Unassociated Document


    
      

      

    

    


    OXFORD
      MEDIA, INC.

    


    CERTIFICATE
      OF DESIGNATION OF PREFERENCES, 

    RIGHTS
      AND LIMITATIONS

    OF

    SERIES
      B CONVERTIBLE PREFERRED STOCK

    


    PURSUANT
      TO SECTION 78.1955 OF THE 

    NEVADA
      GENERAL CORPORATION LAW

    


    The
      undersigned, LEWIS JAFFE, does hereby certify that:

    


    1.    He
      is the
      President of OXFORD MEDIA, INC., a Nevada corporation (the “Corporation”).

    


    2.    The
      Corporation is authorized to issue 1,000,000 shares of preferred stock, 4,000
      of
      which have been issued.

    


    3.    The
      following resolutions were duly adopted by the Board of Directors:

    


    WHEREAS,
      the Articles of Incorporation of the Corporation provides for a class of its
      authorized stock known as preferred stock, comprised of 1,000,000 shares, $0.001
      par value, issuable from time to time in one or more series;

    


    WHEREAS,
      the Board of Directors of the Corporation is authorized to fix the dividend
      rights, dividend rate, voting rights, conversion rights, rights and terms of
      redemption and liquidation preferences of any wholly unissued series of
      preferred stock and the number of shares constituting any Series and the
      designation thereof, of any of them; and

    


    WHEREAS,
      it is the desire of the Board of Directors of the Corporation, pursuant to
      its
      authority as aforesaid, to fix the rights, preferences, restrictions and other
      matters relating to a series of the preferred stock, which shall consist of,
      except as otherwise set forth in the Purchase Agreement, up to 3,857 shares
      of
      the preferred stock which the corporation has the authority to issue, as
      follows:

    


    NOW,
      THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide
      for
      the issuance of a series of preferred stock for cash or exchange of other
      securities, rights or property and does hereby fix and determine the rights,
      preferences, restrictions and other matters relating to such series of preferred
      stock as follows:

     

     

    


    
      
        
           

        

        
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    TERMS
      OF PREFERRED STOCK

    


    Section
      1. Designation,
      Amount and Par Value.
      The
      series of preferred stock shall be designated as its SERIES B Convertible
      Preferred Stock (the “Preferred
      Stock”)
      and
      the number of shares so designated shall be 3,857 (which shall not be subject
      to
      increase without the consent of all of the holders of the Preferred Stock (each,
      a “Holder”
and
      collectively, the “Holders”)).
      Each
      share of Preferred Stock shall have a par value of $0.001 per share and a stated
      value equal to $1,000 (the “Stated
      Value”).
      Capitalized terms not otherwise defined herein shall have the meaning given
      such
      terms in Section 8 hereof.

    


    Section
      2. Dividends.

    


    (a)
      Holders shall be entitled to receive and the Corporation shall pay, cumulative
      dividends at the rate per share (as a percentage of the Stated Value per share)
      of 8% per annum (subject to increase pursuant to Section 7(a)) payable quarterly
      on March 1, June 1, September 1 and December 1, beginning with December 31,
      2006, the first such date after the Original Issue Date, and on any Conversion
      Date or redemption date pursuant to the terms hereunder (except that, if such
      date is not a Trading Day, the payment date shall be the next succeeding Trading
      Day)(“Dividend
      Payment Date”).
      The
      form of dividend payments to each Holder shall be made in the following order:
      (i) if funds are legally available for the payment of dividends and the Equity
      Conditions have not been met, in cash only, (ii) if funds are legally available
      for the payment of dividends and the Equity Conditions have been met, at the
      sole election of the Corporation, in cash or shares of Common Stock which shall
      be valued solely for such purpose at 80% of the average of the 5 VWAPs
      immediately prior to the Dividend Payment Date; (iii) if funds are not legally
      available for the payment of dividends and the Equity Conditions have been
      met,
      in shares of Common Stock which shall be valued at 80% of the average of the
      5
      VWAPs immediately prior to the Dividend Payment Date; (iv) if funds are not
      legally available for the payment of dividends and the Equity Conditions
      relating to registration have been waived by such Holder, as to such Holder
      only, in unregistered shares of Common Stock which shall be valued at 80% of
      the
      average of the 5 VWAPs immediately prior to the Dividend Payment Date; and
      (v)
      if funds are not legally available for the payment of dividends and the Equity
      Conditions have not been met, then, at the election of such Holder, such
      dividends shall accrue to the next Dividend Payment Date or shall be accreted
      to
      the outstanding Stated Value. The Holders shall have the same rights and
      remedies with respect to the delivery of any such shares as if such shares
      were
      being issued pursuant to Section 5. On the Closing Date the Corporation shall
      have notified the Holders whether or not it may lawfully pay cash dividends.
      The
      Corporation shall promptly notify the Holders at any time the Corporation shall
      become able or unable, as the case may be, to lawfully pay cash dividends.
      If at
      any time the Corporation has the right to pay dividends in cash or Common Stock,
      the Corporation must provide the Holder with at least 20 Trading Days’ notice of
      its election to pay a regularly scheduled dividend in Common Stock. Dividends
      on
      the Preferred Stock shall be calculated on the basis of a 360-day year, shall
      accrue daily commencing on the Original Issue Date, and shall be deemed to
      accrue from such date whether or not earned or declared and whether or not
      there
      are profits, surplus or other funds of the Corporation legally available for
      the
      payment of dividends. Except as otherwise provided herein, if at any time the
      Corporation pays dividends partially in cash and partially in shares, then
      such
      payment shall be distributed ratably among the Holders based upon the number
      of
      shares of Preferred Stock held by each Holder. Any dividends, whether paid
      in
      cash or shares, that are not paid within three Trading Days following a Dividend
      Payment Date shall continue to accrue and shall entail a late fee, which must
      be
      paid in cash, at the rate of 18% per annum or the lesser rate permitted by
      applicable law (such fees to accrue daily, from the Dividend Payment Date
      through and including the date of payment).

