Document:

exv10w17

 

Exhibit 10.17

First Amendment to Amended and Restated Rights Agreement

     This First Amendment, dated as of May 25, 2005 (this “Amendment”), to the Amended and Restated
Rights Agreement, dated as of February 17, 1999 (the “Rights Agreement”), is between Cirrus Logic,
Inc., a Delaware corporation (the “Company”), and EquiServe, Inc. and EquiServe Trust Company, N.A.
as successors in interest to BankBoston, N.A. (the “Rights Agent”).

W I T N E S S E T H :

     WHEREAS, the Board of Directors of the Company, at a meeting held on May 24, 2005, determined
that it is advisable and in the best interest of the Company to amend the Rights Agreement as set
forth below; and

     WHEREAS, in compliance with Section 27(a) of the Rights Agreement, the Company and the Rights
Agent desire to amend the Rights Agreement as set forth below.

     NOW, THEREFORE, in consideration of the Rights Agreement and the premises and mutual
agreements herein set forth, the parties hereby agree as follows:

	 	1.  	Section 1(r) of the Rights Agreement is hereby amended by restating the
definition of the term “Final Expiration Date” contained therein so that it reads in
its entirety as follows:

“Final Expiration Date” shall mean May 26, 2005.

	 	2.  	The term “Agreement” as used in the Rights Agreement shall be deemed to refer
to the Rights Agreement as amended by this Amendment.
	 
	 	3.  	This Amendment shall be effective as of the date hereof.
	 
	 	4.  	This Amendment shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed with in
accordance with the internal laws of Delaware applicable to contracts to be made and
performed entirely within Delaware.
	 
	 	5.  	This Amendment may be executed in two or more counterparts, each of which shall
for all purposes be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
	 
	 	6.  	Any capitalized term used herein without definition shall have the meaning
specified in the Rights Agreement.
	 
	 	7.  	Except as otherwise expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any other manner affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are hereby ratified and confirmed in all respects and shall
continue in full force and effect.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
attested, all as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	CIRRUS LOGIC, INC.	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ John T. Kurtzweil	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	John. T. Kurtzweil	 	 
	

	 	Title:
	 	Sr. Vice President, Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	RIGHTS AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	EquiServe Inc. and EquiServe Trust Company, N.A.,
as Rights Agent	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Michael Connor	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Michael Connor	 	 
	

	 	Title:
	 	Managing DirectorExhibit
4.1

CERTIFICATE OF DESIGNATIONS,
 PREFERENCES AND
RIGHTS
 of
 SERIES A CONVERTIBLE PREFERRED STOCK
 of

PERFECTDATA CORPORATION

(Pursuant to Section 151 of the
Delaware
General Corporation Law)

PerfectData Corporation,
a corporation organized and existing under the laws of the State of
Delaware (the "Corporation"), hereby
certifies that, on February 28, 2005, the Board of Directors of the
Corporation (the "Board of Directors" or the
"Board") pursuant to authority of the
Board of Directors as required by Section 151 of the Delaware General
Corporation Law, and in accordance with the provisions of its
Certificate of Incorporation and Bylaws, each as amended and restated
through the date hereof, has authorized, and hereby authorizes, a
series of the Corporation's previously authorized Preferred
Stock, $.01 par value per share (the "Preferred
Stock"), and hereby states the designation and number
of shares, and fixes the relative, participating, optional or other
special rights, preferences, privileges, powers and qualifications,
limitations or restrictions thereof as follows:

I.    DESIGNATION AND AMOUNT

The designation of this
series, which consists of 600,000 shares of Preferred Stock, is the
Series A Convertible Preferred Stock (the "Series A
Preferred Stock").

II.    CERTAIN
DEFINITIONS

For purposes of this Certificate of Designations,
the following terms shall have the following
meanings:

		
	A. 	"Affiliate"
has the meaning ascribed to such term in Rule 405 promulgated under the
Securities Act of 1933, as
amended.

		
	B. 	"Business
Day" means any day other than Saturday, Sunday or any
day on which national banks are authorized to be closed in the City of
New York, New
York.

