AEROGEN INC
EX-10.25
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>4
<FILENAME>a04-3904_1ex10d25.htm
<DESCRIPTION>EX-10.25
<TEXT>
<html>

<head>



</head>

<body link="blue" vlink="purple">

<div style="font-family:'Times New Roman';">

<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 10.25</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OF</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SERIES A-1 PREFERRED STOCK</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OF</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AEROGEN, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Pursuant to Section&nbsp;151 of the<br>
Delaware General Corporation Law)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Aerogen, Inc. (the &#147;<i><u><font style="font-style:italic;">Corporation</font></u></i>&#148;),
a corporation organized and existing under the laws of the State of Delaware,
hereby certifies that, pursuant to authority conferred on its Board of
Directors (the &#147;<i><u><font style="font-style:italic;">Board</font></u></i>&#148;) by
the Amended and Restated Certificate of Incorporation of the Corporation, the
following resolution was adopted by the Board at a meeting of the Board duly
held on March&nbsp;8, 2004, which resolution remains in full force and effect
on the date hereof:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">RESOLVED</font></b>, that there
is hereby established a series of the Corporation&#146;s authorized Preferred Stock
(the &#147;<i><u><font style="font-style:italic;">Preferred Stock</font></u></i>&#148;)
having a par value of $0.001 per share, which series shall be designated as
&#147;Series A-1 Preferred Stock&#148; (the &#147;<i><u><font style="font-style:italic;">Series
A-1 Preferred Stock</font></u></i>&#148;) and shall consist of One Million Five
Hundred Seventy Two Thousand Six Hundred Eighty Five (1,572,685) shares.&#160; The shares of Series A-1 Preferred Stock
shall have the voting powers, designations, preferences and other special
rights, and qualifications, limitations and restrictions thereof set forth
below:</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">1.</font></b><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><b><i><u><font style="font-style:italic;font-weight:bold;">Certain Definitions</font></u></i>.&#160; </b>As used herein, the following terms
shall have the following meanings:</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Affiliate</font></u></i>&#148; shall mean, with respect to
any Person, any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified Person.&#160; For the purposes of this definition, &#147;<i><u><font style="font-style:italic;">control</font></u></i>,&#148; when used with respect to
any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms &#147;<i><u><font style="font-style:italic;">affiliated</font></u></i>,&#148; &#147;<i><u><font style="font-style:italic;">controlling</font></u></i>&#148; and &#147;<i><u><font style="font-style:italic;">controlled</font></u></i>&#148; have meanings correlative
to the foregoing.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Business Day</font></u></i>&#148; shall mean a day, other
than a Saturday or Sunday, on which banks in New York City are open for the
general transaction of business.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Fair Market Value</font></u></i>&#148; shall mean, with
respect to any listed security, its Market Price, and with respect to any
property or assets other than cash or listed securities, the fair value thereof
determined in good faith by the Board and the Requisite Holders.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Initial Issue Date</font></u></i>&#148; shall mean the
date that shares of Series A-1 Preferred Stock are first issued by the
Corporation.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Lead Series A-1 Preferred&#160; Investors</font></u></i>&#148; shall mean each of Xmark Fund, L.P. and
Xmark Fund, Ltd.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Market Price</font></u></i>&#148;, as of a particular date
(the &#147;<i><u><font style="font-style:italic;">Valuation Date</font></u></i>&#148;),
shall mean the following with respect to any class of listed securities: (A) if
such security is then listed on a national stock exchange, the Market Price
shall be the closing sale price of one share of such security on such exchange
on the last trading day prior to the Valuation Date, provided that if such
security has not traded in the prior ten (10) trading sessions, the Market
Price shall be the average closing price of such security in the most recent
ten (10) trading sessions during which such security has traded; (B) if such
security is then included in The Nasdaq Stock Market, Inc. (&#147;<i><u><font style="font-style:italic;">Nasdaq</font></u></i>&#148;), the Market Price shall be
the closing sale price of one share of such security on Nasdaq on the last
trading day prior to the Valuation Date or, if no such closing sale price is
available, the average of the high bid and the low ask price quoted on Nasdaq
as of the end of the last trading day prior to the Valuation Date, provided
that if such security has not traded in the prior ten (10) trading sessions,
the Market Price shall be the average closing price of one share of such
security in the most recent ten (10) trading sessions during which such
security has traded; (C) if such security is then included in the
Over-the-Counter Bulletin Board, the Market Price shall be the closing sale
price of one share of such security on the Over-the-Counter Bulletin Board on
the last trading day prior to the Valuation Date or, if no such closing sale
price is available, the average of the high bid and the low ask price quoted on
the Over-the-Counter Bulletin Board as of the end of the last trading day prior
to the Valuation Date, provided that if such stock has not traded in the prior
ten (10) trading sessions, the Market Price shall be the average closing price
of one share of such security in the most recent ten (10) trading sessions
during which such security has traded; or (D) if such security is then included
in the &#147;pink sheets,&#148; the Market Price shall be the closing sale price of one
share of such security on the &#147;pink sheets&#148; on the last trading day prior to
the Valuation Date or, if no such closing sale price is available, the average
of the high bid and the low ask price quoted on the &#147;pink sheets&#148; as of the end
of the last trading day prior to the Valuation Date, provided that if such
stock has not traded in the prior ten (10) trading sessions, the Market Price
shall be the average closing price of one share of such security in the most
recent ten (10) trading sessions during which such security has traded.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(g)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Person</font></u></i>&#148; shall mean any individual,
partnership, company, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, government or agency
or political subdivision thereof, or other entity.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(h)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Requisite Holders</font></u></i>&#148; shall mean (i) the