    


    
      
        
           

        

        
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    (b)
      So
      long as any Preferred Stock shall remain outstanding, neither the Corporation
      nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly
      or indirectly any Junior Securities. So long as any Preferred Stock shall remain
      outstanding, neither the Corporation nor any Subsidiary thereof shall directly
      or indirectly pay or declare any dividend or make any distribution (other than
      a
      dividend or distribution described in Section 5 or dividends due and paid in
      the
      ordinary course on preferred stock of the Corporation at such times when the
      Corporation is in compliance with its payment and other obligations hereunder)
      upon, nor shall any distribution be made in respect of, any Junior Securities
      so
      long as any dividends due on the Preferred Stock remain unpaid, nor shall any
      monies be set aside for or applied to the purchase or redemption (through a
      sinking fund or otherwise) of any Junior Securities or shares pari passu with
      the Preferred Stock.

    


    (c)
      The
      Corporation acknowledges and agrees that the capital of the Corporation in
      respect of the Preferred Stock and any future issuances of the Corporation’s
      capital stock shall be equal to the aggregate par value of such Preferred Stock
      or capital stock, as the case may be, and that, on or after the date of the
      Purchase Agreement, it shall not increase the capital of the Corporation with
      respect to any shares of the Corporation’s capital stock issued and outstanding
      on such date. The Corporation also acknowledges and agrees that it shall not
      create any special reserves under the General Corporation Law of Nevada without
      the prior written consent of each Holder.

    


    Section
      3. Voting
      Rights.
      Except
      as otherwise provided herein and as otherwise required by law, the Preferred
      Stock shall have no voting rights. However, so long as any shares of Preferred
      Stock are outstanding, the Corporation shall not, without the affirmative vote
      of a majority-in-interest of the Holders of the shares of the Preferred Stock
      then outstanding, (a) alter or change adversely the powers, preferences or
      rights given to the Preferred Stock or alter or amend this Certificate of
      Designation, (b) authorize or create any class of stock ranking as to dividends,
      redemption or distribution of assets upon a Liquidation (as defined in Section
      4) senior to or otherwise pari passu with the Preferred Stock, (c) amend its
      articles of incorporation or other charter documents so as to affect adversely
      any rights of the Holders, (d) increase the authorized number of shares of
      Preferred Stock, or (e) enter into any agreement with respect to the
      foregoing.

    


    Section
      4. Liquidation.
      Upon
      any liquidation, dissolution or winding-up of the Corporation, whether voluntary
      or involuntary (a “Liquidation”),
      the
      Holders shall be entitled to receive out of the assets of the Corporation,
      whether such assets are capital or surplus, for each share of Preferred Stock
      an
      amount equal to the Stated Value per share plus any accrued and unpaid dividends
      thereon and any other fees or liquidated damages owing thereon before any
      distribution or payment shall be made to the holders of any Junior Securities,
      and if the assets of the Corporation shall be insufficient to pay in full such
      amounts, then the entire assets to be distributed to the Holders shall be
      distributed among the Holders ratably in accordance with the respective amounts
      that would be payable on such shares if all amounts payable thereon were paid
      in
      full. A Fundamental Transaction or Change of Control Transaction shall not
      be
      treated as a Liquidation. The Corporation shall mail written notice of any
      such
      Liquidation, not less than 45 days prior to the payment date stated therein,
      to
      each record Holder.

    


    
      
        
           

        

        
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    Section
      5.  Conversion.

    


    (a)
         (i)
      Conversions
      at Option of Holder.
      Each
      share of Preferred Stock shall be convertible into that number of shares of
      Common Stock (subject to the limitations set forth in Sections 5(a)(ii) and
      (iii)) determined by dividing the Stated Value of such share of Preferred Stock
      by the Set Price, at the option of the Holder, at any time and from time to
      time
      from and after the Original Issue Date. Holders shall effect conversions by
      providing the Corporation with the form of conversion notice attached hereto
      as
Annex
      A
      (a
“Notice
      of Conversion”).
      Each
      Notice of Conversion shall specify the number of shares of Preferred Stock
      to be
      converted, the number of shares of Preferred Stock owned prior to the conversion
      at issue, the number of shares of Preferred Stock owned subsequent to the
      conversion at issue and the date on which such conversion is to be effected,
      which date may not be prior to the date the Holder delivers such Notice of
      Conversion to the Corporation by facsimile (the “Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the date that such Notice of Conversion to the Corporation is deemed
      delivered hereunder. The calculations and entries set forth in the Notice of
      Conversion shall control in the absence of manifest or mathematical
      error.