		
	C. 	"Common
Stock" shall mean the Corporation's Common
Stock, $.01 par value per
share.

		
	D. 	"Conversion
Date" means, for (i) any Optional Conversion (as
defined in Article IV, Section A hereof), the date specified in the
notice of conversion in the form attached hereto (the
"Notice of Conversion"), so long as a
copy of the Notice of Conversion is faxed (or delivered by other means
resulting in notice) to the Corporation before 5:00 p.m., New York City
time, on the Conversion Date indicated in the Notice of Conversion;
provided, however, that, if the Notice of Conversion is not so faxed or
otherwise delivered before such time, then the Conversion Date shall be
the date the holder faxes or otherwise delivers the Notice of
Conversion to the Corporation and, if the Notice of Conversion is faxed
or otherwise delivered after 5:00 p.m., New York City time, on the
Conversion Date indicated in the Notice of Conversion, the Conversion
Date shall be the next Business Day, and (ii) for any Mandatory
Conversion Event (as defined in Article IV, Section C hereof) that date
specified in the notice delivered to the holders of the Series A
Preferred Stock being converted pursuant to Article IV.C in the event
that such Mandatory Conversion Event occurs.

		
	E. 	"Conversion
Ratio" means initially 48.11159 per share and shall
be subject to adjustment as provided in Article VIII
hereof.

		
	F. 	"Corporate
Change" has the meaning ascribed to such term in
Article VIII, Section B hereof.

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	G. 	"Delivery
Period" has the meaning ascribed to such term in
Article IV, Section B(i)
hereof.

		
	H. 	"DGCL"
has the meaning ascribed to such term in Article IX, Section A
hereof.

		
	I. 	"Distribution"
has the meaning ascribed to such term in Article VIII, Section C
hereof.

		
	J. 	"Dividend
Date" has the meaning ascribed to such term in
Article III, Section A
hereof.

		
	K. 	"Issuance
Date" means, with respect to each share of the Series
A Preferred Stock, the Closing Date (as defined) under the Merger
Agreement dated as of March 7, 2005 by and among the Corporation, its
wholly-owned subsidiary PerfectData Acquisition Corporation and Sona
Mobile, Inc. (the "Merger Agreement")
pursuant to which such share of the Series A Preferred Stock will be
issued.

		
	L. 	"Junior
Securities" has the meaning ascribed to such term in
Article VI
hereof.

		
	M. 	"Liquidation
Event" has the meaning ascribed to such term in
Article VII, Section A hereof.

		
	N. 	"Liquidation
Preference" means, with respect to a share of the
Series A Preferred Stock, its Stated Value (as hereinafter
defined).

		
	O. 	"Majority
Holders" means the holders of more than fifty
(50%) percent of the then outstanding shares of the Series A
Preferred
Stock.

		
	P. 	"Mandatory
Conversion Event" has the meaning ascribed to such
term in Article IV, Section C of this Certificate of
Designations.

		
	Q. 	"Market
Price" means, for any security (including, without
limitation, the Common Stock) as of any date, the Closing Price of such
security on the principal Trading Market on which such security is
included for trading; provided, that, if there is no trading
in the security on a particular Trading Day on the relevant principal
Trading Market, the Market Price for that day shall be the Market Price
on the last preceding Trading Day on which there was trading in the
security on the principal Trading Marking. "Closing
Price" means on any particular date (i) the last
reported closing price per share of the security on such date on the
Trading Market (as reported by Bloomberg L.P. or any similar
organization or agency succeeding to its functions of reporting prices
("Bloomberg") at 4:15 p.m. (New York
time) as the last reported closing price for regular session trading on
such day) or (ii) if there is no such price on such date, then the
closing price on the Trading Market on the date nearest preceding such
date (as reported by Bloomberg at 4:15 p.m. (New York time) as the
closing price for regular session trading on such day), or (iii) if the
security is not then listed or quoted on the Trading Market and if
prices for the security are then reported in the "pink
sheets" published by the Pink Sheets LLC (or a similar
organization or agency succeeding to its functions of reporting prices
("Pink Sheets")), the most
recent price per share of the security as reported, or (iv) if the
shares of the security are not then publicly traded, the fair market
value of a share of the security as determined in good faith by the
Board of Directors of the Company. "Trading
Day" means (i) a day on which the security is
traded on a Trading Market, or (ii) if the security is not quoted on a
Trading Market, a day on which the security is quoted in the
over-the-counter market as reported by the Pink Sheets; provided, that
in the event that the security is not listed or quoted as set forth in
(i), and (ii) hereof, then Trading Day shall mean a Business Day.
"Trading Market" means the
following markets or exchanges on which the security is listed or
quoted for trading on the date in question: the OTC Bulletin Board, the
American Stock Exchange, the New York Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap
Market.

