, whether or not exercised, plus the consideration
      deemed to have been received by this Corporation upon the issuance of the
      Convertible Securities with respect to which such Options were actually
      exercised;

    

    (D)
      no
      readjustment pursuant to clauses (B) and (C) above shall have the effect of
      increasing the Series A Conversion Value to an amount which exceeds the lower
      of
      (i) the Series A Original Issue Price and (ii) the Series A Conversion Value
      that would have resulted from any issuance of Additional Shares of Common Stock
      between the Series A Original Issue Date and the date of such
      readjustment.

    

    (iii)
      Adjustment of Series A Conversion Value Upon Issuance of Additional Shares
      of
      Common Stock. If this Corporation shall issue Additional Shares of Common Stock
      (including Additional Shares of Common Stock deemed to be issued pursuant to
      Section 5(d)(ii)) without consideration or for a consideration per share less
      than the Series A Conversion Value in effect on the date of and immediately
      prior to such issuance, then and in such event, the Series A Conversion Value
      shall be reduced, concurrently with such issuance, to a price (calculated to
      the
      nearest one cent) determined by dividing (A) an amount equal to the sum of
      (w)
      the number of shares of Common Stock outstanding immediately prior to such
      issue
      (determined on a fully-diluted basis; i.e., treating as issued and outstanding
      all shares of Common Stock issuable upon exercise, exchange or conversion of
      all
      outstanding options (to the extent then vested or exercisable), warrants or
      other securities exercisable or exchangeable for or convertible into, directly
      or indirectly, shares of Common Stock) multiplied by the then existing Series
      A
      Conversion Value plus (x) the consideration, if any, received by this
      Corporation (or deemed to have been received by this Corporation) upon such
      issue of Additional Shares of Common Stock, by (B) the sum of (Y) the number
      of
      shares of this Corporation's issued and outstanding Common Stock on a
      fully-diluted basis immediately before the issuance of such Additional Shares
      of
      Common Stock and (z) the number of shares of Additional Shares of Common Stock
      that were issued (or deemed to have been issued) in the transaction to which
      this Section 5(d)(iii) applies. Notwithstanding the foregoing provisions of
      this
      Section, if the operation of the foregoing provisions shall result in a new
      Series A Conversion Value which is less than or equal to the price paid or
      deemed to have been paid for such Additional Shares of Common Stock (the
      "Additional Shares Issue Price"), then the new Series A Conversion Value shall
      be the amount which is $0.00001 more than the Additional Shares Issue Price.
      If
      such Additional Shares of Common Stock are issued for no consideration, then
      the
      Additional Shares Issue Price shall be deemed to be $0.00001.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (iv)
      Determination of Consideration. For purposes of this Section 5(d), the
      consideration received by this Corporation for the issuance of any Additional
      Shares of Common Stock shall be computed as follows:

    

    (A)
      Cash
      and Property. Such consideration shall:

    

    (1)
      insofar as it consists of cash, be computed at the aggregate amount of cash
      received by this Corporation;

    

    (2)
      insofar as it consists of securities (i) if the securities are then traded
      on a
      national securities exchange or an Alternative Stock Exchange, then the value
      shall be computed based on the average of the closing prices of the securities
      on such exchange or system over the 30-day period ending three days prior to
      receipt of such securities by this Corporation, (ii) if the securities are
      actively traded over-the-counter, then the value shall be computed based on
      the
      average of the closing bid prices over the 30-day period ending three days
      prior
      to the receipt of such securities by this Corporation, and (iii) if there is
      no
      active public market, then the value shall be computed based on the fair market
      value thereof on the date of receipt of such securities by this Corporation,
      as
      determined in good faith by the Board of Directors;

    

    (3)
      insofar as it consists of property other than cash and securities, be computed
      at the fair market value thereof at the time of such issuance, as determined
      in
      good faith by the Board of Directors; and

    

    (4)
      if
      Additional Shares of Common Stock are issued together with other shares or
      securities or other assets of this Corporation for consideration which covers
      both, be the proportion of such consideration so received for such Additional
      Shares of Common Stock, computed as provided in clauses (A)(1), (A)(2) and
      (A)(3) of this Section 5(d)(iv), in each case as determined in good faith by
      the
      Board of Directors.