    


    (ii)
      Beneficial Ownership Limitation. The
      Corporation shall not effect any conversion of the Preferred Stock, and the
      Holder shall not have the right to convert any portion of the Preferred Stock
      to
      the extent that after giving effect to such conversion, the Holder (together
      with the Holder’s affiliates), as set forth on the applicable Notice of
      Conversion, would beneficially own in excess of 4.99% of the number of shares
      of
      the Common Stock Outstanding immediately after giving effect to such
      conversion.  For purposes of the foregoing sentence, the number of shares
      of Common Stock beneficially owned by the Holder and its affiliates shall
      include the number of shares of Common Stock issuable upon conversion of the
      Preferred Stock with respect to which the determination of such sentence is
      being made, but shall exclude the number of shares of Common Stock which would
      be issuable upon (A) conversion of the remaining, nonconverted Stated Value
      of
      Preferred Stock beneficially owned by the Holder or any of its affiliates and
      (B) exercise or conversion of the unexercised or nonconverted portion of any
      other securities of the Corporation subject to a limitation on conversion or
      exercise analogous to the limitation contained herein beneficially owned by
      the
      Holder or any of its affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 5(a)(ii), beneficial ownership shall
      be
      calculated in accordance with Section 13(d) of the Exchange Act. To the extent
      that the limitation contained in this Section 5(a)(ii) applies, the
      determination of whether the Preferred Stock is convertible (in relation to
      other securities owned by the Holder together with any affiliates) and of which
      shares of Preferred Stock is convertible shall be in the sole discretion of
      such
      Holder, and the submission of a Notice of Conversion shall be deemed to be
      such
      Holder’s determination of whether the shares of Preferred Stock may be converted
      (in relation to other securities owned by such Holder) and which shares of
      the
      Preferred Stock is convertible, in each case subject to such aggregate
      percentage limitations. To ensure compliance with this restriction, the Holder
      will be deemed to represent to the Corporation each time it delivers a Notice
      of
      Conversion that such Notice of Conversion has not violated the restrictions
      set
      forth in this paragraph and the Corporation shall have no obligation to verify
      or confirm the accuracy of such determination. For purposes of this Section
      5(a)(ii), in determining the number of outstanding shares of Common Stock,
      the
      Holder may rely on the number of outstanding shares of Common Stock as reflected
      in the most recent of the following: (A) the Corporation’s most recent Form 10-Q
      or Form 10-K, as the case may be, (B) a more recent public announcement by
      the
      Corporation or (C) any other notice by the Corporation or the Corporation’s
      transfer agent setting forth the number of shares of Common Stock
      Outstanding.  Upon the written or oral request of the Holder, the
      Corporation shall within two Trading Days confirm orally and in writing to
      the
      Holder the number of shares of Common Stock then outstanding.  In any case,
      the number of outstanding shares of Common Stock shall be determined after
      giving effect to the conversion or exercise of securities of the Corporation,
      including the Preferred Stock, by the Holder or its affiliates since the date
      as
      of which such number of outstanding shares of Common Stock was reported. The
      provisions of this Section 5(a)(ii) may be waived by the Holder upon, at the
      election of the Holder, not less than 61 days’ prior notice to the Corporation,
      and the provisions of this Section 5(a)(ii) shall continue to apply until such
      61st day (or such later date, as determined by the Holder, as may be specified
      in such notice of waiver).

    


    
      
        
           

        

        
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    (b)     
       (i)
      Not
      later than three Trading Days after each Conversion Date (the “Share
      Delivery Date”),
      the
      Corporation shall deliver to the Holder (A) a certificate or certificates which,
      after the Effective Date, shall be free of restrictive legends and trading
      restrictions (other than those required by Section 4.1 of the Purchase
      Agreement) representing the number of shares of Common Stock being acquired
      upon
      the conversion of shares of Preferred Stock, and (B) a bank check in the amount
      of accrued and unpaid dividends (if the Corporation has elected or is required
      to pay accrued dividends in cash). After the Effective Date, the Corporation
      shall, upon request of the Holder, deliver any certificate or certificates
      required to be delivered by the Corporation under this Section electronically
      through the Depository Trust Corporation or another established clearing
      corporation performing similar functions. If in the case of any Notice of
      Conversion such certificate or certificates are not delivered to or as directed
      by the applicable Holder by the third Trading Day after the Conversion Date,
      the
      Holder shall be entitled to elect by written notice to the Corporation at any
      time on or before its receipt of such certificate or certificates thereafter,
      to
      rescind such conversion, in which event the Corporation shall immediately return
      the certificates representing the shares of Preferred Stock tendered for
      conversion.