		
	R. 	"Optional
Conversion" has the meaning ascribed to that term in
Article IV, Section A of this Certificate of
Designation.

		
	S. 	"Pari
Passu Securities" has the meaning ascribed to such
term in Article VI hereof.

		
	T. 	"Preferred Stock
Certificates" has the meaning ascribed to such term
in Article IV, Section B hereof.

		
	U. 	"Reserved
Amount" has the meaning ascribed to such term in
Article V hereof.

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	V. 	"Stated
Value" means $5.72 per share of the Series A
Preferred Stock.

III.    PAYMENT OF DIVIDENDS

A.    Payment. If and when declared by the Board of
Directors of the Corporation, in its sole discretion, a cash dividend
shall be payable on a non-cumulative basis out of funds legally
available therefor, at the rate of six percent (6%) per annum,
as to each outstanding share of the Series A Preferred Stock on every
successive September 30, December 31, March 31 and June 30 (a
"Dividend Date"), unless any such
Dividend Date is a non-Business Day, in which event the dividend shall
be payable on the next Business Day. Dividends for any period that is
less than three (3) calendar months shall be pro-rated based on a
365-day-year. The Corporation shall not declare or pay any dividend for
any quarterly period unless the Corporation has sufficient funds
legally available for such purchase.

B.    Record
Date. When and if the Board of Directors declares a quarterly
dividend, the dividend shall be payable to the holders of record of the
Series A Preferred Stock on the 15th day of the month (if a Business
Day; if not, on the next Business Day) immediately preceding the
respective Dividend Date or on such other record date as shall be fixed
by the Board of Directors, provided that such record date shall not be
more than 60 or less than ten days prior to the dividend payment
date.

IV.    CONVERSION

A.    Optional
Conversions. Each holder of shares of the Series A Preferred Stock
may, at any time and from time to time, convert (an
"Optional Conversion") each of his,
her or its shares of the Series A Preferred Stock into a number of
fully paid and nonassessable shares of the Common Stock equal to the
product of the number of shares of Series A Preferred being converted
and the Conversion Ratio. In addition, the holder shall receive with
his, her or its shares of the Common Stock accrued, but unpaid,
dividends, if any, on the holder's shares of the Series A
Preferred Stock through the Conversion Date.

B.    Mechanics of Conversion. In order to effect an
Optional Conversion, a holder shall: (x) fax (or otherwise deliver) a
copy of the fully executed Notice of Conversion to the Corporation
(Attention: its Secretary) and (y) surrender or cause to be surrendered
the original certificates representing the shares of the Series A
Preferred Stock being converted (the "Preferred Stock
Certificates"), duly endorsed, along with a copy of
the Notice of Conversion as soon as practicable thereafter to the
Corporation or its agency for such purpose, including the Transfer
Agent for the Common Stock, as the Corporation may designate to the
holders of the Series A Preferred Stock. Upon receipt by the
Corporation or its agency of a facsimile copy of a Notice of Conversion
from a holder, the Corporation shall promptly send, via facsimile, a
confirmation to such holder stating that the Notice of Conversion has
been received, the date upon which the Corporation expects to deliver
the shares of the Common Stock issuable upon such conversion and the
name and telephone number of a contact person at the Corporation
regarding the conversion. The Corporation shall not be obligated to
issue shares of the Common Stock upon a conversion unless either the
Preferred Stock Certificates are delivered to the Corporation as
provided above, or the holder notifies the Corporation that such
Preferred Stock Certificates have been lost, stolen or destroyed and
delivers the documentation to the Corporation required by Article XI.B
hereof.

