Document:

Exhibit A
                  Red Oak Bank 2004 Incentive Stock Option Plan

RED OAK BANK

2004 INCENTIVE STOCK OPTION PLAN

1. Purpose of the Plan. This 2004 Incentive Stock Plan (this "Plan", in intended
to provide an additional incentive to Key Employees of Red Oak Bank (the
"Company"), in order that they may enter into or remain in the employ of the
Company and its Subsidiaries and contribute to the Company's progress and
success, by providing them with an opportunity to acquire or increase their
proprietary interest in the Company through receipt of Options to acquire the
Company's Common Stock. Accordingly, the Company shall, from time to time during
the effective period of this Plan, grant to Key Employees Options to purchase
shares of the Company's Common Stock in the manner and subject to the conditions
specified in this Plan.

2. Definitions.

      2.1. "Act" shall mean the New Jersey Bank Officers and Employees' Stock
Option Plan Act.

      2.2. "Board" shall mean the Board of Directors of the Company.

      2.3. "Cause" shall mean the Grantee's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty to the Company failure to perform
stated duties, willful violation of any law, rule or regulations (other than
traffic violations or similar offenses) or a final cease-and-desist order.
Notwithstanding the foregoing, the Grantee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him or
her a copy of a resolution duly adopted by the affirmative vote or less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to the Grantee and an opportunity
for him or her, together with counsel, to be heard before the Board) finding
that in the good faith opinion of the Board, the Grantee was guilty of conduct
justifying termination for Cause and specifying the particulars thereof in
detail.

      2.4. "Code" shall mean the Internal Revenue Code of 1986, as amended,
References to a section of the Code shall include such section as it is
currently in force, as it may be amended from time to time, and shall include
any substitute section.

      2.5 "Common Stock" shall mean the common stock, par value $5.00 per share,
of the Company, except as may be modified as provided in Section 13 herein.

      2.6. "Company" shall mean Red Oak Bank and any present or future parent or
subsidiary corporations (as defined in Section 424 of the Code) or any successor
to the Company or such corporations.

      2.7. "Committee" shall mean the individual s who are members of the
Resources and Planning Committee responsible for the administration of the Plan
as set forth in Section 3 herein.

      2.8. "Disability" shall mean permanent and total disability, as defined in
Section 22(e)(3) of the Code.

      2.9. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

      2.10. "Fair Market Value" shall mean the following:

<PAGE>

            (a) If any Common Stock is listed or admitted for trading on a
national securities exchange, then the closing price for each day shall be the
last reported sales price or, in case no such reported sales took place on such
day, the average of the last reported bid and asked prices, in either case on
the principal national securities exchange on which the common Stock is listed
or admitted in trading.

            (b) If the Common Stock is not at the time listed or admitted for
trading on any such exchange, then such price as shall be equal to the last
reported sales price, or if there is no such sales price, the average of the
last reported bid and asked prices, as reported by the National Association of
Securities Dealers Automated Quotation System ("Nasdaq") on such day.

            (c) If the Common Stock is not at the time quoted on Nasdaq, then
such price shall be equal to the last reported bid and asked prices on such day
as reported on the OTC Bulletin Board, or any similar reputable quotation and
reporting service if such quotation is not reported on the OTC Bulletin Board.

            (d) If the Common Stock is not traded in such manner that the
quotations referred to in this Section 2.10 are available for the period
required hereunder, then the Fair Market Price shall be the fair market value of
such share, as determined in good faith by the Committee using any reasonable
method of valuation as determined in its sole and absolute discretion.

      2.11. "Grantee" shall mean a Key Employee of the Company or any of its
Subsidiaries to whom an Option is granted.

      2.12. "ISO" or "Incentive Stock Option" shall mean an option to purchase
Common Stock granted pursuant to this Plan which is intended to meet the
requirements of Section 422 of the Code.

      2.13. "Key Employees" shall mean those employees (including executive
officers and directors who are also employees) of the Company and any
Subsidiaries who, in the judgment of the Committee, are considered important to
the future of the Company.

      2.14. "Non-Employees" shall mean a member of the Board of Directors of the
Company who is neither an employee nor an officer of the Company or any of its
Subsidiaries, and as otherwise defined in Rule 18b-3 of the Exchange Act.

      2.15. "Option" shall mean an ISO granted pursuant to this Plan.

      2.16. "Plan" shall mean the Red Oak Bank 2004 Incentive Stock Option Plan.

      2.17. "Subsidiary" shall mean any corporation (other then the Company) in
an unbroken chain of corporations beginning with the Company if, at the time an
Option is granted hereunder, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more if the total
combined voting power of all classes of stock in one of the other corporations
in the chain.

3.    Administration.

      3.1. "This Plan shall be administered by the Committee. The Committee
shall consist of three or more members, all of whom shall be Non-Employee
Directors. The Committee shall be appointed by, and shall serve at the pleasure
of, the Board. A majority of the members present at any meeting at which a
quorum is present, and any acts approved in writing by all of the members of the
Committee without a meeting, shall constitute the acts of the Committee.

<PAGE>

         3.2. Any discretionary authority vested in the Committee shall not be
exercised in contravention of the terms of this Plan.

         3.3. Subject to the provisions of this Plan and the applicable
requirements of federal and state law, the Committee shall have authority, in
its discretion, to take the following actions:

(l) to grant Options pursuant to this Plan:

            (m)   to determine the Key Employees to be granted Options under
                  this Plan; (n) to determine the number of shares of Common
                  Stock subject to each Option; (o) to determine the time or
                  times at which Options will be granted;

            (p)   to determine the option price of the shares of Common Stock
                  subject to each Option, which price shall be not less then the
                  minimum specified in Section 7 of this Plan;

            (q)   subject to the terms of this Plan, including, without
                  limitation, Section 15 hereof, to determine or change the time
                  or times when each Option becomes exercisable and the duration
                  of the exercise period;

            (r)   to prescribe for form or forms of the instructions evidencing
                  any Options granted under this Plan (which forms shall be
                  consistent with this Plan but need not be identical to one
                  another);

            (s)   to adopt, amend and rescind such rules and regulations as it
                  determines are necessary or advisable in the administration of
                  this Plan

            (t)   to construe and interpret this Plan, the rules and regulations
                  and the instruments evidencing Options granted under this Plan
                  and to make any and all other determinations deemed necessary
                  or advisable for the administration of this Plan;

            (u)   to delegate such administrative functions as it deems
                  appropriate and;

            (v)   in general, to exercise full and final authority (consistent
                  with this Plan) over all matters relating to this Plan, the
                  powers denominated above being by way of example and not of
                  limitation.

      3.4. Any interpretation, determination or other action made or taken by
the Committee shall be final, binding and conclusive on the Grantee.

      3.5. No member of the Committee shall be personally liable to the Company,
any officers or employees of the Company or the Company's shareholders for
damages for any action taken or determination made in good faith.

      3.6. Notwithstanding anything in this Plan to the contrary, the Committee
shall not grant Options which would cause the aggregate Fair Market Value,
determined as of the date of grant of Common Stock with an Option under this
Plan (or any other plan of the Company or its Subsidiaries granting ISOs) is
exercisable for the first time by any Grantee during any calendar year to exceed
$1,000,000 or such other amount as may be prescribed by the Code.

4. Shares Available for Options.

      4.1. The aggregate number of shares of Common Stock for which Options may
be granted under this Plan shall be 91,885 shares of Common Stock, subject to
adjustment as provided in Section 13. The Company shall reserve and keep
available an appropriate amount of Common Stock for issuance pursuant to the
exercise of Options granted under this Plan.

      4.2 The shares transferred by the Company upon the exercise of Options
under this Plan shall consist of authorized but unissued shares of Common Stock.

<PAGE>

      4.3. If any Option granted under this Plan shall expire or terminate for
any reason without having been fully exercised, then the unexercised portion of
such Option shall again be available for the granting of other Options under
this Plan.

5.  Eligibility.

      5.1 All employees determined to be Key Employees by the Committee shall be
eligible to receive Options under this Plan. Grantees, including those who have
been granted options under stock option plans heretofore or hereafter adopted by
the Company or any Subsidiary, may receive more than one Option under this Plan,
subject to the limitation of this Plan.