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
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    (ii)
      The
      Corporation’s obligations to issue and deliver the Conversion Shares upon
      conversion and redemption of Preferred Stock in accordance with the terms hereof
      are absolute and unconditional, irrespective of any action or inaction by the
      Holder to enforce the same, any waiver or consent with respect to any provision
      hereof, the recovery of any judgment against any Person or any action to enforce
      the same, or any setoff, counterclaim, recoupment, limitation or termination,
      or
      any breach or alleged breach by the Holder or any other Person of any obligation
      to the Corporation or any violation or alleged violation of law by the Holder
      or
      any other person, and irrespective of any other circumstance which might
      otherwise limit such obligation of the Corporation to the Holder in connection
      with the issuance of such Conversion Shares. In the event a Holder shall elect
      to convert any or all of the Stated Value of its Preferred Stock, the
      Corporation may not refuse conversion based on any claim that such Holder or
      any
      one associated or affiliated with the Holder of has been engaged in any
      violation of law, agreement or for any other reason, unless, an injunction
      from
      a court, on notice, restraining and or enjoining conversion of all or part
      of
      this Preferred Stock shall have been sought and obtained and the Corporation
      posts a surety bond for the benefit of the Holder in the amount of 150% of
      the
      Stated Value of Preferred Stock outstanding, which is subject to the injunction,
      which bond shall remain in effect until the completion of arbitration/litigation
      of the dispute and the proceeds of which shall be payable to such Holder to
      the
      extent it obtains judgment. In the absence of an injunction precluding the
      same,
      the Corporation shall issue Conversion Shares or, if applicable, cash, upon
      a
      properly noticed conversion. If the Corporation fails to deliver to the Holder
      such certificate or certificates pursuant to Section 5(b)(i) by the Share
      Delivery Date applicable to such conversion, the Corporation shall pay to such
      Holder, in cash, as liquidated damages and not as a penalty, for each $5,000
      of
      Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing
      to $100 per Trading Day after 3 Trading Days and increasing to $200 per Trading
      Day 6 Trading Days after such damages begin to accrue) for each Trading Day
      after the Share Delivery Date until such certificates are delivered. Nothing
      herein shall limit a Holder’s right to pursue actual damages for the
      Corporation’s failure to deliver certificates representing shares of Common
      Stock upon conversion within the period specified herein and such Holder shall
      have the right to pursue all remedies available to it hereunder, at law or
      in
      equity including, without limitation, a decree of specific performance and/or
      injunctive relief.

    


    (iii)
      If
      the Corporation fails to deliver to the Holder such certificate or certificates
      pursuant to Section 5(b)(i) by a Share Delivery Date, and if after such Share
      Delivery Date the Holder purchases (in an open market transaction or otherwise)
      Common Stock to deliver in satisfaction of a sale by such Holder of the
      Conversion Shares which the Holder was entitled to receive upon the conversion
      relating to such Share Delivery Date (a “Buy-In”),
      then
      the Corporation shall pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      Common Stock so purchased exceeds (y) the product of (1) the aggregate number
      of
      shares of Common Stock that such Holder was entitled to receive from the
      conversion at issue multiplied by (2) the price at which the sell order giving
      rise to such purchase obligation was executed. For example, if the Holder
      purchases Common Stock having a total purchase price of $11,000 to cover a
      Buy-In with respect to an attempted conversion of shares of Preferred Stock
      with
      respect to which the aggregate sale price giving rise to such purchase
      obligation is $10,000, under clause (A) of the immediately preceding sentence
      the Corporation shall be required to pay the Holder $1,000. The Holder shall
      provide the Corporation written notice indicating the amounts payable to the
      Holder in respect of the Buy-In, together with applicable confirmations and
      other evidence reasonably requested by the Corporation. Nothing herein shall
      limit a Holder’s right to pursue any other remedies available to it hereunder,
      at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Corporation’s failure
      to timely deliver certificates representing shares of Common Stock upon
      conversion of the shares of Preferred Stock as required pursuant to the terms
      hereof.

    


    
      
        
           

        

        
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    (c)      
       (i)
      The
      conversion price for each share of Preferred Stock shall equal $1.00
      (the
“Set
      Price”),
      subject to adjustment below.

    


    (ii)
      if
      the Corporation, at any time while the Preferred Stock is outstanding: (A)
      shall
      pay a stock dividend or otherwise make a distribution or distributions on shares
      of its Common Stock or any other equity or equity equivalent securities payable
      in shares of Common Stock and the Series A Preferred Stock, provided the terms
      of such issuance of interest or dividends, as the case may be, is not amended
      after the Original Issue Date to an effective conversion price less than the
      then Set Price, (B) subdivide outstanding shares of Common Stock into a larger
      number of shares, (C) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (D)
      issue
      by reclassification of shares of the Common Stock any shares of capital stock
      of
      the Corporation, then the Set Price shall be multiplied by a fraction of which
      the numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding before such event and of which the denominator
      shall
      be the number of shares of Common Stock Outstanding after such event. Any
      adjustment made pursuant to this Section shall become effective immediately
      after the record date for the determination of stockholders entitled to receive
      such dividend or distribution and shall become effective immediately after
      the
      effective date in the case of a subdivision, combination or
      reclassification.