    (i)    Delivery of Common Stock Upon an
Optional Conversion. Upon the surrender of the Preferred Stock
Certificates accompanied by a Notice of Conversion, the Corporation
(itself, or through its Transfer Agent for the Common Stock) shall, no
later than the later of (a) the third (3rd) Business Day following the
Conversion Date and (b) the Business Day following the date of such
surrender (or, in the case of lost, stolen or destroyed certificates,
after provision of indemnity pursuant to Article XI.B) (the
"Delivery Period"), issue and deliver
(i.e., deposit with a nationally recognized overnight courier service
postage prepaid) to the holder or its nominee (x) that number of shares
of the Common Stock issuable upon conversion of such shares of the
Series A Preferred Stock being converted and (y) a certificate
representing the number of shares of the Series A Preferred Stock not
being converted, if any. Notwithstanding the foregoing, in no event
shall the Company be required to 

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effect a conversion of shares of the Series A
Preferred Stock into less than 1,000 shares of the Common Stock, unless
such conversion would result in the conversion of all shares of the
Series A Preferred Stock then held by such holder.

    (ii)    Taxes. The Corporation shall pay any and
all taxes that may be imposed upon it with respect to the issuance and
delivery of the shares of the Common Stock upon the conversion of
shares of the Series A Preferred Stock, provided however, that the
Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
shares of the Common Stock in a name other than the holder of the
Series A Preferred Stock.

    (iii)    No Fractional
Shares. No fractional share of the Common Stock shall be issued
upon conversion of shares of the Series A Preferred Stock. If, as a
result of a holder converting all of the holder's shares of the
Series A Preferred Stock, a fractional share would otherwise result,
such fractional share shall instead be rounded up or down to the
nearest whole share. If, as a result of a holder converting only part
of the holder's shares of the Series A Preferred Stock, a
fractional share would otherwise result, such fractional share shall be
disregarded and the holder shall receive the lower number of full
shares; provided, however, that such fractional share shall be taken
into consideration when the holder converts the holder's
remaining shares of the Series A Preferred Stock.

    (iv)    Conversion Disputes. In the case of any
dispute with respect to a conversion, the Corporation shall promptly
issue such number of shares of the Common Stock as are not disputed in
accordance with subsection (i) above. If such dispute involves the
calculation of the Conversion Ratio, and such dispute is not promptly
resolved by discussion between the relevant holder and the Corporation,
the Corporation shall submit the disputed calculations to an
Conversion. The accounting firm shall promptly audit the calculations
and notify the Corporation and the holder of the results no later than
three (3) Business Days from the date independent accounting firm
(which firm may be the independent registered public accounting firm
for the Corporation) via facsimile within three (3) Business Days of
receipt of the Notice of it receives the disputed calculations. The
accounting firm's calculation shall be deemed conclusive, absent
manifest error. The Corporation shall then issue the appropriate number
of shares of the Common Stock in accordance with subsection (i) above.
The fees of the accounting firm shall be borne (i) by the Corporation
if the holder's calculation of the Conversion Ratio is closer to
the accounting firm's calculation of the Conversion Ratio and
(ii) by the holder if the reverse is true.

C.    Mandatory
Conversion. A Mandatory Conversion Event shall occur either
(i) on the date on which the stockholders of the Corporation, in
accordance with Section 5.11 of the Merger Agreement, authorize an
increase in the number of authorized shares of the Common Stock in an
amount sufficient at least to permit (a) the conversion of all shares
of the Series A Preferred Stock and (b) the issuance of the Additional
Shares (as such term is defined in Section 2.6 of the Merger Agreement)
or (ii) on the fifth (5th) anniversary of the Issuance Date.

    (i)    Notice to Holders. In the event that the
Mandatory Conversion Event has occurred, the Corporation shall, not
later than five (5) Business Days after the occurrence thereof, mail a
notice to each of the then holders of the Series A Preferred Stock
describing the Mandatory Conversion Event and requesting that the
holder surrender the certificate or certificates evidencing the shares
at its then principal office or at its agency designated for such
purpose (which may be the Transfer Agent for the Common Stock).

    (ii)    Delivery of Common Stock. As promptly after
surrender of the certificate or certificates evidencing shares of the
Series A Preferred Stock pursuant to a notice by the Corporation
delivered pursuant to subsection (i) of this Article IV, Section C, the
Corporation shall issue and deliver to a holder or, on his, her or its
written order, a permitted transferee a certificate or certificates for
the number of full shares of the Common Stock issuable as if it were an
Optional Conversion and an adjustment, as provided in Article IV,
Section B(iii) hereof, in respect of any fractional interest otherwise
issuable upon such conversion.