    

    (B)
      Options and Convertible Securities. The consideration per share received by
      this
      Corporation for Additional Shares of Common Stock deemed to have been issued
      pursuant to Section 5(d)(ii), relating to Options and Convertible Securities,
      shall be determined by dividing

    

    (1)
      the
      total amount, if any, received or receivable by this Corporation as
      consideration for the issue of such Options or Convertible Securities, plus
      the
      minimum aggregate amount of additional consideration (as set forth in the
      instruments relating thereto, without regard to any provision contained therein
      for a subsequent adjustment of such consideration) payable to this Corporation
      upon the exercise of such Options or the conversion or exchange of such
      Convertible Securities, or, in the case of Options for Convertible Securities,
      the exercise of such Options for Convertible Securities and the conversion
      or
      exchange of such Convertible Securities by

    

    (2)
      the
      maximum number of shares of Common Stock (as set forth in the instrument
      relating thereto, without regard to any provision contained therein for a
      subsequent adjustment of such number) issuable upon the exercise of such Options
      or the conversion or exchange of such Convertible Securities.

    

    (e)
      Adjustment to the Conversion Rate due to Stock Split, Stock Dividend or Other
      Similar Event. If, prior to the conversion of all the Series A Preferred, the
      number of outstanding shares of Common Stock is increased by a stock split,
      stock dividend or other similar event, the Series A Conversion Value shall
      be
      proportionately reduced, or if the number of outstanding shares of Common Stock
      is decreased by a combination or reclassification of shares, or other similar
      event, with the exception of the Reverse Stock Split, the Series A Conversion
      Value shall be proportionately increased.

    

    (f)
      Adjustment Due to Consolidation, Merger, Exchange of Shares, Recapitalization,
      Reorganization or Other Similar Event. If, prior to the conversion of all the
      Series A Preferred, (i) there shall be any merger, consolidation, exchange
      of
      shares, recapitalization, reorganization or other similar event, as a result
      of
      which shares of Common Stock of this Corporation shall be changed into the
      same
      or a different number of shares of the same or another class or classes of
      stock
      or securities of this Corporation or another entity, or (ii) there occurs a
      sale
      of all or substantially all of this Corporation's assets that is not deemed
      to
      be a liquidation, dissolution or winding
      up of this Corporation pursuant to Section 4(c), then the Series A Holders
      thereafter shall have the right to receive upon conversion of the shares of
      Series A Preferred held by them, upon the basis and upon the terms and
      conditions specified herein and in lieu of the shares of Common Stock
      immediately theretofore issuable upon conversion, (i) such stock, securities
      and/or other assets which the Series A Holders would have been entitled to
      receive in such transaction had the Series A Preferred, together with all unpaid
      and accrued dividends thereon (whether or not earned or declared), been
      converted immediately prior to such transaction, and in any such case
      appropriate provisions shall be made with respect to the rights and interests
      of
      the Series A Holders to the end that the provisions hereof (including, without
      limitation, provisions for the adjustment of the Series A Conversion Value
      and
      the Series A Conversion Rate) shall thereafter be applicable, as nearly as
      may
      be practicable in relation to any securities thereafter deliverable upon the
      exercise hereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (g)
      Certificates as to Adjustments. Upon each adjustment or readjustment of the
      Series A Conversion Value pursuant to Sections 5(d), (e) and (f) above, this
      Corporation at its expense promptly shall compute such adjustment or
      readjustment in accordance with the terms hereof and prepare and furnish to
      each
      holder of Series A Preferred a certificate of the Chief Financial Officer of
      this Corporation setting forth such adjustment or readjustment and showing
      in
      detail the facts upon which such adjustment or readjustment is based. This
      Corporation shall, upon the written request at any time of any holder of Series
      A Preferred, furnish or cause to be furnished to such holder a like certificate
      setting forth (i) such adjustments and readjustments, (ii) the then effective
      Series A Conversion Value, and (iii) the number of shares of Common Stock and
      the amount, if any, of other property which at the time would be received upon
      the conversion of each share of such Series A Preferred.