    


    (iii) if
      the
      Corporation, at any time while the Preferred Stock is outstanding, shall issue
      rights, options or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the VWAP at the record date mentioned below, then the Set
      Price shall be multiplied by a fraction, of which the denominator shall be
      the
      number of shares of the Common Stock Outstanding on the date of issuance of
      such
      rights or warrants plus the number of additional shares of Common Stock offered
      for subscription or purchase, and of which the numerator shall be the number
      of
      shares of the Common Stock Outstanding on the date of issuance of such rights
      or
      warrants plus the number of shares which the aggregate offering price of the
      total number of shares so offered (assuming receipt by the Corporation in full
      of all consideration payable upon exercise of such rights, options or warrants)
      would purchase at such VWAP. Such adjustment shall be made whenever such rights
      or warrants are issued, and shall become effective immediately after the record
      date for the determination of stockholders entitled to receive such rights,
      options or warrants.

     

     

    
 

    
      
        
           

        

        
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    (iv) if
      the
      Corporation or any subsidiary thereof at any time while any of the Preferred
      Stock is outstanding, shall offer, sell, grant any option or warrant to purchase
      or offer, sell or grant any right to reprice its securities, or otherwise
      dispose of or issue (or announce any offer, sale, grant or any option to
      purchase or other disposition) any Common Stock or any equity or equity
      equivalent securities (including any equity, debt or other instrument that
      is at
      any time over the life thereof convertible into or exchangeable for Common
      Stock) (collectively, “Common
      Stock Equivalents”)
      entitling any Person to acquire shares of Common Stock, at an effective price
      per share less than the Set Price (such lower price, the “Base
      Conversion Price”
and
      such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalent
      so issued shall at any time, whether by operation of purchase price adjustments,
      reset provisions, floating conversion, exercise or exchange prices or otherwise,
      or due to warrants, options or rights per share which are issued in connection
      with such issuance, be entitled to receive shares of Common Stock at a effective
      price per share which is less than the Set Price, such issuance shall be deemed
      to have occurred for less than the Set Price), then the Set Price shall be
      reduced to equal the Base Conversion Price. Such adjustment shall be made
      whenever such Common Stock or Common Stock Equivalents are issued. The
      Corporation shall notify the Holder in writing, no later than the Business
      Day
      following the issuance of any Common Stock or Common Stock Equivalents subject
      to this section, indicating therein the applicable issuance price, or of
      applicable reset price, exchange price, conversion price and other pricing
      terms
      (such notice the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Corporation provides a Dilutive
      Issuance Notice pursuant to this Section 7(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Conversion Shares based upon the Base Conversion
      Price regardless of whether the Holder accurately refers to the Base Conversion
      Price in the Notice of Conversion.

    


    (v) if
      the
      Corporation, at any time while the Preferred Stock is outstanding, shall
      distribute to all holders of Common Stock (and not to Holders) evidences of
      its
      indebtedness or assets or rights or warrants to subscribe for or purchase any
      security other than the Common Stock (which shall be subject to Section
      5(c)(iii), then in each such case the Set Price shall be adjusted by multiplying
      the Set Price in effect immediately prior to the record date fixed for
      determination of stockholders entitled to receive such distribution by a
      fraction of which the denominator shall be the VWAP determined as of the record
      date mentioned above, and of which the numerator shall be such VWAP on such
      record date less the then per share fair market value at such record date of
      the
      portion of such assets or evidence of indebtedness so distributed applicable
      to
      one outstanding share of the Common Stock as determined by the Board of
      Directors in good faith. In either case the adjustments shall be described
      in a
      statement provided to the Holders of the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one share
      of Common Stock. Such adjustment shall be made whenever any such distribution
      is
      made and shall become effective immediately after the record date mentioned
      above.

    


    
      
        
           

        

        
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    (vi) All
      calculations under this Section 5(c) shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. 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, and the disposition of any such shares
      shall
      be considered an issue or sale of Common Stock. For purposes of this Section
      5(c), the number of shares of Common Stock deemed to be outstanding (the
“Common
      Stock Outstanding”)
      as of
      a given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

    


    (vii) Notwithstanding
      anything to the contrary herein, no adjustment shall be made hereunder in
      connection with an Exempt Issuance.

    


    (viii) Whenever
      the Set Price is adjusted pursuant to this Section the Corporation shall
      promptly mail to each Holder, a notice setting forth the Set Price after such
      adjustment and setting forth a brief statement of the facts requiring such
      adjustment. If the Corporation issues a variable rate security, despite the
      prohibition thereon in the Purchase Agreement, the Corporation shall be deemed
      to have issued Common Stock or Common Stock Equivalents at the lowest possible
      conversion or exercise price at which such securities may be converted or
      exercised in the case of a Variable Rate Transaction (as defined in the Purchase
      Agreement), or the lowest possible adjustment price in the case of an MFN
      Transaction (as defined in the Purchase Agreement).