holders of at least a majority of the then outstanding shares of Series A-1
Preferred Stock, and (ii) each of the Lead Series A-1 Preferred Investors, so
long as the Lead Series A-1 Preferred Investors own at least eighty thousand
(80,000) shares of Preferred Stock in the aggregate (in each case as
appropriately adjusted for any stock dividend, stock split, reverse stock
split,</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">reclassification, stock combination or other recapitalization occurring
after the date hereof).</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>&#147;<i><u><font style="font-style:italic;">Series A-1 Stated Value</font></u></i>&#148; shall mean,
with respect to each share of Series A-1 Preferred Stock, Thirty Dollars
($30.00), which Series A-1 Stated Value shall be subject to appropriate
adjustment from time to time in the event of any stock dividend, stock split,
reverse stock split, reclassification, stock combination or other
recapitalization affecting the Series A-1 Preferred Stock.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.</font></b><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><b><i><u><font style="font-style:italic;font-weight:bold;">Designation; Preference and Ranking</font></u></i>.</b>&#160; The Series A-1 Preferred Stock shall consist
of One Million Five Hundred Seventy Two Thousand Six Hundred Eighty Five
(1,572,685) shares.&#160; The preferences of
each share of Series A-1 Preferred Stock with respect to dividend payments and
distributions of the Corporation&#146;s assets upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation shall be equal to the preferences
of every other share of Series A-1 Preferred Stock from time to time
outstanding in every respect.&#160;
Notwithstanding the terms and conditions of any series of Preferred
Stock now or hereafter existing providing that the Series A-1 Preferred Stock
shall rank junior or senior thereto, the Series A-1 Preferred Stock shall rank
senior to all other outstanding series of Preferred Stock and senior to the
Common Stock, par value $0.001 per share (the &#147;<i><u><font style="font-style:italic;">Common Stock</font></u></i>&#148;), of the Corporation as to the payment of
dividends and the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><i><u><font style="font-style:italic;">Dividend Rights</font></u></i></b>.&#160; (a)&#160;
Each holder of Series A-1 Preferred Stock, in preference and priority to
the holders of all other classes of stock, shall be entitled to receive, with
respect to each share of Series A-1 Preferred Stock then outstanding and held
by such holder of Series A-1 Preferred Stock, dividends, commencing from the
date of issuance of such share of Series A-1 Preferred Stock, at the rate of
six percent (6%) per annum of the Series A-1 Stated Value (the &#147;<i><u><font style="font-style:italic;">Series A-1 Preferred Dividends</font></u></i>&#148;).&#160; The Series A-1 Preferred Dividends shall be
cumulative, whether or not earned or declared, and shall be paid quarterly in
arrears on the first day of January, April, July&nbsp;and October&nbsp;in each
year.&#160; The Series A-1 Preferred
Dividends shall be paid to each holder of Series A-1 Preferred Stock, at the
Corporation&#146;s election, out of legally available funds or through the issuance
of such number of shares of Common Stock determined by dividing the amount of
the total accrued but unpaid dividends then outstanding on such holder&#146;s shares
of the Common Stock by the then existing Fair Market Value (rounded up to the
nearest whole share).&#160; Any election by
the Corporation to pay dividends in cash or shares of Common Stock shall be
made uniformly with respect to all outstanding shares of Series A-1 Preferred
Stock for a given dividend period.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>No
dividends shall be paid on any Common Stock of the Corporation or any other
capital stock of the Corporation during any fiscal year of the Corporation
until all outstanding Series A-1 Preferred Dividends (with respect to the
current fiscal year and all prior fiscal years) shall have been paid or
declared and set apart for payment to the holders of Series A-1 Preferred
Stock.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>In
the event that the Corporation shall at any time pay a dividend on the Common
Stock (other than a dividend payable solely in shares of Common Stock) or any
other class or series of capital stock of the Corporation, the Corporation
shall, at the same time, pay to each holder of Series&nbsp;A-1 Preferred Stock
a dividend equal to the dividend that would have been payable to such holder if
the shares of Series&nbsp;A-1 Preferred Stock held by such holder had been
converted into Common Stock on the date of determination of holders of Common
Stock entitled to receive such dividends, subject to the limitations on
conversion set forth in Section&nbsp;6(j) below.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><i><u><font style="font-style:italic;">Liquidation Rights</font></u></i></b>. (a)&#160; In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Series A-1 Preferred Stock shall be entitled to receive, on a pro rata
basis, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock, or any
other class of capital stock of the Corporation, an amount equal to the Series
A-1 Stated Value for each share of Series A-1 Preferred Stock then held by such
holder, plus an amount equal to all declared but unpaid dividends, and all
accrued but unpaid dividends set forth in Section&nbsp;3(a) above, on each such
share of Series A-1 Preferred Stock (the &#147;<i><u><font style="font-style:italic;">Liquidation
Preference Payment</font></u></i>&#148;).&#160;
If, upon the occurrence of any such liquidation, dissolution or winding
up of the Corporation, the assets and funds to be distributed among the holders
of Series A-1 Preferred Stock shall be insufficient to permit the payment to
such holders of the full Liquidation Preference Payment, then<b><font style="font-weight:bold;">  </font></b>the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of Series A-1 Preferred Stock in
proportion to the Liquidation Preference Payment each such holder is entitled
to receive, and no assets of the Corporation shall be distributed to the
holders of the Common Stock or any other class or series of capital stock of
the Corporation in respect of such Common Stock or such other stock unless and
until the Liquidation Preference Payment payable to all holders of the Series
A-1 Preferred Stock has been indefeasibly paid in full.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>After
payment of the full Liquidation Preference Payment to the holders of the Series
A-1 Preferred Stock as set forth in Section&nbsp;4(a) above and subject to any
other distribution that may be required with respect to any future series of
Preferred Stock that may from time to time come into existence, the remaining
assets and funds of the Corporation, if any, available for distribution to
stockholders shall be distributed ratably among the holders of the Series A-1
