4/29/03
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 E Preferred Stock which constitute such series
and the relative rights, preferences and limitations of such series as follows:
1. Designation and Number of Series E Preferred Stock. The series of
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Preferred Stock shall be designated as "Series E Preferred Stock" (hereinafter
called the "Series E Preferred Stock") and shall consist of a total of
16,800,057 shares of Series E Preferred Stock, with a par value $0.00001 per
share and a stated value (the "Stated Value") of $1.00 per share.
2. Dividends. The holders of Series E Preferred Stock shall be entitled to
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receive an 8% cumulative dividend based on the Stated Value, payable quarterly
in cash. In the event that the Company shall fail to pay two consecutive
quarterly dividends (a "Dividend Payment Failure"), the holders of a majority of
the then outstanding shares of Series E Preferred Stock shall have the right to
elect the majority of the Company's directors until the Dividend Payment Failure
shall have been cured. If, during the period prior to the Company curing a
Dividend Payment Failure, the holders of the Company's Series A Preferred Stock
(the "A Preferred Stock") and/or the holders of the Company's Series C Preferred
Stock (the "C Preferred Stock") shall obtain the right to elect the majority of
the Company's directors as the result of a Dividend Payment Failure as defined
in the Certificates of Designations for the A and/or C Preferred Stock, as the
case may be, then the holders of a majority of the shares of the E Preferred
Stock and the A and/or C Preferred Stock, as the case may be, shall have the
right, voting as a single class, to elect the majority of the Company's
directors until the Dividend Payment Failure of the applicable Series of
Preferred Stock shall have been paid. By way of example, if the holders of the
E, A and C Preferred Stock shall have obtained the right to vote as provided
herein pursuant to a Dividend Payment Failure and the Dividend Payment Failure
of one of these Series is subsequently cured but the Dividend Payment Failure of
the other Series has not been cured, only the Series whose Dividend Payment
Failure have not been cured shall retain the right to elect the majority of the
Company's directors.
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, the holders of the Series E Preferred
Stock will share in any assets remaining after payment to the holders of any
other then outstanding preferred stock on a share for share basis with the
holders of the Common Stock.
(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 E Preferred Stock shall have no
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right of redemption.
5. Voting Rights. The holders of outstanding shares of Series E Preferred
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Stock shall have no voting rights except as provided in Section 2 above or as
may be required by Delaware law.
6. Protective Provisions. So long as any shares of Series E 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 E Preferred Stock:
(a) alter or change the rights, preferences of privileges of the Series
E Preferred Stock so as to affect adversely such Series E Preferred Stock;
(b) increase or decrease (other than by redemption) the total number of
authorized shares of Series E Preferred Stock; or
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(c) authorize or issue, or obligate itself to issue, any other equity
security, including any other security convertible into or exercisable for any
equity security (i) having a preference over, or being on a parity with, the
Series E Preferred Stock upon liquidation, or (ii) having rights similar to any
of the rights of the Series E Preferred Stock under this Section 7.
7. Notices. Any notice required by the provisions hereof to be given to the
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holders of the Series E 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.
8. Restrictions on Issuances. Anything to the contrary not with standing,
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no shares of Series E Preferred Stock shall be issued prior to April 29, 2008,
and then only as provided in the redemption provisions of the Designations of
Rights and Preferences for the A and C Preferred Stock.
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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