    


    Section
      6. Force
      Conversion.
      The
      Corporation shall have the following rights to force a conversion of the
      Preferred Stock if after the Effective Date, each of the Closing Prices for
      any
      20 consecutive Trading Days (such 20 day period commencing only after the later
      of the Effective Date, such period the “Threshold
      Period”))
      exceeds 250% of the then Conversion Price, the Corporation may, within 1 Trading
      Day of the end of any such Threshold Period, deliver a notice to the Holder
      (a
“Forced
      Conversion Notice”
and
      the
      date such notice is received by the Holder, the “Forced
      Conversion Notice Date”)
      to
      cause the Holder to immediately convert all or part of the then outstanding
      Stated Value amount of Preferred Stocks. The Corporation may only effect a
      Forced Conversion Notice if all of the Equity Conditions are met through the
      applicable Threshold Period until the date of the applicable Forced Conversion
      and through and including the date such shares of Common Stock are issued to
      the
      Holder. Any Forced Conversion shall be applied ratably to all Holders based
      on
      their initial purchases of Preferred Stocks pursuant to the Purchase Agreement.
      For purposes of clarification, a Forced Conversion shall be subject to all
      of
      the provisions of Section 5, including, without limitation, the provision
      requiring payment of liquidated damages and limitations on conversions.


    


    


    
      
        
           

        

        
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    Section
      7. Redemption
      Upon Triggering Events.

    


    (a)
      Upon
      the occurrence of a Triggering Event, each Holder shall (in addition to all
      other rights it may have hereunder or under applicable law) have the right,
      exercisable at the sole option of such Holder, to require the Corporation to,
      (i) with respect to the Triggering Events set forth in Sections 7(b)(iii),
      (v),
      (vii), (ix), (x)(as to voluntary filings only) and (xii)), redeem all of the
      Preferred Stock then held by such Holder for a redemption price, in cash, equal
      to the Triggering Redemption Amount; or, (ii) at the option of the Holder and
      with respect to the Triggering Events set forth in Sections 7(b)(i), (ii),
      (iv),
      (vi), (viii), (x)(as to involuntary filings only) and (xi), either (A) redeem
      all of the Preferred Stock then held by such Holder for a redemption price,
      in
      shares of Common Stock, equal to a number of shares of Common Stock equal to
      the
      Triggering Redemption Amount divided by 75% of the average of the 10 VWAPs
      immediately prior to the date of election hereunder or (B) increase the dividend
      on all of the outstanding Preferred Stock held by such Holder to equal 18%
      per
      annum thereafter. The Triggering Redemption Amount, in cash or in shares, if
      the
      Corporation elects clauses (i) or (ii)(B) above, shall be due and payable or
      issuable, as the case may be, within 5 Trading Days of the date on which the
      notice for the payment therefor is provided by a Holder (the “Triggering
      Redemption Payment Date”).
      If
      the Corporation fails to pay the Triggering Redemption Amount hereunder in
      full
      pursuant to this Section on the date such amount is due in accordance with
      this
      Section (whether in cash or shares of Common Stock), the Corporation will pay
      interest thereon at a rate of 18% per annum (or such lesser amount permitted
      by
      applicable law), accruing daily from such date until the Triggering Redemption
      Amount, plus all such interest thereon, is paid in full. For purposes of this
      Section, a share of Preferred Stock is outstanding until such date as the Holder
      shall have received Conversion Shares upon a conversion (or attempted
      conversion) thereof that meets the requirements hereof or has been paid the
      Triggering Redemption Amount plus all accrued but unpaid dividends and all
      accrued but unpaid liquidated damages in cash.

    


    (b)
      “Triggering
      Event”
means
      any one or more of the following events (whatever the reason and whether it
      shall be voluntary or involuntary or effected by operation of law or pursuant
      to
      any judgment, decree or order of any court, or any order, rule or regulation
      of
      any administrative or governmental body):

    


    (i)
      the
      failure of a Conversion Shares Registration Statement to be declared effective
      by the Commission on or prior to the 165th
      day
      after the Original Issue Date;

    


    (ii)
      if,
      during the Effectiveness Period, the effectiveness of the Conversion Shares
      Registration Statement lapses for any reason for more than an aggregate of
      25
      calendar days (which need not be consecutive days) during any 12 month period,
      or the Holder shall not be permitted to resell Registrable Securities under
      the
      Conversion Shares Registration Statement for more than an aggregate of 25
      calendar days (which need not be consecutive days) during any 12 month
      period;

     

    
 

    
      
        
           

        

        
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    (iii)
      the
      Corporation shall fail to deliver certificates representing Conversion Shares
      issuable upon a conversion hereunder that comply with the provisions hereof
      prior to the 5th
      Trading
      Day after such shares are required to be delivered hereunder, or the Corporation
      shall provide written notice to any Holder, including by way of public
      announcement, at any time, of its intention not to comply with requests for
      conversion of any shares of Preferred Stock in accordance with the terms
      hereof;

    


    (iv)
      one
      of the Events (as defined in the Registration Rights Agreement) described in
      subsections (i), (ii) or (iii) of Section 2(c) of the Registration Rights
      Agreement shall not have been cured to the satisfaction of the Holders prior
      to
      the expiration of 30 days from the Event Date (as defined in the Registration
      Rights Agreement) relating thereto (other than an Event resulting from a failure
      of a Conversion Shares Registration Statement to be declared effective by the
      Commission on or prior to the 145th day after the Original Issue Date, which
      shall be covered by Section 7(b)(i));

