Exhibit 4.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
POWER EFFICIENCY CORPORATION
Power Efficiency Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
That the Board of Directors of said corporation, pursuant to Section 242
of the Delaware General Corporation Law, adopted the following resolutions
amending the Certificate of Designation of Series A Convertible Preferred
Stock of Power Efficiency Corporation:
FIRST: RESOLVED, that pursuant to the authority vested in the Board of
Directors, the Certificate of Designation of Series A Convertible Preferred
Stock of Power Efficiency Corporation is hereby amended so that, as amended,
Section 1 shall read as follows:
1. Designation of Series of Preferred Stock. Of the 10,000,000 undesignated
shares of the Company's authorized Preferred Stock, (i) 3,366,844 shares shall
be designated and known as "Series A-1 Convertible Preferred Stock," par value
$0.001 per share (the "Series A-1") and (ii) 6,633,156 shares shall be
designated and known as "Series A-2 Convertible Preferred Stock," par value
$0.001 per share (the "Series A-2") (collectively the Series A-1 and the
Series A-2 shall be referred to herein as the "Series A Preferred Stock").
SECOND: RESOLVED, that pursuant to the authority vested in the Board of
Directors, the Certificate of Designation of Series A Convertible Preferred
Stock of Power Efficiency Corporation is hereby amended so that, as amended,
Section 5.1 shall read as follows:
5.1 Each holder of outstanding shares of Series A Preferred Stock shall be
entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Series A Preferred Stock held of record by such
holder are convertible immediately prior to the record date for the
determination of stockholders entitled to vote (as adjusted from time to time
pursuant to Section 6 hereof) at each meeting of stockholders of the Company
(and written actions of stockholders in lieu of meetings) with respect to any
and all matters presented to the stockholders of the Company for their action
or consideration. Except as provided by law, the holders of shares of Series A
Preferred Stock shall vote together with the holders of Common Stock as a
single class on all matters on which holders of Common Stock shall have a
right to vote.
THIRD: RESOLVED, that pursuant to the authority vested in the Board of
Directors, the Certificate of Designation of Series A Convertible
Preferred Stock of Power Efficiency Corporation is hereby amended so
that, as amended, Section 6.4.3 shall read as follows:
6.4.3 Issue of Options and Convertible Securities Deemed Issuance of
Additional Shares of Common Stock. If the Company at any time or from time to
time after the Original Issue Date shall issue any Options or Convertible
Securities (other than the Revolving Credit Note dated May 8, 2003 issued by the
Company to Summit Energy Ventures, LLC) or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares of Common
Stock (as set forth in the instrument relating thereto without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, issuable upon the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the applicable Conversion Prices shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities; and
(B) if such Options or Convertible Securities by their terms provide, with
the passage of time or otherwise, for any increase in the consideration payable
to the Company, or decrease in the number of shares of Common Stock issuable,
upon the exercise, conversion or exchange thereof, the applicable Conversion
Prices computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities, provided
that no adjustment pursuant to this clause (B) shall have the effect of
increasing the Conversion Prices to an amount that exceeds the lower of (i) the
applicable Conversion Prices on the original adjustment date, or (ii) the
Conversion Prices that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date.
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FOURTH: RESOLVED, that pursuant to the authority vested in the Board of
Directors, the Certificate of Designation of Series A Convertible
Preferred Stock of Power Efficiency Corporation is hereby amended so
that, as amended, Section 6.4.4 shall read as follows:
6.4.4 Adjustment of Conversion Price Upon Issuance of Additional Shares of
Common Stock. In the event the Company shall, after the Original Issue Date,
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 6.4.3), without consideration or
for a consideration per share less than either of the Conversion Prices (the
"New Conversion Price") in effect on the date of, and immediately prior to such
issue, then and in such event, the applicable Conversion Prices shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
tenth of a cent) equal to the New Conversion Price. In the event that any
portion of the Revolving Credit Note issued by the Company to Summit Energy
Ventures, LLC, dated May 8, 2003, is converted into Series A-1 Preferred Stock,
the Series A-1 Conversion Price shall be reduced to a price equal to $0.183. In
no case, however, will such conversion cause the Series A-1 Conversion Price to
be raised if such Conversion Price was below $0.183 prior to the conversion of
the Revolving Credit Note. An adjustment made to the Series A-1 Conversion Price
due to the conversion of the Revolving Credit Note does not lock the Series A-1
Conversion Price at $0.183 and such Conversion Price may be reduced below $0.183
as provide elsewhere in this Article 6.
IN WITNESS WHEREOF, Power Efficiency Corporation has caused this certificate
to be signed by Raymond J. Skiptunis, its President and Chief Executive Officer,
this 8th day of May 2003.
POWER EFFICIENCY CORPORATION
By:__________________________________
Raymond J. Skiptunis, President & CEO
ACKNOWLEDGED:
By:__________________________________
Timothy Franzen, Secretary
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