Preferred Stock, any other class or series of capital stock that participates
with the Common Stock in the distribution of assets upon any liquidation,
dissolution or winding up of the Corporation and the Common Stock, with the
holders of the Series A-1 Preferred Stock deemed to hold that number of shares
of Common Stock into which such shares of Series A-1 Preferred Stock are then
convertible.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The
Requisite Holders, by written notice to the Corporation at least two (2)
Business Days prior to the effective date thereof (and in no event less than
eighteen (18) Business Days after receipt of an Acquisition Notice (as defined
below) or less than eight (8) Business Days after a Change Notice (as defined
below)),<b><font style="font-weight:bold;">  </font></b>may
elect to</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">treat any of the following transactions as a dissolution or winding up
of the Corporation for the purposes of this Section&nbsp;4:&#160; (1) a consolidation or merger of the
Corporation with or into any other corporation or corporations which results in
the stockholders of the Corporation owning less than fifty percent (50%) of the
outstanding capital stock of the surviving entity; (2) a sale of all or substantially
all of the assets of the Corporation; (3) the issuance and/or sale by the
Corporation in one or a series of related transactions of shares of Common
Stock (or securities convertible or exchangeable into or exercisable for shares
of Common Stock) constituting a majority of the shares of Common Stock
outstanding immediately following such issuance (treating all securities
convertible or exchangeable into or exercisable for shares of Common Stock as
having been fully converted, exchanged and exercised); and (4) any other form
of acquisition or business combination where the Corporation is the target of
such acquisition and where a change in control occurs such that the Person
seeking to acquire the Corporation has the power to elect a majority of the Board
as a result of the transaction<b><font style="font-weight:bold;">  </font></b>(each
such event an &#147;<i><u><font style="font-style:italic;">Acquisition</font></u></i>&#148;).&#160; The Corporation shall give written notice
(the &#147;<i><u><font style="font-style:italic;">Acquisition Notice</font></u></i>&#148;)
to the holders of Series A-1 Preferred Stock at least twenty (20) Business Days
prior to the consummation of any Acquisition.&#160;
Such Acquisition Notice shall describe the material terms and conditions
of such Acquisition and the rights of the holders of Series A-1 Preferred Stock
pursuant to this Section&nbsp;4, and the Corporation shall give such holders
written notice (a &#147;<i><u><font style="font-style:italic;">Change Notice</font></u></i>&#148;)
of any material changes at least ten (10) Business Days prior to the
consummation of any Acquisition.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Distributions
Other than Cash</u>.&#160; Whenever the distributions provided for in
this Section&nbsp;4 shall be payable in property other than cash, the value of
such distribution shall be the<b><font style="font-weight:bold;">  </font></b>Fair Market Value thereof.&#160; All distributions (including distributions
other than cash) made hereunder shall be made <u>pro</u>  <u>rata</u> to the
holders of Series A-1 Preferred Stock, based on the number of shares of Series A-1
Preferred Stock held by each such holder.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Nothing
in this Section&nbsp;4 shall affect in any way the right of each holder of
Series A-1 Preferred Stock to convert such shares at any time and from time to
time into Common Stock in accordance with Section&nbsp;6 hereof prior to the
liquidation, dissolution or winding up of the Corporation or consummation of
any Acquisition.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">5.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b><i><u><font style="font-style:italic;font-weight:bold;">Voting
Rights; Protective Provisions</font></u></i></b>.</h3>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Except
as otherwise provided herein or as required by applicable law, the holders of
Series A-1 Preferred Stock shall be entitled to vote on all matters on which
the holders of Common Stock shall be entitled to vote, in the same manner and
with the same effect as the holders of Common Stock, voting together with the
holders of Common Stock as a single class.&#160;
For this purpose, the holders of Series A-1 Preferred Stock shall be
given notice of any meeting of stockholders as to which the holders of Common
Stock are given notice in accordance with the by-laws of the Corporation.&#160; As to any matter on which the holders of
Series A-1 Preferred Stock shall be entitled to vote, each holder of Series A-1
Preferred Stock shall have a number of votes per share of Series A-1 Preferred
Stock held of record by such holder on the record date for the</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">meeting of stockholders, if such matter is subject to a vote at a
meeting of stockholders, or on the effective date of any written consent, if
such matter is subject to a written consent of the stockholders without a
meeting of stockholders, equal to the number of shares of Common Stock into
which such share of Series A-1 Preferred Stock is then convertible on such
record date or effective date, as the case may be, in accordance with
Section&nbsp;6 hereof (subject to the limitations on conversion set forth in Section&nbsp;6(j)
below).</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>As
long as at least two hundred thousand (200,000) shares of Series A-1 Preferred
Stock are outstanding (appropriately adjusted for any stock dividend, stock
split, reverse stock split, reclassification, stock combination or other
recapitalization occurring after the date hereof), the Corporation shall not,
without the affirmative vote or written consent of the Requisite Holders,
directly or indirectly, take any of the following actions or agree to take any
of the following actions:</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>amend,
alter or repeal any of the provisions of the Corporation&#146;s Amended and Restated
Certificate of Incorporation or Bylaws or this Certificate of Designations, or
in any way change the preferences, privileges, rights or powers with respect to
the Series A-1 Preferred Stock or reclassify any class of stock, including,
without limitation, by way of merger or consolidation;</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>authorize,
create, designate, issue or sell any (A) class or series of capital stock
(including shares of treasury stock), (B) rights, options, warrants or other
securities convertible into or exercisable or exchangeable for capital stock or
(C) any debt security which by its terms is convertible into or exchangeable
for any capital stock or has any other equity feature or any security that is a
combination of debt and equity, which capital stock, in each case, is senior to
or <u>pari</u>  <u>passu</u> with the Series A-1 Preferred Stock;</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>increase