    


    (v)
      the
      Corporation shall fail for any reason to pay in full the amount of cash due
      pursuant to a Buy-In within 5 days after notice therefor is delivered hereunder
      or shall fail to pay all amounts owed on account of an Event within five days
      of
      the date due;

    


    (vi)
       the
      Corporation shall fail to have available a sufficient number of authorized
      and
      unreserved shares of Common Stock to issue to such Holder upon a conversion
      hereunder;

    


    (vii)
       the
      Corporation shall fail to observe or perform any other covenant, agreement
      or
      warranty contained in, or otherwise commit any breach of the Transaction
      Documents, and such failure or breach shall not, if subject to the possibility
      of a cure by the Corporation, have been remedied within 30 calendar days after
      the date on which written notice of such failure or breach shall have been
      given;

    


    (viii)
      any breach of the agreements delivered to the initial Holders at the Closing
      pursuant to Section 2.2(a)(vi) of the Purchase Agreement;

    


    (ix) the
      Corporation shall redeem more than a de minimis number of Junior
      Securities;

     

    (x) the
      Corporation shall be party to a Change of Control Transaction;

     

    (xi) there
      shall have occurred a Bankruptcy Event; or

     

    (xii) the
      Common Stock shall fail to be listed or quoted for trading on a Principal Market
      for more than 5 Trading Days, which need not be consecutive Trading
      Days.

     

    Section
      8. Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

    


    “Alternate
      Consideration”
shall
      have the meaning set forth in Section 9.

    


    
      
        
           

        

        
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    “Bankruptcy
      Event”
means
      any of the following events: (a) the Corporation or any Significant Subsidiary
      (as such term is defined in Rule 1.02(s) of Regulation S-X) thereof commences
      a
      case or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Corporation or any Significant
      Subsidiary thereof; (b) there is commenced against the Corporation or any
      Significant Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement; (c) the Corporation or any Significant
      Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief
      or other order approving any such case or proceeding is entered; (d) the
      Corporation or any Significant Subsidiary thereof suffers any appointment of
      any
      custodian or the like for it or any substantial part of its property that is
      not
      discharged or stayed within 60 days; (e) the Corporation or any Significant
      Subsidiary thereof makes a general assignment for the benefit of creditors;
      (f)
      the Corporation or any Significant Subsidiary thereof calls a meeting of its
      creditors with a view to arranging a composition, adjustment or restructuring
      of
      its debts; or (g) the Corporation or any Significant Subsidiary thereof, by
      any
      act or failure to act, expressly indicates its consent to, approval of or
      acquiescence in any of the foregoing or takes any corporate or other action
      for
      the purpose of effecting any of the foregoing.

    


    “Base
      Conversion Price”
shall
      have the meaning set forth in Section 5(c)(iv). 

    


    “Buy-In”
shall
      have the meaning set forth in Section 5(b)(iii).

    


    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (a) an acquisition after the
      date
      hereof by an individual or legal entity or “group” (as described in Rule
      13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Corporation,
      by
      contract or otherwise) of in excess of 33% of the voting securities of the
      Corporation, or (b) a replacement at one time or within a one year period of
      more than one-half of the members of the Corporation’s board of directors which
      is not approved by a majority of those individuals who are members of the board
      of directors on the date hereof (or by those individuals who are serving as
      members of the board of directors on any date whose nomination to the board
      of
      directors was approved by a majority of the members of the board of directors
      who are members on the date hereof), or (c) the execution by the Corporation
      of
      an agreement to which the Corporation is a party or by which it is bound,
      providing for any of the events set forth above in (a) or (b).

    


    “Closing”
means
      closing of the purchase and sale of the Preferred Stock.

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Holders’ obligations to pay the Subscription Amount and (ii) the
      Corporation’s obligations to deliver the shares of Preferred Stock and Warrants
      have been satisfied or waived. 

    


    “Commission”
means
      the Securities and Exchange Commission.

    


    


    
      
        
           

        

        
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    “Common
      Stock”
means
      the Corporation’s common stock, par value $0.01 per share, and stock of any
      other class into which such shares may hereafter have been reclassified or
      changed.

    


    “Common
      Stock Outstanding”
shall
      have the meaning set forth in Section 5(c)(vi).

    


    “Conversion
      Amount”
means
      the sum of the Stated Value at issue.

    


    “Conversion
      Date”
shall
      have the meaning set forth in Section 5(b)(i).

    


    “Conversion
      Shares”
means,
      collectively, the shares of Common Stock into which the shares of Preferred
      Stock are convertible in accordance with the terms hereof.

    


    “Conversion
      Shares Registration Statement”
means
      a
      registration statement that meets the requirements of the Registration Rights
      Agreement and registers the resale of all Conversion Shares by the Holder,
      who
      shall be named as a “selling stockholder” thereunder, all as provided in the
      Registration Rights Agreement.

    


    “Dilutive
      Issuance”
shall
      have the meaning set forth in Section 5(c)(iv).