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(iii)    Dividends.
Notwithstanding anything to the contrary in this Article IV, Section C,
the Corporation shall pay in cash accrued but unpaid dividends, if any,
said payment to be made simultaneously with the delivery of shares of
the Common Stock as provided in subsection (ii) of this Article IV,
Section C.

(iv)    Effect of Mandatory Conversion
Event. Effective upon the occurrence of a Mandatory Conversion
Event, all rights of a holder of the Series A Preferred Stock as a
holder of the Series A Preferred Stock shall cease and terminate except
the right to receive shares of the Common Stock as provided in
subsection (ii) of this Article IV, Section C and to receive accrued,
but unpaid, dividends, as provided in subsection (iii) of this Article
IV, Section C and thereafter the holder shall be deemed to be a holder
of the Common Stock for the number of shares as to which the
holder's shares of the Series A Preferred Stock are convertible
pursuant to this Article IV.

V.    RESERVATION OF SHARES OF
COMMON STOCK

As promptly as practicable following the Issuance
Date the Corporation shall use its best efforts to obtain stockholder
approval of an increase in its authorized but unissued shares of Common
Stock in accordance with Section 5.11 of the Merger Agreement and, upon
such approval, shall reserve 110% of the number of shares of its
authorized but unissued shares of Common Stock for issuance upon
conversion of the Series A Preferred Stock. Thereafter, the number of
authorized but unissued shares of Common Stock so reserved (the
"Reserved Amount") shall at all times
be sufficient to provide for the conversion of all of the Series A
Preferred Stock outstanding at the then current Conversion Ratio
thereof.

VI.    RANK

All shares of the Series A
Preferred Stock shall rank (i) prior to (a) the Common Stock and (b)
any class or series of capital stock of the Corporation hereafter
created (unless, with the consent of the Majority Holders, such class
or series of capital stock specifically, by its terms, ranks senior to,
or pari passu with, the Series A Preferred Stock) (collectively with
the Common Stock, "Junior
Securities"); (ii) pari passu with any other class or
series of capital stock of the Corporation hereafter created (with the
written consent of the Majority Holders) specifically ranking, by its
terms, on parity with the Series A Preferred Stock (the
"Pari Passu Securities"); and (iii)
junior to any class or series of capital stock of the Corporation
hereafter created (with the written consent of the Majority Holders
obtained in accordance with Article X hereof) specifically ranking, by
its terms, senior to the Series A Preferred Stock (collectively, the
"Senior Securities"), in each case as
to distribution of assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary.

VII.    LIQUIDATION PREFERENCE

If the Corporation shall
commence a voluntary case under the U.S. Federal bankruptcy laws or any
other applicable bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in an involuntary case under any law
or to the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or
of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief
in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the U.S.
Federal bankruptcy laws or any other applicable bankruptcy, insolvency
or similar law resulting in the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official)
of the Corporation or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such
decree or order shall be unstayed and in effect for a period of 90
consecutive days and, on account of any such event, the Corporation
shall liquidate, dissolve or wind up, or if the Corporation shall
otherwise liquidate, dissolve or wind up (a
"Liquidation Event"), no distribution
shall be made to the holders of any shares of capital stock of the
Corporation (other than the preferences and privileges thereof, if any)
upon liquidation, dissolution or winding up unless prior thereto the
holders of shares of the Series A Preferred Stock shall have received
the Liquidation 

E-6

Preference with respect to each share. If,
upon the occurrence of a Liquidation Event, the assets and funds
available for distribution among the holders of the Series A Preferred
Stock and holders of the Pari Passu Securities, if any, shall be
insufficient to permit the payment to such holders of the preferential
amounts payable thereon, then the entire assets and funds of the
Corporation legally available for distribution to the Series A
Preferred Stock and the Pari Passu Securities, if any, shall be
distributed ratably among such shares in proportion to the ratio that
the Liquidation Preference payable on each such share bears to the
aggregate Liquidation Preference payable on all such shares. A
Corporate Change shall not be deemed a Liquidation Event provided that
compliance is made with Article VIII, Section B hereof. The proposed
transaction between the Corporation and Sona Mobile, Inc., a Washington
corporation, shall not be deemed a Liquidation Event or a Corporate
Change.