    

    (h)
      No
      Impairment. This Corporation will not, by amendment of its Certificate of
      Incorporation or through any reorganization, transfer of assets, merger,
      dissolution, issue or sale of securities or any other voluntary action, avoid
      or
      seek to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by this Corporation, but will at all times in good faith
      assist in the carrying out of all the provisions hereof and in the taking of
      all
      such action as may be necessary or appropriate to protect the Conversion Rights
      against impairment.

    

    6.
      Mandatory Conversion by Corporation.

    

    (a)
      If:

    

    (i)
      the
      Reverse Stock Split of this Corporation has become effective,

    

    (ii)
      the
      shares of Common Stock to be issued on any mandatory conversion of shares of
      the
      Series A Preferred pursuant to this Section 6 are Freely Tradeable,

    

    (iii)
      the
      Common Stock is listed on a Principal Market and trading on such market or
      exchange shall not have been suspended, or

    

    (iv)
      no
      Series A Preferred Breach or any event which, with the notice or passage of
      time, or both, would become an Series A Preferred Breach has occurred and is
      continuing,

    

    then
      this
      Corporation may, at its option, cause all of the outstanding Series A Preferred
      to be converted into shares of Common Stock, in accordance with Section 6(b),
      at
      any time and from time to time, if (x) the Market Price of the Common Stock
      for
      any twenty (20) of the thirty (30) most recent consecutive Trading Days prior
      to
      the giving of the notice referred to in Section 6(c) below equaled or exceeds
      the Target Price, and (y) the daily trading volume of the Common Stock for
      any
      twenty (20) of the thirty (30) most recent consecutive Trading Days prior to
      the
      giving of the notice referred to in Section 6 (c) below equaled or exceeds
      50,000 shares;

    

    (b)
      Each
      share of Series A Preferred shall be converted into a number of shares of Common
      Stock equal to the Series A Conversion Rate. Upon conversion of shares of Series
      A Preferred, any accrued and unpaid dividends thereon (whether or not earned
      or
      declared) shall be converted into shares of Common Stock at the then Market
      Price of the Common Stock.

    

    Notwithstanding
      the preceding, this Corporation may, at its sole discretion, pay any or all
      of
      the accrued and unpaid dividends in cash. Subject to the provisions of the
      DGCL,
      no fractional shares of Common Stock shall be issued on the mandatory
      conversion, but the number of shares shall be rounded up or down to the nearest
      whole number. The amount of any accrued and unpaid dividends that this
      Corporation elects to pay in cash shall be promptly sent to the holder thereof
      by means of check or other means provided by this Corporation.

    

    (c)
      This
      Corporation shall give thirty (30) days notice of its intent to convert in
      accordance with this Section no later than five (5) calendar days from the
      end
      of the thirty (30)-day period described above. Upon the giving of the notice
      referred to above, this Corporation shall be bound to convert the Series A
      Preferred as to which notice has been provided. During the 30-day notice period,
      holders of the Series A Preferred will retain their right to convert their
      shares of Series A Preferred in accordance with Section 5.