      5.2. No director of the Company or any Subsidiary who is not also a Key
Employee shall be entitled to receive Options under this Plan.

      5.3. Each Option may be granted alone or in addition to any other Option
granted under this Plan. The terms of each Option need to be identical, and the
Committee need not treat Grantees uniformly. Except as otherwise provided by
this Plan or a particular Option, any determination with respect to an Option
may be made by the Committee at the time of grant or at any time thereafter.

      5.4. Options granted pursuant to this Plan shall be ISOs and shall be
subject to and comply with Section 422 of the Code. Anything in this Plan to the
contrary notwithstanding, no term of this Plan relating to Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
to the Committee under this Plan be so exercised so as to cause any Option
granted hereunder to not comply fully with the requirements if Section 422 of
the Code as of the date of grant.

6. Terms and Conditions of Options.

      6.1. Except as herein provided, each Option granted hereunder shall be
exercisable for such period as the Committee shall determine at the time of the
grant; provided, however, that (i) such period maybe not commence until at least
six months following the date of grant, except in the event in the event of the
death, Disability, retirement in accordance with the Company's retirement plans
or policies or involuntary termination of employment other than for Cause of the
Grantee before the expiration of such period; (ii) no Option shall be
exercisable until the Plan shall have been approved in accordance with Section
15 hereof; (iii) the Company shall have fully complied with the terms and
provisions of the Act, and (iv) in no event shall an Option be exercisable more
than 10 years from the date of grant hereof; provided, however, that if a Key
Employee owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company, and an Option is granted to such Key Employee,
such Option shall not be exercisable after the expiration of five (5) years from
the date of grant. Options shall be subject to earlier termination as
hereinafter provided.

6.5   An Option shall terminate immediately, and no rights there under may be
      exercised, if the person to whom it is granted ceases to be employed by
      the Company or any Subsidiary, except that:

      (e)   subject to the limitations on excercisability set forth in Section
            6.1, if the Grantee dies while in the employ of the Company or any
            Subsidiary, the Grantee's rights under the Option may be exercised
            as to the share of Common Stock covered thereby, by his or her legal
            representative or by the persons to whom such rights under the
            Option shall pass by will or by the laws of descent and
            distribution, upon the earlier of (i) expiration of the term of the
            Option, or (ii) twelve months following the Grantee's death;

      (f)   If the employment of the Grantee is terminated because of
            Disability, the Grantee's rights under the Option may be exercised
            as to the shares of Common Stock covered thereby by the Grantee or

<PAGE>

            his or her guardian or other legal representative, upon the earlier
            of (i) expiration of the term of the Option or (ii) twelve months
            following termination of his or her employment because of
            Disability;

      (g)   If the employment of the Grantee is terminated by reason of his or
            her retirement in accordance with the terms of the Company's
            retirement plans or policies or with the consent of the Committee or
            is involuntarily terminated other than for Cause, the Grantee's
            rights under the Option may be exercised as to the shares of Common
            Stock covered thereby, upon the earlier of (i) expiration of the
            term of the Option or (ii) three months after termination of
            employment.

      (h)   If the employment of the Grantee is terminated for Cause, the
            Options shall immediately terminate and the Grantee shall have no
            further rights there under.

      6.6   Notwithstanding anything contained in Section 6.2 to the contrary,
            no Option rights shall be exercisable by anyone after the expiration
            of the term of the Option.

      6.7   Transfers of employment between the Company and any Subsidiary or
            between Subsidiaries shall not constitute termination of employment
            for purposes of any Option granted under this Plan. For purposes of
            this Plan, an employee who is on a leave of absence approved by the
            Company or any Subsidiary shall not be deemed to have terminated his
            or her employment.

7. Option Price

      7.3   The option price shall be not less than 100% of the Fair Market
            Value of the Common Stock subject to such Option on the date of
            grant; provided, however, that if the Key Employee owns or is deemed
            to own (by reason of the attribution rules applicable under Section
            424(d) of the Code) more than 10% of the combined voting power of
            all classes of stock of the Company and an Option is granted to such
            Key Employee, the Option price shall be not less than 110% of Fair
            Market Value of the Common Stock on the date of grant.

      7.4   Notwithstanding any provisions in Section 7.1 to the contrary, in no
            event shall the option price of the authorized but unissued shares
            of Common Stock of the Company be less than the par value of such
            stock.

8. Non-Transferability of Options. No Option granted under this Plan shall be
transferable by the Grantee otherwise than by will or the laws of descent and
distribution, and, except as otherwise provided in Section 6, such Option may
only be exercised by the Grantee during his or her lifetime.

9.  Option Price

      9.1   The grant of every Option shall be evidenced by and conditioned upon
            the execution of a written option agreement between the Company and
            the Grantee. The option agreement shall set forth the number of
            shares of Common Stock subject to the Option, the option price, the
            term during which the Option may be exercised, and any other
            provisions not inconsistent with the provisions of this Plan, which
            the Committee may deem necessary or appropriate from time to time.
            The option agreement shall not contain any provision which would
            cause such Option granted there under to fall to quality as an
            Incentive Stock Option under Section 422 of the Code. The Committee
            shall approve a form or forms of option agreements which the
            Committee, in its discretion, may specify as the sole forms of
            option agreement effective to grant Options to Key Employees under
            this Plan.

      9.2   Notwithstanding the date upon which an option agreement be executed,
            the data upon which and Option is authorized by the Committee shall

<PAGE>

            be the effective date of the Option, unless the authorization by the
            Committee indicates that the Option is to be effective as of a
            future date.

10.   Option Exercise and Payment

      10.5  Subject to Sections 5, 6, and 7, each Option granted under this Plan
            shall be exercisable on such date or dates and during such period
            and for such number of shares of Common Stock as shall be determined
            pursuant to the provisions of the option agreement evidencing such
            Option.

      10.6  A Grantee electing to exercise an Option shall give written notice
            to the Committee (or its designated representative) of such election
            and of the number of full shares of Common Stock to the Grantee
            elects to purchase. Options shall be exercisable in such amounts as
            the Grantee may elect subject to such restrictions as the Committee
            or this Plan may provide.

      10.7  Payment of the option price shall be tendered to the Company (i) in
            cash, including certified check, bank draft or money order, or (ii)
            at the discretion of the Committee, by delivering Common Stock
            already owned by the Grantee or (iii) a combination of the payments
            specified in (i) and (ii), or all or a portion of the purchase price
            of the shares of Common Stock purchased, and shall comply with such
            other requirements as the Committees shall establish in accordance
            with this Plan. With respect to clause (ii) above, the Fair Market
            Value of Common Stock so delivered shall be determined as of the
            date immediately preceding the date the Option is exercised. If
            payment is made in whole or in part in shares of Common Stock, the
            Grantee shall deliver to the Company certificates registered in the
            name of the Grantee representing shares of Common Stock owned by
            such Grantee, free of all liens, claims and encumbrances of every
            kind, accompanied by stock powers duly endorsed in blank by the
            Grantee. With respect to Grantees (other than officers of the
            Company), payment may also be made by delivering a properly executed
            exercise notice (which includes irrevocable instructions to the
            Company to deliver the stock certificate(s) evidencing the shares of
            Common Stock directly to a specified broker) together with a copy of
            the irrevocable instructions forwarded to such broker to promptly
            deliver to the Company the amount of sale proceeds to pay the option
            price an the amount of any withholding taxes due.

      10.8  A Grantee shall notify the Committee in writing in the event that
            the Grantee disposes of Common Stock acquired upon exercise of an
            Option with the two-year period following the date the Grantee
            received Common Stock upon the exercise of the Option, and shall
            comply with any other requirements imposed by the Company in order
            to enable the Company to secure the related income tax deduction to
            which it will be entitled in such event under the Code.

11. No Rights as Shareholder. Neither the Grantee no the personal
representatives, heirs or legatees of such Grantee shall be or have any rights
or privileges of a shareholder of the Company with respect to any Common Stock
subject to an Option unless and until certificates evidencing such Common Stock
shall have been issued and delivered to the Grantee or to such personal
representatives, heirs or legatees.