VIII.    ADJUSTMENTS TO THE CONVERSION RATIO

The Conversion Ratio shall be subject to adjustment from time to
time as follows:

A.    Stock Splits, Stock Dividends,
Etc. If, at any time on or after the Issuance Date, the number of
outstanding shares of the Common Stock is increased by a stock split,
stock dividend, combination, reclassification or other similar event,
the Conversion Ratio shall be proportionately reduced and the number of
shares of the Common Stock issuable upon conversion shall be
proportionately increased, or if the number of outstanding shares of
the Common Stock is decreased by a reverse stock split, combination or
reclassification of shares, or other similar event, the Conversion
Ratio shall be proportionately increased and the number of shares of
the Common Stock issuable upon conversion shall be proportionately
decreased. In such event, the Corporation shall notify the
Corporation's Transfer Agent of such change on or before the
effective date thereof.

B.    Adjustment Due to Merger,
Consolidation, Etc. If, at any time after the Issuance Date, there
shall be (i) any reclassification or change of the outstanding shares
of the Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or
merger of the Corporation with any other entity (other than a merger in
which the Corporation is the surviving or continuing entity and its
capital stock is unchanged), (iii) any sale or transfer of all or
substantially all of the assets of the Corporation or (iv) any share
exchange pursuant to which all of the outstanding shares of Common
Stock are converted into other securities or property (each of (i) -
(iv) above being a "Corporate
Change"), then the holders of the Series A Preferred
Stock shall thereafter have the right to receive upon conversion, in
lieu of the shares of the Common Stock otherwise issuable, such shares
of stock, securities and/or other property as would have been issued or
payable in such Corporate Change with respect to, or in exchange for
the number of shares of the Common Stock which would have been issuable
upon conversion had such Corporate Change not taken place, and, in any
such case, appropriate provisions (in form and substance reasonably
satisfactory to the Majority Holders) shall be made with respect to the
rights and interests of the holders of the Series A Preferred Stock to
the end that the economic value of the shares of the Series A Preferred
Stock is in no way diminished by such Corporate Change and that the
provisions hereof, including, without limitation, in the case of any
such consolidation, merger or sale in which the successor entity or
purchasing entity is not the Corporation, an immediate adjustment shall
be made to the Conversion Ratio so that the Conversion Ratio
immediately after the Corporate Change reflects the same relative value
as compared to the value of the surviving entity's common stock
that existed between the Conversion Ratio and the value of the
Corporation's Common Stock immediately prior to such Corporate
Change. The Corporation shall not effect any Corporate Change unless
the resulting successor or acquiring entity (if not the Corporation)
assumes by written instrument (in form and substance reasonable
satisfactory to the Majority Holders) the obligations of this
Certificate of Designations. The above provisions shall apply
regardless of whether or not there would have been a sufficient number
of shares of the Common Stock authorized and available for issuance
upon conversion of the shares of the Series A Preferred Stock
outstanding as of the date of such transaction, and shall similarly
apply to successive reclassifications, consolidations, mergers, sales,
transfers or share exchanges.

C.    Adjustment Due to
Distribution. If, at any time after the Issuance Date, the
Corporation shall declare or make any distribution of its assets (or
rights to acquire its assets) to holders of the 

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Common Stock as a partial liquidating
dividend, by way of return of capital or otherwise (including any
dividend or distribution to the Corporation's stockholders in
cash or shares (or rights to acquire shares) of capital stock of a
subsidiary (i.e., a spin-off)) (a
"Distribution"), then the holders of
the Series A Preferred Stock shall be entitled, upon any conversion of
shares of the Series A Preferred Stock after the date of record for
determining stockholders entitled to such Distribution, to receive the
amount of such assets which would have been payable to the holder with
respect to the shares of the Common Stock issuable upon such conversion
had such holder been the holder of such shares of the Common Stock on
the record date for the determination of stockholders entitled to such
Distribution. If the Distribution involves rights, warrants, options or
any other form of convertible securities and the right to exercise or
convert such securities would expire in accordance with its terms prior
to the conversion of the Series A Preferred Stock, then the terms of
such securities shall provide that such exercise or convertibility
right shall remain in effect until 30 days after the date the holder of
the Series A Preferred Stock receives such securities pursuant to the
conversion hereof.