the number of authorized shares of Series A-1 Preferred Stock or authorize the
issuance of or issue any shares of Series A-1 Preferred Stock (other than in
connection with the payment of Series A-1 Preferred Dividends in accordance
with Section&nbsp;3 hereof);</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>increase
or decrease the number of authorized shares of any class of capital stock of
the Corporation;</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(5)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>agree
to any restriction on the Corporation&#146;s ability to satisfy its obligations
hereunder to holders of Series A-1 Preferred Stock or the Corporation&#146;s ability
to honor the exercise of any rights of the holders of the Series A-1 Preferred
Stock;</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>directly
or indirectly declare or pay any dividend or make any distribution (whether in
cash, shares of capital stock of the Corporation, or other property) on shares
of capital stock of the Corporation (except with respect to shares of Series
A-1 Preferred Stock in accordance with the terms of this Certificate of
Designations), or redeem, purchase or otherwise acquire for value (including
through an exchange), or set apart money or other property for any mandatory
purchase or analogous</h3>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">fund for the redemption, purchase or acquisition of any shares of
capital stock of the Corporation (except with respect to the repurchase of
shares of Common Stock held by employees, officers or directors of the
Corporation, which has been approved by the Board);</font></p>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(7)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>consummate
an Acquisition or enter into an agreement with respect to an Acquisition;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(8)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>materially
change the nature or scope of the business of the Corporation to a business
other than the manufacturing or formulation of devices or drugs for aerosol
delivery;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(9)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>consummate
or agree to make any sale, transfer, assignment, pledge, lease, license or
similar transaction by which the Corporation grants on an exclusive basis any
rights to any of the Corporation&#146;s intellectual property other than intellectual
property relating to the Corporation&#146;s insulin program or the licensing of any
of the Corporation&#146;s intellectual property to a ventilator manufacturer for
incorporation into such manufacturer&#146;s ventilator technology;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(10)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>create,
incur, assume or suffer to exist, any lien, charge or other encumbrance on any
of its properties or assets, other than liens of carriers, warehousemen,
artisans, bailees, mechanics and materialmen incurred in the ordinary course of
business securing sums not overdue; or</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(11)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>agree
to do any of the foregoing.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>As
long as at least two hundred thousand (200,000) shares of Series A-1 Preferred
Stock are outstanding (appropriately adjusted for any stock dividend, stock
split, reverse stock split, reclassification, stock combination or other
recapitalization occurring after the date hereof), the Corporation shall not,
without the affirmative vote or written consent of the Requisite Holders,
directly or indirectly, take any of the following actions or agree to take any
of the following actions unless such action has been approved by the Board:</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>approve
the annual budget of the Corporation or any changes thereto;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>incur
any indebtedness for borrowed money (whether directly or indirectly through an
Affiliate or otherwise) in excess of twenty-five thousand dollar ($25,000) in
one or a series of related transactions other than trade payables incurred in
the ordinary course of business or indebtedness provided for in and consistent
with the approved current annual budget;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>increase
the compensation or benefits payable or to become payable to its directors or
executive officers other than pursuant to the terms of any agreement as in
effect prior to the Initial Issue Date;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>make
any loans to its directors, officers or shareholders;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(5)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>assume,
endorse or become liable for or guaranty the obligations of any Person;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>cancel
any liability or debt owed to it, except for consideration equal to or
exceeding the outstanding balance of such liability or debt, and in any event,
in the ordinary course of business; or</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(7)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>agree
to do any of the foregoing.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For this purpose, the holders of Series A-1 Preferred Stock shall be
given notice of any meeting of stockholders as to which the holders of Common
Stock or any other class or series of capital stock of the Corporation are
given notice in accordance with the by-laws of the Corporation.&#160; As to any matter on which the holders of
Series A-1 Preferred Stock shall be entitled to vote in accordance with this
Sections 5(b) and 5(c), each holder of Series A-1 Preferred Stock shall have
one vote for each share of Series A-1 Preferred Stock held of record by such
holder on the record date for the meeting of stockholders, if such matter is
subject to a vote at a meeting of stockholders, or on the effective date of any
written consent, if such matter is subject to a written consent of the
stockholders without a meeting of stockholders.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">6.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><i><font style="font-style:italic;">Conversion</font></i>.&#160; </b>The holders of shares of Series A-1 Preferred Stock shall
have the following conversion rights:</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><i><font size="1" style="font-size:3.0pt;font-style:italic;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></i>Subject
to the terms and conditions of this Section&nbsp;6, the holder of any share or
shares of Series A-1 Preferred Stock shall have the right, at its option at any
time, to convert any such shares of Series A-1 Preferred Stock into such number
of fully paid and nonassessable shares of Common Stock as is obtained by: (i)
multiplying the number of shares of Series A-1 Preferred Stock to be converted
by the Series A-1 Stated Value and adding to such product the amount of any
accrued but unpaid dividends with respect to such shares of Series A-1