12. No Rights to Continued Employment. This Plan and any Option granted under
this Plan shall not confer upon any Grantee any right with respect to
continuation of employment by the Company or any Subsidiary, nor shall they
interfere in any way with the right of the Company or any Subsidiary by which
the Grantee is employed to terminate his or her employment at any time.

13. Adjustment Upon Changes in Capitalization. The instruments evidencing
Options granted hereunder shall contain such provisions as the Committee shall
deem appropriate to adjust the number of shares of Common Stock covered thereby,

<PAGE>

or to adjust the option prices, or both, in the event of the sale or other
disposition or distribution by the Company of all or a portion of its assets or
any change in the outstanding Common Stock of the Company by reason of stock
dividends, stock split-ups, recapitalizations, reorganizations, mergers,
consolidations, combinations or exchanges of shares or the like, of or by the
Company. To prevent dilution of enlargement of rights in the event of any such
change, the aggregate number and classes of shares for which Options thereafter
may be granted under this Plan may be appropriately adjusted as determined by
the Committee so as to reflect such change.

14. Withholding Taxes. Whenever, under this Plan, shares of Common Stock are to
be issued upon the exercise of Options, the Company shall have the right to
require the Grantee to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements. If any, prior to the
delivery of any certificate or certificates for such shares, in the alternative,
at the Grantee's request and at the sole discretion of the Committee, the
Company may withhold that number of shares of Common Stock covered by the Option
or allow the Grantee to delivery already owned shares of Common Stock (in either
case based on the Fair Market Value of such shares on the date of exercise)
which would satisfy the withholding tax amounts due, if any, in connection with
the shares to be issued to the Grantee upon exercise of the Grantee's Option.

15. Necessity of Shareholder Approval. This Plan and any Options granted
hereunder shall be null, void and of no effect unless this Plan has been
approved by two-thirds of the holders of Common Stock of the Company within
twelve (12) months after the date of this Plan's adoption by the Board.

16. Duration and Amendment of the Plan

      16.5  No Option may be granted under this Plan after the expiration of ten
            (10) years from the earlier of (a) the date this Plan is adopted by
            the Board or (b) the date this Plan is approved by the shareholders
            of the Company in accordance with Section 15.

      16.6  The Board may amend, terminate or suspend this Plan at any time;
            provided, however, that no such amendment shall, without approval of
            the Company's shareholders, (a) Increase the aggregate number of
            shares as to which Options may be granted under this Plan as set
            forth in Section 4.1, except as specified in Section 13; (b) change
            the number of shares of Common Stock subject to Options or the date
            of grant of the exercise price of such Options; (c) modify the
            requirements as to the eligibility for participation in this Plan;
            or (d) materially increase the benefits accruing to participants in
            this Plan.

      16.7  No Option may be granted during any suspension of this Plan or after
            this Plan has been terminated; and no amendment, suspension or
            termination shall, with out the Grantee's consent, alter or impair
            any of the Grantee's rights or obligations under any Option
            therefore granted to him or her under this Plan except insofar as a
            merger or consolidation of the Company or termination of employment
            of a Grantee or a liquidation or dissolution shall effect the
            cancellation of an Option.

      16.8  In the event of a consolidation, reorganization, merger or sale of
            all or substantially all of the assets of the Company, in each case
            in which outstanding shares of Common Stock are exchanged for
            securities, cash or other property of any other corporation or
            business entity, or in the event of a liquidation of the Company,
            the Board shall use its best efforts to cause the board of directors
            of any corporation assuming the obligations of the Company, to, in
            its discretion, take any one or more of the following actions, as to
            outstanding Options: (i) provide that such options shall be assumed,
            or equivalent options shall be submitted, by the acquiring or
            succeeding corporations (or an affiliate thereof), (ii) upon written
            notice to the Grantee, provide that all unexercised options will
            terminate immediately prior to the consummation of such transaction
            unless exercised (to the extent then exercisable) by the Grantee
            within a specified period following the date of such notice, (III)
            in the event of a merger under the terms of which holders of the
            Common Stock of the Company will receive upon consummation thereof a

<PAGE>

            cash payment to the Grantee equal to the difference between (A) the
            Merger Price times the number of shares of Common Stock subject to
            such outstanding Options (to the extent than exercisable at prices
            not in excess of the Merger Price) and (B) the aggregate exercise
            price of all such outstanding Options in exchange for the
            termination of such Options, and (IV) provide that all or any
            outstanding Options shall become exercisable in full immediately
            prior to such event.

17. Applicable Law. This Plan shall be governed by, and construed in accordance
with, the laws of the State of New Jersey without giving effect to conflicts of
laws principles thereof.

18. Binding Effect. The terms of the Plan shall be binding upon its successors
and assigns.

19. Savings Clause. The invalidity or illegality of any provision herein shall
not be deemed to affect the validity of any other provision.SECOND
        AMENDED AND RESTATED

      CERTIFICATE
        OF DESIGNATION OF THE

      PREFERENCES,
        PRIVILEGES, POWERS AND RIGHTS OF

      SERIES
        A CONVERTIBLE PREFERRED STOCK

      OF
        DECORIZE, INC.

      

      (Under
        Section 151 of the General Corporation Law of
        the
        State of Delaware)

      

      DECORIZE,
        INC.
        (the
        "Corporation"),
        a
        corporation duly organized and validly existing under the General Corporation
        Law of the State of Delaware (the "DGCL")
        does
        by Steve Crowder, its President and CEO, hereby certify that:

      

      FIRST:
        By the
        Certificate of Incorporation of the Corporation filed with the Secretary
        of
        State of the State of Delaware on June 27, 2001 (the "Certificate
        of Incorporation"),
        the
        Corporation is authorized to issue fifty million (50,000,000) shares of common
        stock, $.001 par value ("Common
        Stock"),
        and
        ten million (10,000,000) shares of preferred stock, $.001 par value
        ("Preferred
        Stock").
        

      

      SECOND:
        Pursuant
        to the authority vested in the Board of Directors of the Corporation by the
        Certificate of Incorporation, resolutions were duly adopted by the Board
        of
        Directors of the Corporation on February 3, 2004, to authorize the issuance
        of a
        series of Preferred Stock designated as the Series A Convertible Preferred
        Stock
        having the powers, designations, preferences and relative participating,
        optional or other rights set forth in a Certificate of Designations, which
        was
        thereafter filed with the Delaware Secretary of State (the “Original
        Certificate of Designations”). 

      

      THIRD:
        Pursuant
        to the authority vested in the Board of Directors of the Corporation by the
        Certificate of Incorporation, resolutions were duly adopted by the Board
        of
        Directors of the Corporation on January 14, 2005, to authorize the amendment
        and
        restatement of the Original Certificate of Designations, providing for the
        Series A Convertible Preferred Stock to have the powers, designations,
        preferences and relative participating, optional or other rights set forth
        in a
        First Amended and Restated Certificate of Designations, which was thereafter
        filed with the Delaware Secretary of State (the "First
        Amended Certificate of Designations").

      

      FOURTH:
        Pursuant
        to the authority vested in the Board of Directors of the Corporation by the
        Certificate of Incorporation, resolutions were duly adopted by the Board
        of
        Directors of the Corporation on June 15, 2005, to authorize the amendment
        and
        restatement of the Original Certificate of Designations, as previously amended
        and restated by the First Amended Certificate of Designations, providing
        for the
        Series A Convertible Preferred Stock to have the powers, designations,
        preferences and relative participating, optional or other rights set forth
        therein, as follows:

      

      WHEREAS:
        The
        Corporation is authorized by Article 4 of its Certificate of Incorporation
        to
        issue ten million (10,000,000) shares of Preferred Stock; and

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      WHEREAS:
        Article
        4 of the Certificate of Incorporation expressly grants to the Board of Directors
        (pursuant to the provisions of Section 151 of the DGCL) the authority to
        fix, by
        resolution or resolutions, the designation of any series of Preferred Stock
        and
        the powers, preferences and rights of the shares of such series, and the
        qualifications, limitations or restrictions thereof.