D.    Other Action Affecting Conversion
Ratio. If the Corporation takes any action affecting the Common
Stock after the date hereof that would be covered by Article VIII,
Sections A through C, but for the manner in which such action is taken
or structured, which would in any way diminish the value of the Series
A Preferred Stock, then the Conversion Ratio shall be adjusted in such
manner as the Board of Directors of the Corporation shall in good faith
determine to be equitable under the circumstances.

IX.    VOTING RIGHTS

A.    General. Except as
otherwise expressly provided elsewhere in this Certificate of
Designations or as otherwise required by the Delaware General
Corporation Law (the "DGCL"), (i) each
holder of the Series A Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the stockholders of the Corporation and
shall be entitled to that number of votes equal to the largest number
of whole shares of the Common Stock into which such holder's
shares of Series A Preferred Stock could be converted pursuant to the
provisions of Article IV hereof at the record date for the
determination of stockholders entitled to vote on such matters or, if
no such record date is established, at the date such vote is taken or
any written consent of stockholders is solicited, and (ii) except as
otherwise provided herein, the holders of shares of the Series A
Preferred Stock and the Common Stock shall vote together (or tender
written consents in lieu of a vote) as a single class on all matters
submitted for a vote or consent to the stockholders of the
Corporation.

B.    Notification. The Corporation
shall provide each holder of Series A Preferred Stock with prior
notification of any meeting of the stockholders (and copies of proxy
materials and other information sent to holders of the Common Stock)
and a brief statement regarding the business to be transacted at the
meeting to the extent known at such time, at least 20 days prior to the
date of the meeting or other formal action of shareholders (or 20 days
prior to the consummation of the transaction or event if a transaction
or fundamental corporate event is to be voted upon, whichever is
earlier, but in no event earlier than public announcement of such
proposed transaction). Mailing of the proxy or consent solicitation
material to the holders of the Series A Preferred Stock simultaneously
with the mailing of such material to the holders of the Common Stock
shall be deemed in complete satisfaction of the Corporation's
notification obligation hereunder.

C.    Class
Voting. To the extent that under the DGCL the vote of the holders
of the Series A Preferred Stock, voting separately as a class or
series, as applicable, is required to authorize a given action of the
Corporation, the affirmative vote or consent of the Majority Holders
(except as otherwise may be required under the DGCL) shall constitute
the approval of such action by the class.

X.    PROTECTION
PROVISIONS

So long as any shares of the Series A Preferred
Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by the
DGCL) of the Majority Holders:

    (i)    alter or change
the rights, preferences or privileges of the Series A Preferred Stock,
whether through merger, sale, consolidation or otherwise;

E-8

    (ii)    alter or change the rights,
preferences or privileges of any capital stock of the Corporation so as
to affect adversely the Series A Preferred Stock, whether through
merger, sale, consolidation or otherwise;

    (iii)    create any Senior Securities;

    (iv)    create any Pari Passu Securities;

    (v)    increase or decrease the authorized number of shares
of the Series A Preferred Stock;

    (vi)    issue any
shares of Senior Securities or Pari Passu Securities;

    (vii)    redeem or repurchase, or declare or pay any cash
dividend, distribution or interest on, any Junior Securities or other
outstanding securities of the Company, except pursuant to this
Certificate of Designations or for repurchases pursuant to an equity
incentive plan approved by the Corporation's Board of Directors
in good faith;

    (viii)    permit any subsidiary now or
hereinafter existing to issue any securities, other than to the
Corporation; or

    (ix)    amend the Corporation's
Certificate of Incorporation or Bylaws.

Furthermore,
notwithstanding the foregoing, no change pursuant to this Article X
shall be effective to the extent that, by its terms, it applies to less
than all of the holders of shares of Series A Preferred Stock then
outstanding.

XI.    MISCELLANEOUS

A.    Cancellation of the Series A Preferred Stock. If
any shares of the Series A Preferred Stock are converted pursuant to
Article IV hereof, the shares so converted shall be canceled, shall
return to the status of authorized, but unissued shares of the
Preferred Stock of no designated series, and shall not be issuable by
the Corporation as shares of the Series A Preferred Stock.