Preferred Stock to be converted; and (ii) dividing the result obtained pursuant
to clause (i) above by the Series A-1 Conversion Price then in effect.&#160; The &#147;<i><u><font style="font-style:italic;">Series
A-1 Conversion Price</font></u></i>&#148; shall initially be $3.00, and shall be
subject to adjustment from time to time in accordance with the provisions of
this Section&nbsp;6.&#160; The rights of
conversion set forth in this Section&nbsp;6 shall be exercised by any holder of
Series A-1 Preferred Stock by giving written notice to the Corporation that
such holder elects to convert a stated number of shares of Series A-1 Preferred
Stock into Common Stock and by surrender of a certificate or certificates for
the shares of Series A-1 Preferred Stock so to be converted (or, in lieu thereof,
by delivery of an appropriate lost stock affidavit in the event such
certificate or certificates have been lost or destroyed) to the Corporation at
its principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of Series A-1
Preferred Stock) at any time on the date set forth in such notice (which date
shall not be earlier than the Corporation&#146;s receipt of such notice), together
with a statement of the name or names (with address) in which the certificate
or certificates for shares of Common Stock shall be issued.</h4>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Promptly
after receipt of the written notice referred to in Section&nbsp;6(a) above and
surrender of the certificate or certificates for the share or shares of Series
A-1 Preferred Stock to be converted (or, in lieu thereof, by delivery of an
appropriate lost stock affidavit in the event such certificate or certificates
have been lost or destroyed), but in no event more than three (3) Business Days
thereafter, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder of Series A-1 Preferred Stock, registered in such name
or names as such holder may direct in writing, a certificate or certificates
for the number of whole shares of Common Stock issuable upon the conversion of
such share or shares of Series A-1 Preferred Stock. To the extent permitted by
law, such conversion shall be deemed to have been effected, and the Series A-1
Conversion Price shall be determined, as of the close of business on the date
on which such written notice shall have been received by the Corporation and
the certificate or certificates for such share or shares of Series A-1
Preferred Stock shall have been surrendered as aforesaid (or, in lieu thereof,
an appropriate lost stock affidavit has been delivered to the Corporation), and
at such time, the rights of the holder of such share or shares of Series A-1
Preferred Stock shall cease with respect to the shares of Series A-1 Preferred
Stock being converted, and the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby.</h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>No
fractional shares shall be issued upon any conversion of shares of Series A-1
Preferred Stock into Common Stock.&#160; If
any fractional share of Common Stock would, except for the provisions of the
first sentence of this Section&nbsp;6(c), be delivered upon such conversion,
the Corporation, in lieu of delivering such fractional share, shall pay to the
holder surrendering the shares of Series A-1 Preferred Stock for conversion an
amount in cash equal to the Market Price of such fractional share of Common
Stock.&#160; In case the number of shares of
Series A-1 Preferred Stock represented by the certificate or certificates
surrendered pursuant to Section&nbsp;6(a) above exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or
certificates for the number of shares of Series A-1 Preferred Stock represented
by the certificate or certificates surrendered which are not to be converted.</h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Except as provided in
Section&nbsp;6(e) below, if and whenever the Corporation shall issue or sell,
or is, in accordance with Sections 6(d)(1) through 6(d)(5) hereof, deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the Series A-1 Conversion Price in effect immediately prior to the
time of such issue or sale, then and in each such case (a &#147;<i><u><font style="font-style:italic;">Trigger Issuance</font></u></i>&#148;), regardless of
whether such issuance or sale was approved under Section&nbsp;5 above,
effective as of the close of business on the effective date of the Trigger
Issuance the then-existing Series A-1 Conversion Price shall be reduced to the
lowest price per share at which any share of Common Stock was issued or sold or
deemed to be issued or sold in such Trigger Issuance.</h4>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For purposes of this Section&nbsp;6(d), the following subsections
(d)(l) to (d)(5) shall also be applicable (subject, in each such case, to the
provisions of Section&nbsp;6(e) hereof):</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)(1) In case at any time after the date
hereof the Corporation shall in any manner grant, issue or sell any stock or
security convertible into or exchangeable for Common Stock (&#147;<i><u><font style="font-style:italic;">Convertible Securities</font></u></i>&#148;) or any
warrants or other rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or any Convertible Securities (such warrants,
rights or options being called &#147;<i><u><font style="font-style:italic;">Options</font></u></i>&#148;),
whether or not the right to convert, exchange or exercise any such Convertible
Securities or such Options are immediately exercisable, and the price per share
for which Common Stock is issuable upon the conversion or exchange of such
Convertible Securities or upon the exercise of such Options (determined by
dividing (i) the sum of (x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities or the granting of such Options, plus (y) the aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities or the exercise of
all such Options, plus (z), in the case of such Options to purchase Convertible
Securities, the aggregate amount of additional consideration, if any, payable
upon the conversion or exchange of such Convertible Securities, by (ii) the
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities, or upon the exercise of such
Options, or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options), shall be less than the Series A-1
Conversion Price in effect immediately prior to the time of the issue or sale
of such Convertible Securities or the granting of such Options, then the total
number of shares of Common Stock issuable upon the conversion or exchange of
such Convertible Securities, or the exercise of such Options, or upon the
conversion or exchange of the maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been issued
for such price per share as of the date of the issuance or sale of such
Convertible Securities or the granting of such Options (including Options to
purchase Convertible Securities) and thereafter shall be deemed to be
outstanding for purposes of adjusting the Series A-1 Conversion Price.&#160; Except as otherwise provided in
Section&nbsp;6(d)(2), no additional adjustment of the Series A-1 Conversion