      

      NOW,
        THEREFORE, BE IT:

      

      RESOLVED:
        That the
        Board of Directors deems it advisable to, and does hereby, fix and designate
        500,000 shares of Preferred Stock as Series A Convertible Preferred Stock
        and
        does hereby give such series the designation, powers, preferences,
        qualifications, limitations and restrictions set forth in the Terms of Series
        A
        Convertible Preferred Stock (the "Series
        A Terms")
        attached hereto as Exhibit
        "A"
        and
        made a part hereof;

      

      FURTHER
        RESOLVED:
        That the
        appropriate officer or officers of the Corporation shall be, and hereby are,
        authorized, empowered and directed to execute, on behalf of the Corporation,
        the
        Series A Terms setting forth such designation of such series of Preferred
        Stock
        and such preferences, privileges, powers, qualifications, limitations and
        restrictions and to cause the same to be filed with the Office of the Secretary
        of State of the State of Delaware; and

      

      FURTHER
        RESOLVED:
        That the
        appropriate officer or officers of the Corporation shall be, and hereby are,
        authorized, empowered and directed to take all such steps and to do and
        authorize to be done all such acts and things as may be necessary, advisable,
        convenient or proper for the purpose of fully effectuating and carrying out
        such
        designation of the series of Preferred Stock referred to in the foregoing
        resolutions.

      

      IN
        WITNESS WHEREOF, the Corporation has caused this Certificate of Designation
        to
        be executed in its corporate name by Steve Crowder, its President and Chief
        Executive Officer, as of this 15th
        day
        of
        June
        2005.

       

      
        	 	 	 
	 	DECORIZE,
                INC.
	 
 	 
 	 
 
	 	By:  	/s/
                Steve Crowder
	 	
                
Steve
                Crowder
	 	President
                and Chief Executive Officer

      ATTEST:

      

      

              /s/
        Gaylen
        Ball

      
        
Gaylen
        Ball

      Secretary

      
        
           

        

        
           

          
            

          

        

        
           

          
          

        

      

      EXHIBIT
        A

      

      TERMS
        OF SERIES A CONVERTIBLE PREFERRED STOCK

      OF

      DECORIZE,
        INC.

      

      The
        following is a statement of the preferences, voting powers, qualifications
        and
        special or relative rights and privileges of the Series A Convertible Preferred
        Stock, $.001 par value per share (the "Series
        A Preferred"),
        of
        Decorize, Inc. (the "Corporation").

      

      1. Designation
        of Series A Preferred; Number of Authorized Shares.
        The
        Series A Preferred authorized hereby shall consist of an aggregate Five Hundred
        Thousand (500,000) shares. The Board of Directors of the Corporation may
        by
        resolution or resolutions provide for the issuance of all or a portion of
        the
        authorized Series A Preferred at any time or from time to time (the date
        of such
        issuance or issuances being, in each case, an "Issue
        Date").

      2. Rank.
        All
        shares of Series A Preferred shall rank prior, both as to payment of dividends
        and as to distributions of assets upon liquidation, dissolution or winding
        up of
        the Corporation, whether voluntary or involuntary ("Liquidation"),
        to
        all of the
        now or
        hereafter issued common stock, par value $.001 per share, of the Corporation
        (the "Common
        Stock"),
        and
        to all of the Corporation's
        issued
        capital stock which by its terms ranks junior to the Series A Preferred,
        both as
        to the payment of dividends and as to distributions of assets upon Liquidation,
        when and if issued (the Common Stock and any such other capital stock being
        herein referred to collectively as "Junior
        Stock").

       

      3. Dividends.
         

      

      (a) Payment
        Dates.
        The
        holders of Series A Preferred shall be entitled to receive, out of any assets
        legally available therefor, quarterly dividends on their shares of Series
        A
        Preferred, which shall be cumulative and shall accrue daily, beginning on
        the
        Issue Date of the applicable shares, at an annual rate of eight percent (8%),
        and which shall be payable in cash at the declaration of the Board of Directors
        out of funds legally available therefor on January 1, April 1, July 1, and
        October 1 of each year, subject to subparagraph (b) below
        (each of
        such dates being the "Dividend
        Payment Date")
        (except that if any such date is a Saturday, Sunday or legal holiday, then
        such
        dividend shall be payable on the next day that is not a Saturday, Sunday
        or
        legal holiday), to holders of record at the close of business on the date
        specified by the Board of Directors (or, to the extent permitted by applicable
        law, a duly authorized committee thereof) at the time such dividend is declared,
        in preference to dividends on the Junior Stock, commencing on the Dividend
        Payment Date next succeeding the initial issuance date of the Series A Preferred
        (the "Initial
        Issue Date").
        If a
        record date is not otherwise specified by the Board of Directors with respect
        to
        a particular Dividend Payment Date, then the applicable record date shall
        be the
        twentieth business day preceding such Dividend Payment Date. Any such dividend
        record date shall be not less than ten (10) days and not more than sixty
        (60)
        days before the relevant Dividend Payment Date. Notwithstanding the foregoing,
        if the Board of Directors determines in its discretion that it is in the
        best
        interests of the Corporation that any such quarterly dividend payment not
        be
        made, then such dividend shall accrue and cumulate as provided in Section
        3(b)
        below.

      

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

      (b) Dividend
        Payments.
        Holders
        of Series A Preferred will not be entitled to any dividends, whether payable
        in
        cash or other property, in excess of the full cumulative dividends provided
        for
        herein. Dividends accrued on the shares of Series A Preferred shall bear
        interest at an annual rate of eight percent (8%),
        compounded annually on January 1 of each year, and due
        and
        payable in cash upon the earlier of (i) Liquidation, (ii) the conversion
        of such shares as described under Section
        5,
        (iii)
        the redemption of such shares as described under Section
        7,
        or (iv)
        the determination of the Board of Directors to pay all or any portion of
        the
        accrued and unpaid dividends out of funds at the time legally available
        therefor.
        Dividends payable on the Series A Preferred for the first annual dividend
        period
        following the Initial Issue Date (or any other dividend payable for a period
        less than a full annual period) shall be computed on the basis of a 360-day
        year. All dividends paid with respect to shares of Series A Preferred pursuant
        to this Section
        3
        shall be
        paid pro rata to the holders entitled thereto, subject to any differences
        for
        any different dates of original issuance.

      

      (c) Accrual
        of Dividends.
        In the
        case of shares of Series A Preferred issued on any Issue Date, dividends
        shall
        accrue and be cumulative from such date, whether or not they have been declared
        and whether or not there are profits, surplus or other funds of the Corporation
        legally available for the payment of dividends. 

      

      (d) Fractional
        Shares.
        Each
        fractional share of Series A Preferred outstanding shall be entitled to a
        ratably proportionate amount of all dividends accruing with respect to each
        outstanding share of Series A Preferred pursuant to this Section
        3,
        and all
        such dividends with respect to such outstanding fractional shares shall be
        cumulative and shall accrue (whether or not declared), and shall be payable
        in
        the same manner and at such times as provided for in this Section
        3
        with
        respect to dividends on each outstanding share of Series A Preferred. Each
        fractional share of Series A Preferred outstanding shall also be entitled
        to a
        ratably proportionate amount of any other distributions made with respect
        to
        each outstanding share of Series A Preferred, and all such distributions
        shall
        be payable in the same manner and at the same time as distributions on each
        outstanding share of Series A Preferred.

       

      (e) Preference
        as to Junior Stock.
        No
        dividend or other distributions, other than dividends payable solely in shares
        of Junior Stock, shall be declared, paid or set apart for payment on shares
        of
        Junior Stock or any other capital stock of the Corporation which by its terms
        ranks junior as to dividends to the Series A Preferred (the Junior Stock
        and any
        such other class or series of the Corporation's capital stock being herein
        referred to as "Junior
        Dividend Stock"),
        unless and until all accrued and unpaid dividends on the Series A Preferred
        for
        all Dividend Payment Dates occurring on or before the payment date of such
        dividends or other distributions on Junior Dividend Stock shall have been
        paid
        or declared and set apart for payment. No payment on account of the purchase,
        redemption, retirement or other acquisition of shares of Junior Dividend
        Stock
        or any class or series of the Corporation's capital stock which by its terms
        ranks junior to the Series A Preferred as to distributions of assets upon
        liquidation, dissolution or winding up of the Corporation, whether voluntary
        or
        involuntary (the Junior Stock and any class or series of the Corporation's
        capital stock which by its terms rank junior to the Series A Preferred as
        to
        such distributions being herein referred to as "Junior
        Liquidation Stock"),
        shall
        be made unless and until accrued and unpaid dividends on the Series A Preferred
        for all Dividend Payment Dates occurring on or before such payment for such
        Junior Dividend Stock or Junior Liquidation Stock shall have been paid or
        declared and set apart for payment.