B.    Lost or Stolen Certificates. Upon receipt by the
Corporation of (i) evidence of the loss, theft, destruction or
mutilation of any Preferred Stock Certificate(s) and (ii) (y) in the
case of loss, theft or destruction, of indemnity (without any bond or
other security) reasonably satisfactory to the Corporation, or (z) in
the case of mutilation, upon surrender and cancellation of the
Preferred Stock Certificate(s), the Corporation shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date.
However, the Corporation shall not be obligated to reissue such lost or
stolen Preferred Stock Certificate(s) if the holder contemporaneously
requests the Corporation to convert such Series A Preferred Stock or in
the event of a Mandatory Conversion Event.

C.    Status as
Stockholder. Upon submission of a Notice of Conversion by a holder
of the Series A Preferred Stock, (i) the shares covered thereby (other
than the shares, if any, which cannot be issued because their issuance
would exceed such holder's allocated portion of the Reserved
Amount) shall be deemed converted into shares of the Common Stock and
(ii) the holder's rights as a holder of such converted shares of
the Series A Preferred Stock shall cease and terminate, excepting only
the right to receive certificates for such shares of the Common Stock
and to any remedies provided herein or otherwise available at law or in
equity to such holder because of a failure by the Corporation to comply
with the terms of this Certificate of Designations. Notwithstanding the
foregoing, if a holder has not received certificates for all shares of
the Common Stock prior to the sixth (6th) Business Day after
the expiration of the Delivery Period with respect to a conversion of
the Series A Preferred Stock for any reason, then (unless the holder
otherwise elects to retain its status as a holder of the Common Stock
by so notifying the Corporation within five (5) Business Days after the
expiration of such six (6)-Business-Day period after expiration of the
Delivery Period) the holder shall regain the rights of a holder of the
Series A Preferred Stock with respect to such unconverted shares of the
Series A Preferred Stock and the Corporation shall, as soon as
practicable, return such unconverted shares to the holder. In all
cases, the holder shall retain all of its rights and remedies for the
Corporation's failure to convert shares of the Series A Preferred
Stock.

D.    Transfer. Subject to applicable law and
the legend, if any, on the certificate(s) to be transferred, the Series
A Preferred Stock may be transferred at any time and from time to time
by the holder thereof.

E-9

E.    Remedies Cumulative. The
remedies provided in this Certificate of Designations shall be
cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing
herein shall limit a holder's right to pursue actual damages for
any failure by the Corporation to comply with the terms of this
Certificate of Designations. The Corporation acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the
holders of the Series A Preferred Stock and that the remedy at law for
any such breach may be inadequate. The Corporation therefore agrees, in
the event of any such breach or threatened breach, that the holders of
the Series A Preferred Stock shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach,
without the necessity of showing economic loss and without any bond or
other security being required.

IN WITNESS WHEREOF,
this Certificate of Designations is executed on behalf of the
Corporation this 14th day of April, 2005.

PERFECTDATA CORPORATION

By: /s/ Harris A.
Shapiro

 Name: Harris Shapiro
 Title: Chairman of the
Board & Chief Executive Officer

E-10

NOTICE OF CONVERSION

(To be
Executed by the Registered Holder
 in order to Convert the Series A
Preferred Stock)

The undersigned hereby irrevocably
elects to convert
                        
shares of Series A Preferred Stock (the
"Conversion"), represented by stock
certificate No(s).
                      (the
"Preferred Stock Certificates"), into
shares of common stock (the "Common
Stock") of PerfectData Corporation according to the
conditions of the Certificate of Designations, Preferences and Rights
of the Series A Convertible Preferred Stock, as of the date written
below. If securities are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. No fee will be charged to the holder for
any conversion, except for transfer taxes, if any. Each Preferred Stock
Certificate is attached hereto (or evidence of loss, theft or
destruction thereof).

The undersigned acknowledges and
agrees that all offers and sales by the undersigned of the securities
issuable to the undersigned upon conversion of the Series A Preferred
Stock have been or will be made only pursuant to an effective
registration of the transfer of the Common Stock under the Securities
Act of 1933, as amended (the "Act"),
or pursuant to an exemption from registration under the Act.

		Date of
Conversion:                                                       

		Applicable Conversion
Ratio:                                      

		Signature:                                                                         

		Name:                                                                                 

		Address:
                                                                          

		                                                                          

		                                                                          

E-11

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