Price shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities or upon exercise of such Options.</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)(2) Upon the happening of any of the
following events, namely, if the purchase price provided for in any Option
referred to in Section&nbsp;6(d)(l) hereof, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities referred
to in Section&nbsp;6(d)(l), or the rate at which Convertible Securities
referred to in</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Section&nbsp;6(d)(l) are convertible into or exchangeable for Common
Stock shall change at any time (including, but not limited to, changes under or
by reason of provisions designed to protect against dilution), the Series A-1
Conversion Price in effect at the time of such event shall forthwith be
readjusted to the Series A-1 Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued or
sold, but only if as a result of such adjustment the Series A-1 Conversion
Price then in effect hereunder is thereby reduced.</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)(3)&#160;
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Corporation therefor, after
deduction therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.&#160; In case any shares of Common Stock, Options
or Convertible Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board, after deduction of any expenses incurred
or any underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith.</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)(4)&#160;
In case the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Options or Convertible Securities or (ii)
to subscribe for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.&#160; Notwithstanding the foregoing, no
anti-dilution adjustment provided for in this Section&nbsp;6 shall be effected
with respect to any transaction for which a record date is set by the
Corporation if the transaction is abandoned by the Corporation prior to the
time such transaction becomes effective.</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)(5)&#160;
The number of shares of Common Stock outstanding at any given time shall
not include shares owned or held by or for the account of the Corporation or
any of its subsidiaries, and the disposition of any such shares (other than the
cancellation or retirement thereof) shall be considered an issue or sale of
Common Stock for the purpose of this Section&nbsp;6(d).</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Anything
herein to the contrary notwithstanding, the Corporation shall not be required
to make any adjustment of the Series A-1 Conversion Price in the case of the
following issuances of shares of Common Stock from and after the Initial Issue
Date: (i) issuances upon the exercise of any Options or Convertible Securities
granted, issued and outstanding on the Initial Issue Date; (ii) issuances upon
the grant or exercise of any stock or options which may hereafter be granted or
exercised under any employee benefit plan, stock option plan or restricted
stock plan of the Corporation in existence on the Initial Issue Date, so long
as the issuance of such stock or options is approved by a majority of the
independent members of the Board or a majority of the members of a committee of
independent directors established for such purpose; (iii) issuances of
securities as consideration for a merger or consolidation with, or purchase of
assets from, a non-Affiliated third party or in connection with any strategic
partnership or joint venture with a non-Affiliated third party with which the
Corporation will enter into technology agreements (the primary purpose of any
such action is not to raise equity capital); (iv) shares of Common Stock
issuable upon conversion of Series A-1 Preferred Stock or as payment-in-kind
dividends on the Series A-1 Preferred Stock in accordance with the terms
hereof; (v) shares of Common Stock issued or issuable as a result of any stock
split, combination, dividend, distribution, reclassification, exchange or
substitution for which an equitable adjustment is provided for in Sections
6(f), (g), (h) or (i) below; and (vi) shares of Common Stock issued (or
issuable upon exercise, exchange or conversion of rights, options or warrants
outstanding from time to time) which the Requisite Holders expressly elect in
writing to treat as an excluded issuance hereunder (collectively, &#147;<i><u><font style="font-style:italic;">Excluded Issuances</font></u></i>&#148;).</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>If,
at any time after the Initial Issue Date, the number of shares of Common Stock
outstanding is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or split-up of shares of Common Stock, then, following the
record date for the determination of holders of Common Stock entitled to
receive such stock dividend, or to be affected by such subdivision or split-up,
the Series A-1 Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of Series A-1 Preferred
Stock shall be increased in proportion to such increase in outstanding shares.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(g)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>If,
at any time after the Initial Issue Date, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then, following the
record date to determine shares affected by such combination, the Series A-1
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of each share of Series A-1 Preferred
Stock shall be decreased in proportion to such decrease in outstanding shares.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(h)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>If
the Common Stock issuable upon the conversion of the Series A-1 Preferred Stock
shall be changed into the same or different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination or shares of stock dividend
provided for elsewhere in this Section&nbsp;6, or the sale of all or
substantially all of the Corporation&#146;s</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">properties and assets to any other Person), then and in each such event
the holder of each share of Series A-1 Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series A-1 Preferred Stock might have been
converted, as the case may be, immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>If
at any time or from time to time there shall be a merger or consolidation of
the Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation&#146;s properties and assets to any other
Person, then, as a part of such merger, or consolidation or sale, provision
shall be made so that holders of Series A-1 Preferred Stock, as the case may
be, shall thereafter be entitled to receive upon conversion of the Series A-1
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation, or of the successor corporation resulting from such merger,
consolidation or sale, to which such holder would have been entitled if such
holder had converted its shares of Series A-1 Preferred Stock immediately prior
to such merger, consolidation or sale, without regard to any conversion
limitation specified in Section&nbsp;6(j).&#160;
In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section&nbsp;6 with respect to the rights