       

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

      (f) Parity
        Stock.
        No full
        dividends shall be declared, paid or set apart for payment on shares of any
        class or series of the Corporation's capital stock whether existing or hereafter
        issued and which by its terms ranks, as to dividends, on a parity with the
        Series A Preferred (any such class or series of the Corporation's capital
        stock
        being herein referred to as "Parity
        Dividend Stock")
        for
        any period unless full cumulative dividends have been, or contemporaneously
        are,
        paid or declared and set apart for payment on the Series A Preferred for
        all
        Dividend Payment Dates occurring on or before the payment date of such dividends
        on Parity Dividend Stock. No dividends shall be paid on Parity Dividend Stock
        except on dates on which dividends are paid on the Series A Preferred. All
        dividends paid or declared and set apart for payment on the Series A Preferred
        and any Parity Dividend Stock shall be paid or declared and set apart for
        payment pro rata so that the amount of dividend paid or declared and set
        apart
        for payment per share on the Series A Preferred and the Parity Dividend Stock
        on
        any date shall in all cases bear to each other the same ratio that accrued
        and
        unpaid dividends to the date of payment on the Series A Preferred and the
        Parity
        Dividend Stock bear to each other.

      

      4. Liquidation
        Preference.
        

       

      (a) Preference.
        In the
        event of a Liquidation, the holders of Series A Preferred,
        by
        reason
        of their ownership of such shares of Series A Preferred,
        shall be
        entitled to receive, prior and in preference to any distribution of any of
        the
        assets of the Corporation to the holders of the Junior Securities, an
        amount
        per share of cash or property equal to the sum of (i) $1.00 (as adjusted
        to take
        into account any stock split, reverse stock split,
        reclassification or other combination or subdivision of the Series A Preferred)
        and (ii) an amount equal to any declared but unpaid dividends per share of
        Series A Preferred. If upon the occurrence of a Liquidation, the assets and
        funds thus distributed among the holders of the Series A Preferred shall
        be
        insufficient to permit the payment to such holders of the full aforesaid
        preferential amounts, then the entire assets and funds of the Corporation
        legally available for distribution shall be distributed ratably among the
        holders of the Series A Preferred in proportion to the amount payable to
        each
        such holder under this Section
        4(a).

      

      (b) Distribution
        of Remaining Assets.
        Upon
        the completion of the distribution required by Section
        4(a),
        if
        assets remain in the Corporation, the holders of the Series A Preferred shall
        be
        entitled to participate in the distribution of the remaining assets of the
        Corporation with the holders of Common Stock and other Junior Securities
        entitled to such a distribution on a pro rata basis as if each share of Series
        A
        Preferred had been converted into Common Stock. The voluntary sale, lease,
        exchange or transfer of all or substantially all of the Corporation's property
        or assets
        for
        value in an arms’ length transaction
        to, or
        its consolidation or merger with, one or more corporations shall not be deemed
        to be a Liquidation.

      

      
        
           

        

        
          A-3

          
            

          

        

        
           

        

      

      (c) Distribution
        of Property.
        If any
        of the Corporation’s property distributed to stockholders in connection with a
        Liquidation is in a form other than cash, then the value of such property
        will
        be their fair market value as determined in good faith by the Board of
        Directors.

      

      5. Conversion.
        The
        holders of the Series A Preferred shall have conversion rights as
        follows:

      

      (a) Right
        to Convert.
        Each
        share of Series A Preferred shall be convertible at the option of the holder
        of
        such share, at any time after the Issue Date of such share and without payment
        of additional consideration by the holder, into that number of fully-paid
        and
        non-assessable shares of Common Stock determined by dividing the Original
        Issue
        Price by the Conversion Price (the "Conversion
        Rate").
        Upon
        any increase or decrease in the Original Issue Price or Conversion Price,
        as
        described in this Section
        5,
        the
        Conversion Rate for such series will be appropriately adjusted. "Original
        Issue Price"
        shall
        mean $1.00 per share, subject to adjustment from time to time in accordance
        with
Section 5(d),
        and
        "Conversion Price" shall mean $0.20 per share, subject to adjustment from
        time
        to time in accordance with Section
        5(d). Any conversion of Series A Preferred into Common Stock will not prejudice
        the holder’s right to receive dividends on the converted Series A Preferred that
        have accumulated through the date of conversion but remain unpaid, whether
        or
        not declared. 

      

      (b) Automatic
        Conversion.
        All
        outstanding shares of Series A Preferred shall automatically be converted
        into
        the number of shares of Common Stock into which such shares of Series A
        Preferred are then convertible pursuant to Section 5(a), immediately at the
        close of trading on any date (the
        "Automatic
        Conversion Event") on
        which:

      

      (i)
         the
        closing price of the Common Stock as listed on the American Stock Exchange
        (or
        any other national securities exchange or nationally recognized quotation
        system
        on which the Common Stock is then listed) has been at or above $2.50 per
        share
        for at least the
        ten
(10)
        trading
        days
        immediately preceding such date of conversion,
        and

      

      (ii)
         the
        Common Stock has had an average trading volume of at least 40,000 shares
        per day
        for at
        least
the
        twenty (20) trading days immediately preceding such date of
        conversion. 

      

      (c) Mechanics
        of Conversion.

      

      (i) Before
        any holder of Series A Preferred shall be entitled to convert the same into
        shares of Common Stock, such holder:

      

      (A) shall
        surrender the certificate or certificates representing such shares to be
        converted, duly endorsed in blank or accompanied by proper instruments of
        transfer (or, in the event a certificate has been lost, stolen or destroyed,
        an
        affidavit as to that fact), at the principal corporate office of the Corporation
        or of any transfer agent for the Series A Preferred, and 

      

      
        
           

        

        
          A-4

          
            

          

        

        
           

        

      

      (B) shall
        give written notice to the Corporation at such office, of the election to
        convert the same and shall state therein the name or names in which the
        certificate or certificates for shares of Common Stock are to be issued.
        

      

      The
        Corporation shall, as soon as practicable thereafter
        but in
        no event more than ten (10) business days after its receipt of the surrendered
        certificate and this conversion notice,
        issue
        and deliver to such holder of Series A Preferred or to the nominee or nominees
        of such holder, a certificate or certificates for the number of shares of
        Common
        Stock to which such holder shall be entitled as aforesaid. 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 as of such date.

      

      (ii) Notwithstanding
        the provisions of Section
        5(c)(i),
        on the
        date of occurrence of the Mandatory Conversion Event, the outstanding shares
        of
        Series A Preferred will be converted automatically without any further action
        by
        the holders of such shares and whether or not the certificates representing
        such
        shares are surrendered to the Corporation or its transfer agent; provided,
        that
        the Corporation will not be obligated to issue certificates evidencing the
        shares of Common Stock issuable upon such Automatic Conversion Event until
        the
        certificate or certificates representing the shares of Series A Preferred,
        duly
        endorsed in blank or accompanied by proper instruments of transfer (or, in
        the
        event a certificate has been lost, stolen or destroyed, an affidavit as to
        that
        fact) are delivered to the Corporation or its transfer agent as provided
        in
Section
        5(c)(i).
        On the
        date of the occurrence of the Mandatory Conversion Event, each record holder
        of
        shares of Series A Preferred will be deemed to be the record holder of the
        Common Stock issuable upon such conversion, notwithstanding that the
        certificates representing such shares of Series A Preferred will not have
        been
        surrendered, that notice from the Corporation will not have been received
        by any
        record holder of shares of Series A Preferred, or that the certificates
        evidencing such shares of Common Stock will not then be actually delivered
        to
        such holder. 

       

      (d) Adjustment
        of Conversion Rate.