    

    7.
      Voting
      Rights. Each holder of outstanding shares of Series A Preferred shall be
      entitled to the number of votes equal to (i) prior to the effective date of
      the
      Reverse Stock Split, the product of eighty-nine (89) multiplied by the number
      of
      whole shares of Common Stock into which the shares of Series A Preferred held
      by
      such holder are then convertible (regardless of whether such conversion is
      permissible at that time), or (ii) subsequent to the effective date of the
      Reverse Stock Split, the number of whole shares of Common Stock into which
      the
      shares of Series A Preferred held by such holder are then convertible, with
      respect to any and all matters presented to the stockholders of this Corporation
      for their action or consideration. Except as provided by law, or the provisions
      of Section 8, holders of Series A Preferred shall vote together with the holders
      of Common Stock as a single class on any actions to be taken by the stockholders
      of this Corporation.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    8.
      Protective Provisions. So long as any shares of Series A Preferred are
      outstanding, this Corporation shall not without first obtaining the approval
      (by
      vote or written consent, as provided by the DGCL) of the Holders of outstanding
      shares of Series A Preferred constituting an 80% majority of the outstanding
      shares of Series A Preferred:

    

    (a)
      alter
      or change the rights, preferences or privileges of the Series A Preferred,
      including, but not limited to, the creation or authorization of any Senior
      Securities;

    

    (b)
      increase the size of the authorized number of Series A Preferred;
      or

    

    (c)
      do
      any act or thing not authorized or contemplated by the Certificate of
      Incorporation which would result in taxation of the Series A Holders under
      Section 305 of the Internal Revenue Code of 1986, as amended (or any comparable
      provision of the Internal Revenue Code as hereafter from time to time
      amended).

    

    If
      the
      Holders of outstanding shares of Series A Preferred constituting an 80% majority
      of the outstanding shares of Series A Preferred agree to allow this Corporation
      to alter or change the rights, preferences or privileges of the shares of Series
      A Preferred, pursuant to this Section, so as to affect adversely the Series
      A
      Preferred, then this Corporation will deliver notice of such approved alteration
      or change to the Series A Holders that did not agree to such alteration or
      change (the "Series A Dissenting Holders"), and the Series A Dissenting Holders
      shall thereafter have the right for a period of 30 days to convert pursuant
      to
      the terms of these Certificate of Incorporation as they exist prior to such
      alteration or change or continue to hold their shares of Series A Preferred
      subject to the approved alteration or change of the rights, preferences or
      privileges of the Series A Preferred.

    

    9.
      Status
      of Converted Stock. Whenever any shares of Series A Preferred are converted
      pursuant to Section 5, the shares so converted shall be canceled, shall return
      to the status of authorized but unissued preferred stock of no designated
      series, and shall not be issuable by this Corporation as Series A
      Preferred.

    

    10.
      Definitions. As used herein, the following terms shall have the following
      meanings:

    

    "Additional
      Shares of Common Stock" shall mean all shares of Common Stock issued (or,
      pursuant to Section 5(d)(ii), deemed to be issued) by this Corporation after
      the
      Series A Original Issue Date, other than shares of Common Stock issued or
      issuable:

    

    (i)
      upon
      conversion of shares of Series A Preferred;

    

    (ii)
      to
      officers, directors or employees of, or financial advisors or other consultants
      to, this Corporation pursuant to a Plan or Plans or pursuant to any acquisition,
      financing or other written agreement, including without limitation employment
      agreements, so long as any such Plan or written agreement has been approved
      by
      the Board of Directors; and

     

    (iii)
      as
      a dividend or distribution on Series A Preferred.

    

    "Affiliate"
      means, with respect to any Person, any other Person that directly, or indirectly
      through one or more intermediaries, controls, is controlled by, or is under
      common control with, the subject Person. For purposes of the term "Affiliate,"
      the term "control" (including the terms "controlling," "controlled by" and
      "under common control with") means the possession, direct or indirect, of the
      power to direct or to cause the direction of the management and policies of
      a
      Person, whether through the ownership of securities, by contract or
      otherwise.

    

    "Alternative
      Stock Exchange" means any other national stock exchange or the Nasdaq National
      Market or the Nasdaq Smallcap Market.

    

    "Board
      of
      Directors" means the Board of Directors of this Corporation.

    

    "Common
      Stock" shall mean the common stock, par value $0.00001 per share, of this
      Corporation.