of the holders of the Series A-1 Preferred Stock after the merger, consolidation
or sale to the end that the provisions of this Section&nbsp;6, including
adjustment of the Series A-1 Conversion Price then in effect for the Series A-1
Preferred Stock and the number of shares issuable upon conversion of the Series
A-1 Preferred Stock) shall be applicable after that event in as nearly
equivalent a manner as may be practicable.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(j)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Notwithstanding
anything herein to the contrary, in no event shall a holder of Series A-1
Preferred Stock be entitled to convert any portion of the Series A-1 Preferred
Stock so held by such holder in excess of that portion upon conversion of which
the sum of (1) the number of shares of Common Stock beneficially owned by such
holder and its Affiliates (other than shares of Common Stock which may be deemed
beneficially owned through ownership of the unconverted shares of Series A-1
Preferred Stock or the unexercised or unconverted portion of any other security
of the holder subject to a limitation on conversion analogous to the
limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of that portion of the Series A-1 Preferred Stock
with respect to which the determination of this proviso is being made, would
result in beneficial ownership by such holder and its Affiliates of more than
4.99% of the then outstanding shares of Common Stock.&#160; The waiver by a holder of Series A-1 Preferred Stock of any
limitation contained in an Option or Convertible Security now or hereafter held
by such holder that is similar or analogous to the limitations set forth in
this Section&nbsp;6(j) shall not be deemed a waiver or otherwise effect the
limitation set forth in this Section&nbsp;6(j), unless such waiver expressly
states it is a waiver of the provisions of this Section&nbsp;6(j).&#160; For purposes of this Section&nbsp;6(j),
beneficial ownership shall be determined in accordance with Section&nbsp;13(d)
of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso.&#160; Any holder of Series A-1 Preferred</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stock may waive the limitations set forth herein by sixty-one (61) days
written notice to the Corporation.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(k)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Notices
of Record Date</u>.&#160; In case at any
time:</h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h6 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt 1.0in;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
Corporation shall declare any dividend upon its Common Stock or any other class
or series of capital stock of the Corporation payable in cash or stock or make
any other distribution to the holders of its Common Stock or any such other
class or series of capital stock;</h6>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h6 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt 1.0in;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
Corporation shall offer for subscription <u>pro</u>  <u>rata</u> to the holders
of its Common Stock or any other class or series of capital stock of the
Corporation any additional shares of stock of any class or other rights; or</h6>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h6 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt 1.0in;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>there
shall be any capital reorganization or reclassification of the capital stock of
the Corporation, any Acquisition or a liquidation, dissolution or winding up of
the Corporation;</h6>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">then, in any one or more of said cases, the
Corporation shall give, by delivery in person or by certified or registered
mail, return receipt requested, addressed to each holder of any shares of
Series A-1 Preferred Stock at the address of such holder as shown on the books
of the Corporation, (a) at least 20 Business Days&#146; prior written notice of the
date on which the books of the Corporation shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any event set forth in clause (3) of this
Section&nbsp;6(k) and (b) in the case of any event set forth in clause (3) of
this Section&nbsp;6(k), at least 20 Business Days&#146; prior written notice of the
date when the same shall take place.&#160;
Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock or such other class or series of
capital stock shall be entitled thereto and such notice in accordance with the
foregoing clause (b) shall also specify the date on which the holders of Common
Stock and such other series or class of capital stock shall be entitled to
exchange their Common Stock and other stock for securities or other property
deliverable upon consummation of the applicable event set forth in clause (3)
of this Section&nbsp;6(k).</font></h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(l)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Upon any
adjustment of the Series A-1 Conversion Price, then and in each such case the
Corporation shall give prompt written notice thereof, by delivery in person or
by certified or registered mail, return receipt requested, addressed to each
holder of shares of Series A-1 Preferred Stock at the address of such holder as
shown on the books of the Corporation, which notice shall state the Series A-1
Conversion Price resulting from such adjustment and setting forth in reasonable
detail the method upon which such calculation is based.</h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(m)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The Corporation will at
all times reserve and keep available out of its authorized Common Stock, solely
for the purpose of issuance upon conversion of the</h4>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Series A-1 Preferred Stock as herein provided, such number of shares of
Common Stock as shall then be issuable upon the conversion of all outstanding
shares of Series A-1 Preferred Stock without regard to the limitation set forth
in Section&nbsp;6(j). The Corporation covenants that all shares of Common Stock
which shall be so issued shall be duly and validly issued and fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as
may be requisite to assure that the par value per share of the Common Stock is
at all times equal to or less than the Series A-1 Conversion Price in effect at
the time. The Corporation will take all such action as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirement of any national
securities exchange upon which the Common Stock may be listed. The Corporation
will not take any action which results in any adjustment of the Series A-1
Conversion Price if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Series A-1 Preferred Stock
would exceed the total number of shares of Common Stock then authorized by the
Corporation&#146;s Amended and Restated Certificate of Incorporation.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(n)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The
issuance of certificates for shares of Common Stock upon conversion of Series