      

      (i) Adjustments
        for Common Stock Subdivisions or Combinations.
        In case
        outstanding shares of Common Stock shall be subdivided (by stock split, payment
        of a stock dividend or otherwise) into a greater number of shares of Common
        Stock, then the Conversion Price in effect immediately before such subdivision
        shall, simultaneously with the effectiveness of each such subdivision, be
        proportionately decreased. In case outstanding shares of Common Stock shall
        be
        combined (by reverse stock split, reclassification or otherwise) into a smaller
        number of shares of Common Stock, then the Conversion Price in effect
        immediately before each such combination will, simultaneously with the
        effectiveness of such combination, be proportionately increased.

       

      
        
           

        

        
          A-5

          
            

          

        

        
           

        

      

      (ii) Adjustments
        for Series A Preferred Subdivisions or Combinations.
        In case
        outstanding shares of Series A Preferred shall be subdivided (by stock split,
        payment of a stock dividend or otherwise) into a greater number of shares
        of
        Series A Preferred, the Original Issue Price in effect immediately prior
        to each
        such subdivision shall, simultaneously with the effectiveness of such
        subdivision, be proportionately decreased. In case outstanding shares of
        Series
        A Preferred shall be combined (by reverse stock split, reclassification or
        otherwise) into a smaller number of shares of Series A Preferred, then the
        Original Issue Price in effect immediately prior to each such combination
        shall,
        simultaneously with the effectiveness of such combination, be proportionately
        increased.

       

      (iii) Adjustments
        for Reclassification, Exchange, and Substitution.
        If the
        Common Stock issuable upon conversion of the Series A Preferred will be changed
        into the same or a different number of shares of any other class or classes
        of
        stock, whether by capital reorganization, reclassification or otherwise (other
        than a subdivision or combination of shares provided for above), then, in
        any
        such event, instead of the number of shares of Common Stock that the holders
        would otherwise have been entitled to receive, each holder of Series A Preferred
        will have the right thereafter to convert such shares of Series A Preferred
        into
        a number of shares of such other class or classes of stock that a holder
        of the
        number of shares of Common Stock deliverable upon conversion of the Series
        A
        Preferred immediately before that change would have been entitled to receive
        in
        such reorganization or reclassification, all subject to further adjustment
        as
        provided in this Section
        5(d)
        with
        respect to such other shares.

       

      (iv) No
        Impairment.
        The
        Corporation will not, through any reorganization, asset transfer, merger,
        dissolution, securities issuance, securities sale, 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 the Corporation, but instead the
        Corporation will at all times in good faith assist in carrying out all
        provisions of this Section
        5
        and in
        taking all such action as may be necessary or appropriate to protect the
        conversion rights of the holders of Series A Preferred against
        impairment.

       

      (v) Certificate
        as to Adjustments.
        Upon
        the occurrence of each adjustment or readjustment of the Conversion Price
        in
        accordance with this Section
        5,
        the
        Corporation, at its own expense, will promptly compute such adjustment or
        readjustment in accordance with the terms hereof and furnish to each holder
        of
        Series A Preferred a certificate setting forth such adjustment or readjustment
        and showing in detail the facts upon which such adjustment or readjustment
        is
        based. The Corporation will, 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 (A) such adjustments and readjustments, (B) the
        Conversion Price at the time in effect, and (C) 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 Series A Preferred.

      

      
        
           

        

        
          A-6

          
            

          

        

        
           

        

      

      (e) No
        Fractional Shares.
        No
        fractional shares shall be issued upon the conversion of any share or shares
        of
        the Series A Preferred, and the number of shares of Common Stock to be issued
        shall be rounded to the nearest whole share (with one-half being rounded
        upward). Whether or not fractional shares are issuable upon such conversion
        shall be determined on the basis of the total number of shares of Series
        A
        Preferred the holder is at the time converting into Common Stock and the
        number
        of shares of Common Stock issuable upon such aggregate conversion.

      

      (f) Notices
        of Record Date.
        In the
        event of any taking by the Corporation of a record of the holders of any
        class
        of securities for the purpose of determining the holders of such securities
        who
        are entitled to receive any dividend or other distribution, any right to
        subscribe for, purchase or otherwise acquire any shares of stock of any class
        or
        any other securities or property, or to receive any other right, the Corporation
        shall mail to each holder of Series A Preferred, at least twenty (20) calendar
        days prior to the record date specified, a notice specifying the date on
        which
        any such record is to be taken for the purpose of such dividend, distribution
        or
        right, and the amount and character of such dividend, distribution or
        right.

      

      (g) Reservation
        of Stock Issuable Upon Conversion.
        The
        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 the 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 the Series A Preferred; and 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 the Series A
        Preferred, in addition to such other remedies as shall be available to the
        holder of such Series A Preferred, the Corporation will 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, including, without limitation, engaging
        in best
        efforts to obtain the requisite stockholder approval of any necessary amendment
        to the Corporation’s Certificate of Incorporation.

      

      6. Voting
        and Director Rights.

      

      (a) General
        Voting Rights.
        Except
        as set forth in
        this
        Section
        6
        and
        Section 7(a) below, the holders of Series A Preferred shall have no voting
        rights.
        Upon
        any
        conversion of the Series A Preferred into Common Stock, the holder thereof
        shall
        have all voting rights applicable to such shares of Common Stock. 

       

      (b) Election
        of Directors.

       

      (i) If
        there
        are shares of Series A Preferred outstanding, then the maximum number of
        members
        of the Board of Directors shall be nine (9).

       

      (ii) The
        holders of Series A Preferred, voting separately as a single class, shall
        have
        the right to elect two (2) individuals for election to the Board of Directors
        (the "Series
        A Directors").
        After
        his
        initial election, each Series A Director shall serve as a director until
        the
        next annual meeting of stockholders and thereafter for a term of one year
        until
        the next annual meeting of stockholders, until his successor is elected and
        qualified, or until the earlier resignation or removal of such director.
        

      

      
        
           

        

        
          A-7

          
            

          

        

        
           

        

      

      (iii) A
        Series
        A Director may be removed
        during
        his or her term of office, either for or without cause,
        only by
        the vote of the holders of a majority of the issued and outstanding shares
        of
        Series A Preferred, voting separately as a class; provided, that if there
        are no
        shares of Series A Preferred outstanding, then any Series A Director may
        be
        removed upon the affirmative vote of a majority of the members of the Board
        of
        Directors. 

      

      (iv) At
        any
        annual or special meeting of stockholders held, or action taken by written
        consent, the
        holders of the Series A Preferred, voting separately as a class, may fill
        any
        vacancy in the office of a Series A Director or may elect a successor to
        replace
        a Series A Director. 

      

      (c) Fundamental
        Transactions.
        The
        Corporation shall not, for so long as shares of Series A Preferred remain
        outstanding, without first obtaining the approval (by written consent or
        vote,
        as provided by law) of at least a majority-in-interest of the holders of
        Series
        A Preferred, voting separately as a single class, consummate any merger or
        consolidation of the Corporation with another party (other than a wholly
        owned
        subsidiary in a merger in which the Corporation is the surviving corporation),
        the sale of substantially all of the Corporation’s assets, the liquidation of
        the Corporation, any amendment of the Corporation’s certificate of
        incorporation, or any other fundamental transaction for which, in any of
        the
        foregoing cases, the affirmative vote of the Corporation’s stockholders, voting
        by class, is required under Delaware law
        or any
        applicable rules and regulations of the Securities and Exchange Commission
        or
        any exchange on which the Common Stock is listed for trading; provided, that
        the
        foregoing approval shall not be required if in connection with such transaction
        all outstanding shares of Series A Preferred are to be redeemed by the
        Corporation, in the manner contemplated by Section 7 below, as of the date
        of
        the closing of such transaction.