    

    "Convertible
      Securities" shall mean any evidences of indebtedness, shares (other than Common
      Stock or Series A Preferred) or other securities convertible into or
      exchangeable for Common Stock.

    

    "Exchange
      Act" means the Securities Exchange Act of 1934, as amended.

    

    "Freely
      Tradeable" means, with respect to the Common Stock issuable upon the conversion
      or redemption of or, if relevant, on the payment of a dividend upon the Series
      A
      Preferred, that under the Securities Act the holders thereof may then offer
      and
      sell any amount of such outstanding securities to the public in the United
      States in transactions that are not brokers' transactions (as defined in the
      Securities Act) either (i) pursuant to an effective registration statement
      then
      in effect or (ii) pursuant to Rule 144(k) under the Securities Act. For purposes
      of determining whether such securities are Freely Tradeable, it shall be assumed
      that no affiliate of the issuer has ever held such securities from and after
      their issuance.

    

    "Fundamental
      Change" means

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (a)
      any
      consolidation or merger of this Corporation or any Subsidiary with or into
      another entity (other than a merger or consolidation of a Subsidiary into this
      Corporation or a wholly-owned Subsidiary) that has been approved by the Board
      of
      Directors where the stockholders of this Corporation immediately prior to such
      transaction do not collectively own at least 51% of the outstanding voting
      securities of the surviving entity of such consolidation or merger immediately
      following such transaction; or

    

    (b)
      the
      acquisition by a Person or entity or group of Persons or entities acting in
      concert as a partnership, limited partnership, syndicate or group, as a result
      of a tender or exchange offer, open market purchases, privately negotiated
      purchases or otherwise approved or consented to by the Board of Directors,
      of
      beneficial ownership of securities of this Corporation representing 50% or
      more
      of the combined voting power of the outstanding voting securities of this
      Corporation ordinarily (and apart from voting rights accruing in special
      circumstances) having the right to vote in the election of directors other
      than
      any such acquisition that arises from a transfer of outstanding securities
      of
      this Corporation that have voting power and not through action taken by this
      Corporation or any Subsidiary.

    

    "Majority
      Holders" means at any time the Holders of outstanding shares of Series A
      Preferred which shares constitute a majority of the outstanding shares of Series
      A Preferred.

    

    "Market
      Price" means with respect to any security on any date the VWAP of such security
      for such date on the Principal Market, as reported by Bloomberg Financial,
      L.P.

    

    "Options"
      shall mean rights, options or warrants to subscribe for, purchase or otherwise
      acquire either Common Stock or Convertible Securities.

    

    "Plan"
      shall mean a written stock grant, option plan or purchase plan or other employee
      stock incentive program.

    

    "Person"
      means any individual, corporation, partnership, association, trust or other
      entity or organization, including a government or political subdivision or
      any
      agency or instrumentality thereof.

    

    "Principal
      Market" means the NASD OTC Bulletin Board or any Alternative Stock Exchange
      on
      which the Common Stock is listed for trading which at such time constitutes
      the
      principal securities market for the Common Stock.

    

    "Property"
      means any kind of property or asset, whether real, personal, mixed, or tangible
      or intangible, and any interest therein.

    

    "Reverse
      Stock Split" means the 1 for 89 reverse stock split of this Corporation's Common
      Stock approved by the holders of Common Stock of this Corporation on May 31,
      2005 (the "Reverse Stock Split").

    

    "Securities
      Act" means the Securities Act of 1933, as amended.

    

    "Series
      A
      Original Issue Date" shall mean June 30, 2005.

    

    “Series
      A
      Original Issue Price” shall mean $3.77 per share.