A-1 Preferred Stock shall be made without charge to the holders thereof for any
issuance tax in respect thereof, provided 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 certificate in a name other than
that of the holder of the Series A-1 Preferred Stock which is being converted.</h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(o)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The
Corporation will at no time close its transfer books against the transfer of
any Series A-1 Preferred Stock or of any shares of Common Stock issued or
issuable upon the conversion of any shares of Series A-1 Preferred Stock in any
manner which interferes with the timely conversion of such Series A-1 Preferred
Stock, except as may otherwise be required to comply with applicable securities
laws.</h4>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">7.</font></b><b><i><font size="1" style="font-size:3.0pt;font-style:italic;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Right
of First Refusal</u>.</i></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>In
the event the Corporation desires to raise capital pursuant to any equity or
debt financing transaction (which shall include, without limitation, any
transaction where the Corporation raises capital through the issuance and sale
of any of its equity or debt securities, or any securities that are convertible
into or exercisable for such securities (other than pursuant to an Excluded
Issuance)) at any time prior to the date that is one (1) year from the Initial
Issue Date (a &#147;<i><u><font style="font-style:italic;">Proposed Financing</font></u></i>&#148;),
the Corporation shall, as long as at least two hundred thousand (200,000)
shares of Series A-1 Preferred Stock are outstanding (appropriately adjusted
for any stock dividend, stock split, reverse stock split, reclassification,
stock combination or other recapitalization occurring after the date hereof),
deliver to the then current holders of Series A-1 Preferred Stock a
comprehensive term sheet containing all of the significant business terms of
the Proposed Financing (the &#147;<i><u><font style="font-style:italic;">Proposed
Financing Notice</font></u></i>&#148;). The delivery of the Proposed Financing Notice
to the holders of Series A-1 Preferred Stock shall constitute an irrevocable
offer by the Corporation to the holders of Series A-1 Preferred Stock to</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">provide the Proposed Financing on the terms set forth in the Proposed
Financing Notice.&#160; For a period of
thirty (30) days following receipt of the Proposed Financing Notice (the &#147;<i><u><font style="font-style:italic;">Series A-1 Exercise Notice Period</font></u></i>&#148;),
upon written notice to the Corporation, the holders of Series A-1 Preferred
Stock shall have the right, but not the obligation, to provide the entire
Proposed Financing (but not less than the entire Proposed Financing) on the
terms set forth in the Proposed Financing Notice, and each such holder shall
have the right to purchase its pro rata share of the securities being issued
and sold in the Proposed Financing, based on the aggregate Stated Value of the
Series A-1 Preferred held by each such holder; <u>provided</u>, <u>however</u>,
if any such holder shall decline to exercise its rights under this
Section&nbsp;7, then in determining the pro rata share of the other holders who
are exercising their rights under this Section&nbsp;7, the aggregate Stated
Value of the Series A-1 Preferred held by each such declining holder shall be
excluded from such determination, and each exercising holder shall have the
right of over-subscription to the extent of the declining holder&#146;s or holders&#146;
(as the case may be)&#160; pro rata share.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>If
the holders of Series A-1 Preferred Stock do not exercise their right to
provide the entire Proposed Financing within the aforementioned thirty (30) day
period, the Corporation shall have the right, for a period of thirty (30) days
following the expiration of the Series A-1 Exercise Notice Period, to
consummate the Proposed Financing with any third party on the terms and
conditions set forth in the Proposed Financing Notice (but on no less favorable
terms to the Corporation than those set forth in the Proposed Financing
Notice); <u>provided</u>, <u>however</u>, in the event the Proposed Financing
is not consummated within the thirty (30) day period following the expiration
of the Series A-1 Exercise Notice Period, this Section&nbsp;7 shall again apply
to such Proposed Financing and any subsequent Proposed Financing.&#160; The failure of the holders of Series A-1
Preferred Stock to exercise their rights under this Section&nbsp;7 shall not be
deemed a waiver of such right with respect to any future Proposed Financing,
and the Corporation shall be obligated to comply with the provisions of this
Section&nbsp;7 with respect to any Proposed Financing so long as any shares of
Series A-1 Preferred Stock are outstanding.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">8.</font></b><b><i><font size="1" style="font-size:3.0pt;font-style:italic;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Amendment</u></i></b>.&#160; This Certificate of Designations may only be
amended with the prior written consent of the Requisite Holders.&#160; The Corporation may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Corporation shall have obtained the written consent to such
amendment, action or omission to act, of the Requisite Holders.</p>

<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">[Signature page follows]</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations
to be duly executed as of the 19th day of March, 2004.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">AEROGEN, INC.</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="33%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:33.72%;">
  <p style="margin:0in 0in .0001pt .1in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Jane E. Shaw</font></p>
  </td>
  <td width="16%" valign="top" style="padding:0in 0in 0in 0in;width:16.28%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt .15in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.22%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Name:</font></p>
  </td>
  <td width="43%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:43.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Jane E. Shaw</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.22%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Title:</font></p>
  </td>
  <td width="43%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:43.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Executive Officer</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="361" style="border:none;"></td>
  <td width="45" style="border:none;"></td>
  <td width="198" style="border:none;"></td>
  <td width="117" style="border:none;"></td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>


<!-- SEQ.=1,FOLIO='',FILE='C:\jms\mbabu\04-3904-1\task100401\3904-1-lc.htm',USER='vgram',CD='Mar 26 15:29 2004' -->
</body>

</html>

</TEXT>
</DOCUMENT>
