4/28/03
CERTIFICATE OF DESIGNATIONS
OF
CNE GROUP, INC.
ADOPTED PURSUANT TO SECTION 151(g)
OF THE
DELAWARE GENERAL CORPORATION LAW
RESOLVED, that pursuant to the authority expressly granted to the Board of
Directors (the "Board of Directors") of CNE Group, Inc., a Delaware Corporation
(the "Company"), by the provisions of the Amended and Restated Certificate of
Incorporation of the Company and the provisions of Section 151(g) of the
Delaware General Corporation Law, the Board of Directors hereby creates a series
of preferred stock, par value $0.00001 per share, and determines the designation
and number of shares of Series B Preferred Stock which constitute such series
and the relative rights, preferences and limitations of such series as follows:
1. Designation and Number of Series B Preferred Stock. The series of
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Preferred Stock shall be designated as "Series B Preferred Stock" (hereinafter
called "Series B Preferred Stock") and shall consist of a total of 4,400 shares
of Series B Preferred Stock, par value $0.00001 per share.
2. Dividends. The holders of Series B Preferred Stock shall not be entitled
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to receive any dividends except as provided in Section 4 below.
3. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, after payment by the Company to the
holders of the Company's Series A Preferred Stock, which may be issued with a
liquidating preference value of up to $5,000,000, from the then existing assets
of the Company an amount equal the liquidation preference of the then
outstanding Series A Preferred Stock, holders of Series B Preferred Stock shall
be entitled to receive, prior and in preference to any distribution of any
remaining assets of the Company to the holders of Common Stock and any other
Preferred Stock not then equal or senior to the Series B Preferred Stock, by
reason of their ownership thereof, an amount equal to the sum of $100.00 for
each outstanding share of Series B Preferred Stock (the "Original Issue Price").
If, upon the occurrence of the liquidation, dissolution or winding up of the
Company, the assets and funds thereof distributed to the holders of the Series B
Preferred Stock shall be insufficient to permit the payment to such holders in
full of the Original Issue Price, then the entire assets and funds of the
Company, after the payment to the holders of the Series A Preferred Stock and
any other then outstanding Preferred Stock that is senior to Series B Preferred
Stock as provided above, legally available for distribution shall be distributed
ratably among the holders of the Series B Preferred Stock and any Preferred
Stock equal to the Series B Preferred Stock in proportion to the amount of
Preferred Stock held by each.
(b) In the event of a liquidation as described above, all non-cash
assets of the Company shall be valued as follows:
(i) Securities not subject to legend, investment letter or other
similar restrictions on free marketability:
(A) If traded on a recognized securities exchange, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the thirty day period ending three days prior to the closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty day period ending three days prior to the closing;
and
(C) If there is no active public market, the value shall be the
fair market value thereof, as determined by the Company's Board of Directors,
which determination shall be final absent fraud or manifest error.
(ii) Securities subject to legend, investment letter or other
similar restrictions shall be valued by an appropriate discount from the market
value as determined in accordance with subsection (i) (C) above.
4. Redemption. The holders of the Series B Preferred Stock shall have no
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right of redemption. The Company shall have the right, but not the obligation,
to redeem all or any portion of the Series B Preferred Stock commencing 60
months after the issuance thereof, on the redemption date (the "Redemption
Date"), which shall be 30 days after notice of such redemption shall be given to
the holders who shares are to be redeemed. Each share of Series B Preferred
Stock shall be redeemed for 100 shares of the Company's Common Stock
(hereinafter referred to as the "Redeeming Stock"). If the Company redeems less
than all of the then outstanding shares of Series B Preferred Stock as provided
in this Section 4, then such redemption shall be made on a pro rata basis. The
Company shall cause the appropriate number of shares of the Redeeming Stock to
be transferred to each holder of the Series B Preferred Stock upon receipt of
such holder's certificate representing the shares of Series B Preferred Stock to
be redeemed. After the Redemption Date, all shares of Series B Preferred Stock
redeemed as provided herein shall cease to exist and the holders thereof shall
have only the right to receive the shares of Redeeming Stock issuable to them
for the redemption of their Series B Preferred Stock. If the Company shall fail
to redeem the Class B Preferred Stock on the Redemption Date, the Class B
Preferred Stock shall thereafter bear a 16% cumulative dividend, payable
quarterly in cash.
5. Voting Rights. The holders of outstanding shares of Series B Preferred
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Stock shall have no voting rights except as may be required by Delaware law.
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6. Protective Provisions. So long as any shares of Series B Preferred Stock
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are outstanding, the Company shall not, without first obtaining the approval (by
vote or by written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series B Preferred Stock:
(a) alter or change the rights, preferences of privileges of the
Series B Preferred Stock so as to affect adversely such Series B Preferred
Stock; or
(b) increase or decrease (other than by redemption) the total number
of authorized shares of Series B Preferred Stock.
7. Notices. Any notice required by the provisions hereof to be given to the
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holders of the Series B Preferred Stock shall be deemed given if deposited by
mail, postage prepaid, and addressed to each holder of record at his or her
address appearing on the books of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to
be signed by Anthony S. Conigliaro, its Secretary, as of the 28th day of April
2003.
/S/ANTHONY S. CONIGLIARO
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Anthony S. Conigliaro
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