    

    "Series
      A
      Preferred Breach" means any one of the following events:

    

    (1)
      any
      Fundamental Change;

    

    (2)
      this
      Corporation fails to declare or pay in full any dividend payable on the shares
      of Series A Preferred on the applicable Dividend Payment Date, and such failure
      is not cured with 30 days, or fails to issue, within three Trading Days, any
      Shares of Common Stock due upon the due conversion or redemption of any share
      of
      Series A Preferred;

    

    (3)
      the
      adoption of any amendment to the Certificate of Incorporation of this
      Corporation (other than (A) any such amendment which has been approved by the
      Majority Holders or (B) any Certificate of Designations for a series of
      preferred stock of this Corporation which (i) has been approved by the Majority
      Holders or (ii) creates any stock which is a Junior Security) which materially
      and adversely affects the rights of the Holders or the taking of any other
      action by this Corporation which materially and adversely affects the rights
      of
      the Holders;

    

    (4)
      this
      Corporation (A) fails to comply with any provision of Section 2(b), 4 or 8
      or
      (B) fails to comply in any material respect with Section 2 of the Subscription
      Agreement, and such breach continues for a period of 30 days after notice
      thereof to this Corporation from any Series A Holder;

    

    (5)
      any
      written representation or warranty of this Corporation made in or pursuant
      to
      any Transaction Document shall be false or misleading in any material respect
      when made or deemed made; or

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (6)
      this
      Corporation or any Subsidiary shall commence a voluntary case or other
      proceeding seeking liquidation, reorganization or other relief with respect
      to
      itself or its debts under any bankruptcy, insolvency or other similar law now
      or
      hereafter in effect or seeking the appointment of a trustee, receiver,
      liquidator, custodian or other similar official of it or any substantial part
      of
      its property, or shall consent to any such relief or to the appointment of
      or
      taking possession by any such official in an involuntary case or other
      proceeding commenced against it, or shall make a general assignment for the
      benefit of creditors, or shall fail generally to pay its debts as they become
      due or shall admit in writing its inability generally to pay its debts as they
      become due.

    

    "Subscription
      Agreement" means the Subscription Agreement, dated as of June 30, 2005, by
      and
      between this Corporation and the original holder pursuant to which the shares
      of
      Series A Preferred were issued.

    

    "Subsidiary"
      of any Person means any corporation of which at least amajority of the shares
      of
      stock having by the terms thereof ordinary voting power to elect a majority
      of
      the Board of Directors of such corporation (irrespective of whether or not
      at
      the time stock of any other class or classes of such corporation shall have
      voting power by reason of the happening of any contingency) is directly or
      indirectly owned or controlled by any one of or any combinations of this
      Corporation or one or more of its Subsidiaries.

    

    "Target
      Price" means 200% of the Series A Conversion Value at the time in
      effect.

    

    "Trading
      Day" means any day (other than a Saturday or Sunday) on which the American
      Stock
      Exchange or the Alternative Stock Exchange, as thecase may be, is open for
      business.

    

    "Transaction
      Documents" means, individually or collectively, the Subscription Agreements,
      the
      Original Certificate of Designation, and each other instrument statement or
      certificate given in writing in connection herewith or therewith.

    

    "VWAP"
      of
      any security on any Trading Day means the volume-weighted average closing price
      of such security on such Trading Day on the Principal Market, as reported by
      Bloomberg Financial, L.P. (based on a Trading Day from 9:30 a.m., Eastern Time,
      to 4:00 p.m., Eastern Time), using the AQR Function, for such Trading Day;
      provided, however, that during any periodthe VWAP is being determined, the
      VWAP
      shall be subject to adjustments acceptable to the Majority Holders for stock
      splits, stock dividends, combinations, and capital reorganizations, as
      applicable."

    

    IN
      WITNESS WHEREOF, this Certificate of Designations have been duly adopted by
      the
      Board of Directors of this Corporation and have been duly executed as the act
      and deed of this Corporation by its Secretary thereunto duly authorized this
      2nd
      day of August, 2006.

     

    
      	 	 	 
	 	
              RONCO
                CORPORATION

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Richard Allen
	 	
              
Richard
              F. Allen, Sr.
	 	
              President
                and Chief Executive Officer

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