      

      (d) Issuance
        of Preferred Stock.
        The
        Corporation shall not, for so long as shares of Series A Preferred remain
        outstanding, issue any additional shares of its Preferred Stock, unless it
        obtains the prior approval (by written consent or vote, as provided by law)
        of
        such issuance from the
        holders of Series A Preferred, voting separately as a single class; provided:
        

      

      (i) that
        the
        foregoing approval shall not be required if in connection with such transaction
        all outstanding shares of Series A Preferred are to be redeemed by the
        Corporation, in the manner contemplated by Section 7 below, as of the date
        of
        the closing of such transaction;
        and

      

      (ii) that
        the
        Corporation shall have no obligation to obtain the approval of the Series
        A
        Preferred with respect to a transaction in which the Corporation issues Junior
        Stock that has voting rights that are subordinate to the Series A Preferred,
        and
        that is not convertible into shares of Common Stock or, if it is convertible,
        is
        convertible at an initial exercise price of no less than $0.36 (with this
        amount
        to be adjusted as the Conversion Price is adjusted in Section
        5(d)).

      

      
        
           

        

        
          A-8

          
            

          

        

        
           

        

      

      (e) Issuances
        of Common Stock.
        The
        Corporation shall not, for so long as shares of Series A Preferred remain
        outstanding, issue any additional shares of Common Stock or any Common Stock
        Equivalents, unless it obtains the prior approval (by written consent or
        vote,
        as provided by law) of such issuance from a majority-in-interest of the holders
        of Series A Preferred, voting separately as a single class;
        provided:

      

      (i) that
        the
        foregoing approval shall not be required (A) in connection with any Excluded
        Securities (as defined in Section 10 below), nor (B) if in connection with
        such
        transaction all outstanding shares of Series A Preferred are to be redeemed
        by
        the Corporation, in the manner contemplated by Section 7 below, as of the
        date
        of the closing of such transaction;
        and

      

      (ii) that
        the
        Corporation shall have no obligation to obtain the approval of the Series
        A
        Preferred with respect to a transaction in which the Corporation issues
        presently authorized but unissued shares of its Common Stock for consideration
        equal to or exceeding $0.36 per share (with this amount to be adjusted as
        the
        Conversion Price is adjusted in Section 5(d)). 

      

      (f) Issuance
        of Convertible Debt Instruments.
        The
        Corporation shall not, for so long as shares of Series A Preferred remain
        outstanding, issue any instruments evidencing its indebtedness to any party,
        which instruments are convertible into shares of Common Stock or any
        option, warrant or other security exercisable for, or debenture, note, Preferred
        Stock or other security convertible into, shares of Common Stock
        (“Common
        Stock Equivalents”),
        at
        an
        initial exercise price per share of Common Stock (giving effect to any
        consideration to be paid upon exercise or conversion of such Common Stock
        Equivalents) less than $0.36 (with this amount to be adjusted as the Conversion
        Price is adjusted in Section 5(d)),
        unless
        it obtains the prior approval (by written consent or vote, as provided by
        law)
        of such issuance from the holders of Series A Preferred, voting separately
        as a
        single class; provided, that the foregoing approval shall not be required
        if in
        connection with such transaction all outstanding shares of Series A Preferred
        are to be redeemed by the Corporation, in the manner contemplated by Section
        7
        below, as of the date of the closing of such transaction.

      

      (g) Amendments
        of Employee Option Plan.
        Neither
        the Corporation nor any committee of the Board of Directors shall, for so
        long
        as shares of Series A Preferred remain outstanding, grant options under any
        employee stock option plan adopted by the Corporation (as it may be amended
        from
        time to time) for the purchase, in the aggregate, of more than 250,000 shares
        of
        its Common Stock, unless:

      

      (i) the
        initial exercise price of the options exceeds $0.36
        (with
        this amount to be adjusted as the Conversion Price is adjusted in Section
        5(d));
        or

      

      
        
           

        

        
          A-9

          
            

          

        

        
           

        

      

      (ii) it
        obtains the prior approval (by written consent or vote, as provided by law)
        of
        such issuance from the holders of Series A Preferred, voting separately as
        a
        single class; provided, that the foregoing approval shall not be required
        if in
        connection with such transaction all outstanding shares of Series A Preferred
        are to be redeemed by the Corporation, in the manner contemplated by Section
        7
        below, as of the date of the closing of such transaction.

      

      7. Redemption.
        

      

      (a) Mandatory
        Redemption.
        Except
        as and to the extent expressly prohibited by applicable law, upon the
        affirmative vote of the holders of a majority of the Series A Preferred issued
        and outstanding, to the extent the Corporation shall have funds legally
        available for such payment, the Corporation shall redeem all outstanding
        shares
        of Series A Preferred in three equal installments on the third, fourth and
        fifth
        anniversaries of the Issue Date of the Series A Preferred (each, a "Redemption
        Date");
        provided, that the holders of Series A Preferred shall give the Corporation
        written notice of their election to effect the mandatory redemption no less
        than
        fifteen (15) days before the applicable anniversary date. If and to the extent
        the Corporation may not at any such Redemption Date legally redeem all
        outstanding shares of the Series A Preferred then to be redeemed, then such
        shares as may be redeemed shall be redeemed on a pro rata basis according
        to
        each holder’s relative ownership of the Series A Preferred, and the redemption
        of any remaining shares will take place as soon as permitted by applicable
        law.
        The Series A Preferred shall be redeemed for an amount in cash equal to $1.00
        per share, subject to appropriate adjustment in the event of any stock dividend,
        stock split, combination or other similar recapitalization affecting the
        Series
        A Preferred, plus an amount in cash equal to all accrued and unpaid dividends
        on
        such share of Series A Preferred, whether or not declared, through the date
        of
        payment, such sum being hereinafter referred to as the "Redemption
        Price".
        

       

      (b) Optional
        Redemption.
        To the
        extent the Corporation shall have funds legally available for such payment,
        the
        Corporation at its option may, at any time and upon no less than thirty (30)
        days notice to the holders of the Series A Preferred, redeem all or any portion
        of the outstanding shares of Series A Preferred, at an amount equal to the
        Redemption Price for such shares of Series A Preferred, plus a premium equal
        to
:

      

      (i) ten
        percent (10%) of the Redemption Price for any optional redemption occurring
        in
        the period from the Issue Date until the second anniversary of the Issue
        Date,
        and 

      

      (ii) a
        premium
        equal to five percent (5%) of the Redemption Price for any optional redemption
        occurring in the period beginning on the day after the second anniversary
        of the
        Issue Date, and ending on the third anniversary of the Issue Date. 

      

      (c) Procedures.
        Not
        more than ninety (90) nor less than thirty (30) days prior to the Redemption
        Date (in the case of a mandatory redemption) or the date fixed for redemption
        by
        the Board of Directors (in the case of an optional redemption), notice thereof
        by first class mail, postage prepaid, shall be given to the holders of record
        of
        the shares of Series A Preferred to be redeemed, addressed to such holders
        at
        their last addresses as shown upon the stock transfer books of the Corporation.
        Each such notice of redemption shall specify the shares being redeemed, the
        date
        fixed for redemption, the Redemption Price, the place or places of payment,
        that
        payment will be made upon presentation and surrender of the shares of Series
        A
        Preferred, and that on and after the date fixed for redemption dividends
        will
        cease to accrue on such shares
        (except
        to the extent that the redemption does not occur with respect to any of such
        shares).
        Failure
        to give such notice by mail or any defect in such notice to the holders of
        any
        shares designated for redemption shall not affect the validity of the
        proceedings for the redemption of any other shares of Series A Preferred.
        

      

      
        
           

        

        
          A-10

          
            

          

        

        
           

        

      

      On
        or
        after the date fixed for redemption as stated in such notice, each holder
        of the
        shares called for redemption shall surrender the certificate evidencing such
        shares to the Corporation at the place designated in such notice and shall
        thereupon be entitled to receive payment of the Redemption Price. If less
        than
        all the shares evidenced by any such surrendered certificate are redeemed,
        a new
        certificate shall be issued evidencing the unredeemed shares. 

      

      Notice
        having been given as aforesaid, if, on the date fixed for redemption, funds
        necessary for the redemption shall be available therefor and shall have been
        deposited with a bank or trust company with irrevocable instructions and
        authority to pay the Redemption Price to the holders of the Series A Preferred,
        then, notwithstanding that the certificates evidencing any shares so called
        for
        redemption shall not have been surrendered, dividends with respect to the
        shares
        so called shall cease to accrue on and after the date fixed for redemption,
        such
        shares shall no longer be deemed outstanding, the holders thereof shall cease
        to
        be stockholders of the Corporation on
        the
        basis of the shares so called for redemption, and
        all
        rights whatsoever with respect to the shares so called for redemption (except
        the right of the holders to receive the Redemption Price without interest
        upon
        surrender of their certificates therefor) shall terminate. 

      

      If
        funds
        legally available for such purpose are not sufficient for redemption of the
        shares of Series A Preferred which were to be redeemed, then the certificates
        evidencing such shares shall be deemed not to be surrendered, such shares
        shall
        remain outstanding and the right of holders of shares of Series A Preferred
        thereafter shall continue to be only those of a holder of shares of the Series
        A
        Preferred
        (to the
        extent the holders do not hold other capital stock of the
        Corporation).

       

      (d) No
        Sinking Fund.
        The
        shares of Series A Preferred shall not be subject to the operation of any
        retirement or sinking fund.

      

      8. Severability
        of Provisions. Whenever
        possible, each provision hereof shall be interpreted in a manner as to be
        effective and valid under applicable law, but if any provision hereof is
        held to
        be prohibited by or invalid under applicable law, such provision shall be
        ineffective only to the extent of such prohibition or invalidity, without
        invalidating or otherwise adversely affecting the remaining provisions hereof.
        If a court of competent jurisdiction should determine that a provision hereof
        would be valid or enforceable if a period of time were extended or shortened
        or
        a particular percentage were increased or decreased, then such court may
        make
        such change as shall be necessary to render the provision in question effective
        and valid under applicable law.

      

      
        
           

        

        
          A-11

          
            

          

        

        
           

        

      

      9. No
        Reissuance of Series A Preferred.
        No
        share or shares of Series A Preferred acquired by the Corporation by reason
        of
        redemption, purchase, conversion or otherwise shall be reissued, and all
        such
        shares shall be canceled, retired and eliminated from the shares, which the
        Corporation shall be authorized to issue. This Certificate of Designation
        shall
        be appropriately amended to effect the corresponding reduction in the
        Corporation’s authorized capital stock.

      

      10. Preemptive
        Rights.
        The
        holders of outstanding shares of Series A Preferred shall have the following
        preemptive rights:

      

      (a) The
        Corporation shall not offer, issue or sell any shares of Common Stock, shares
        of
        any class of Series A Preferred, or any securities convertible into or
        exercisable for shares of Common Stock or any class of Preferred Stock
        ("Offered
        Securities"),
        or
        enter into any agreements or commitments pursuant to which the Corporation
        may
        become obligated to issue any Offered Securities, except for the issuance
        of
        Excluded Securities, unless the Corporation shall first offer to each holder
        of
        Series A Preferred (collectively, the "Offered
        Stockholders")
        the
        opportunity to purchase such person's Pro Rata Share of the Offered Securities.
        For purposes of this Section 10, "Pro
        Rata Share"
        shall
        mean, as to any stockholder of the Corporation, the ratio between the number
        of
        shares of outstanding Common Stock owned by such stockholder and the aggregate
        number of shares of outstanding Common Stock owned by all stockholders, all
        of
        which shall be computed on a fully diluted basis; accordingly, any Common
        Stock
        Equivalents that are held by a stockholder of the Corporation shall be deemed
        to
        have been exercised, converted and/or exchanged into the underlying shares
        of
        Common Stock as of the time when any calculation of Pro Rata Share is to
        be
        made.

      

      (b) Corporation
        Offering Notice.
        If the
        Corporation proposes to offer, issue or sell any Offered Securities it shall
        notify, in writing, the Offered Stockholders (the "Corporation
        Offering Notice")
        and
        shall specify all material terms of the proposed issuance and sale of the
        Offered Securities including, without limitation, the kind, offering price
        and
        number of Offered Securities proposed to be issued and sold by the Corporation.
        The Corporation Offering Notice shall constitute an offer (the "Corporation
        Offer")
        to
        sell to each Offered Stockholder such person's Pro Rata Share of the Securities
        described therein, upon the terms and conditions described below. If any
        Offered
        Stockholders' Pro Rata Share of Securities, as calculated by the Corporation,
        results in a fractional interest or share number, as applicable, then the
        Corporation shall round the number of Securities to be offered to such Offered
        Stockholder to the next highest whole number, which number shall be set forth
        in
        the Corporation Offering Notice.

      

      An
        Offered Stockholder shall have ten (10) days after its receipt of the
        Corporation Offering Notice to accept, in whole or in part, the Corporation
        Offer set forth therein. An Offered Stockholder shall accept the Corporation
        Offer by delivering to the Corporation before the end of such 10-day period
        a
        written notice of acceptance setting forth such portion of the Securities
        offered as such Offered Stockholder elects to purchase (the "Notice
        of Acceptance").
        The
        Notice of Acceptance shall be irrevocable.

      

      
        
           

        

        
          A-12

          
            

          

        

        
           

        

      

      (c) Right
        of Corporation to Sell.
        If
        Notices of Acceptance are not given by Offered Stockholders in respect of
        all
        the Offered Securities, then the Corporation shall have ninety (90) days
        from
        the expiration of the 10-day period required by Section 10(b) to sell any
        part
        of such Securities as to which Notices of Acceptance have not been given
        to any
        other person or persons, but only for cash and otherwise in all respects
        upon
        terms and conditions, including, without limitation, unit price and interest
        rates, which are no more favorable, in the aggregate, to such other person
        or
        persons or less favorable to the Corporation than those set forth in the
        Corporation Offer.

      

      (d) Application
        to Unsold Securities.
        Whenever any Offered Securities shall be offered but not purchased by the
        Offered Stockholders and not sold in accordance with this Section 10, then
        such
        securities may not be sold or otherwise disposed of until they are again
        offered
        under the procedures specified in this Section 10.

      

      (e) Excluded
        Securities.
        The
        rights of any holder of Series A Preferred under this Section 10 shall not
        apply
        to the following securities (the "Excluded
        Securities"):

         

      
        (i) Common
          Stock issued as a stock dividend or upon any subdivision or combination
          of
          shares of Common Stock;

        

        (ii) Securities
          issued in exchange for the securities of another corporation or in connection
          with the bona fide acquisition of another corporation by the Corporation
          by
          merger or purchase of substantially all of the assets, which is approved
          by the
          holders of Series A Preferred as required by Section 6;

        

        (iii) Shares
          issuable under stock options or any other Common Stock Equivalents that
          are
          currently outstanding; and

        

        (iv) Any
          options or shares of Common Stock that may be granted under any
          employee stock option plan adopted by the Corporation (as it may be amended
          from
          time to time),
          subject
          to the requirements of Section 6(g).

      11. Miscellaneous.

      

      (a) Transfer
        Taxes. The
        Corporation shall pay any and all stock transfer and documentary stamp taxes
        that may be payable in respect of any issuance or delivery of shares of Series
        A
        Preferred or other securities issued on account of Series A Preferred pursuant
        hereto or certificates or instruments evidencing such shares or securities.
        The
        Corporation shall not, however, be required to pay any such tax which may
        be
        payable in respect of any transfer involved in the issuance or delivery of
        shares of Series A Preferred or other securities in a name other than that
        in
        which the shares of Series A Preferred with respect to which such shares
        or
        other securities are issued or delivered were registered, or in respect of
        any
        payment to any person with respect to any such shares or securities other
        than a
        payment to the registered holder thereof, and shall not be required to make
        any
        such issuance, delivery or payment unless and until the person otherwise
        entitled to such issuance, delivery or payment has paid to the Corporation
        the
        amount of any such tax or has established, to the satisfaction of the
        Corporation, that such tax has been paid or is not payable.

      

      
        
           

        

        
          A-13

          
            

          

        

        
           

        

      

      (b) Failure
        to Designate Stockholder or Payee.
        In the
        event that a holder of shares of Series A Preferred shall not by written
        notice
        designate the name to whom payment upon redemption of shares of Series A
        Preferred should be made or the address to which such payment should be sent,
        the Corporation shall be entitled to register such payment in the name of
        the
        holder of such Series A Preferred as shown on the records of the Corporation
        and
        to send such payment to the address of such holder shown on the records of
        the
        Corporation.

       

      

      
        
           

        

        
          A-14

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