    


    “Dilutive
      Issuance Notice”
shall
      have the meaning set forth in Section 5(c)(iv).

    


    “Dividend
      Payment Date”
shall
      have the meaning set forth in Section 2(a).

    


    “Effective
      Date”
means
      the date that the Conversion Shares Registration Statement is declared effective
      by the Commission.

    


    “Equity
      Conditions”
Unless
      waived by a Holder as to a particular event (which waiver shall apply only
      to
      such Holder), as of such event date, the following conditions have been met:
      (i)
      the Corporation shall have duly honored all conversions and redemptions
      scheduled to occur or occurring prior to such date, (ii) there is an effective
      Conversion Shares Registration Statement pursuant to which the Holders are
      permitted to utilize the prospectus thereunder to resell all of the Conversion
      Shares issued to the Holders and all of the Conversion Shares as are issuable
      to
      the Holders upon conversion in full of the Preferred Stock (and the Corporation
      believes, in good faith, that such effectiveness will continue uninterrupted
      for
      the foreseeable future), (iii) the Common Stock is listed for trading on the
      Principal Market (and the Corporation believes, in good faith, that trading
      of
      the Common Stock on the Principal Market will continue uninterrupted for the
      foreseeable future), (iv) all liquidated damages and other amounts owing in
      respect of the Preferred Stock shall have been paid or will, concurrently with
      the issuance of the Conversion Shares, be paid in cash; (v) there is a
      sufficient number of authorized but unissued and otherwise unreserved shares
      of
      Common Stock for the issuance of all the Conversion Shares as are issuable
      to
      the Holder upon conversion in full of the Preferred Stock; (vi) no Triggering
      Event has occurred and is continuing; (vii) all of the Conversion Shares
      issuable to the Holder upon conversion in full of the Preferred Stock will
      not
      violate the limitations set forth in Sections 5(a)(ii) and (iii); and (viii)
      no
      public announcement of a pending or proposed Fundamental Transaction or Change
      of Control Transaction has occurred that has not been consummated.

    


    
      
        
           

        

        
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    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    


    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Corporation pursuant to any stock or option plan duly adopted
      by a majority of the non-employee members of the Board of Directors of the
      Corporation or a majority of the members of a committee of non-employee
      directors established for such purpose, (b) securities upon the exercise of
      or
      conversion of any securities issued hereunder, convertible securities, options
      or warrants issued and outstanding on the date of the Purchase Agreement,
      provided that such securities have not been amended since the date of the
      Purchase Agreement to increase the number of such securities or to decrease
      the
      exercise or conversion price of any such securities, and (c) securities issued
      pursuant to acquisitions or strategic transactions, provided any such issuance
      shall only be to a Person which is, itself or through its subsidiaries, an
      operating company in a business synergistic with the business of the Corporation
      and in which the Corporation receives benefits in addition to the investment
      of
      funds, but shall not include a transaction in which the Corporation is issuing
      securities primarily for the purpose of raising capital or to an entity whose
      primary business is investing in securities. 

    


    “Fundamental
      Transaction”
means
      the occurrence after the date hereof of any of (a) the Corporation effects
      any
      merger or consolidation of the Corporation with or into another Person, (b)
      the
      Corporation effects any sale of all or substantially all of its assets in one
      or
      a series of related transactions, (c) any tender offer or exchange offer
      (whether by the Corporation or another Person) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (d) the Corporation effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property.

    


    “Holder”
shall
      have the meaning given such term in Section 1 hereof.

    


    “Junior
      Securities”
means
      the Common Stock and all other equity or equity equivalent securities of the
      Corporation other than those securities that are (a) outstanding on the Original
      Issue Date and (b) which are explicitly senior in rights or liquidation
      preference to the Preferred Stock.

    


    “Liquidation”
shall
      have the meaning given such term in Section 4. 

    


    “Notice
      of Conversion”
shall
      have the meaning given such term in Section 5(a). 

    


    “Original
      Issue Date”
shall
      mean the date of the first issuance of any shares of the Preferred Stock
      regardless of the number of transfers of any particular shares of Preferred
      Stock and regardless of the number of certificates which may be issued to
      evidence such Preferred Stock.

     

     

    
 

    
      
        
           

        

        
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    “Person”
means
      a
      corporation, an association, a partnership, an organization, a business, an
      individual, a government or political subdivision thereof or a governmental
      agency.

    


    “Principal
      Market”
      initially means the Over-the-Counter Bulletin Board and shall also include
      the
      American Stock Exchange, NASDAQ Small-Cap Market, the New York Stock Exchange,
      or the NASDAQ National Market, whichever is at the time the principal trading
      exchange or market for the Common Stock, based upon share volume.

     

    “Purchase
      Agreement”
means
      the Securities Purchase Agreement, dated as of the Original Issue Date, to
      which
      the Corporation and the original Holders are parties, as amended, modified
      or
      supplemented from time to time in accordance with its terms.

    


    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated as of the Original Issue Date, to
      which
      the Corporation and the original Holders are parties, as amended, modified
      or
      supplemented from time to time in accordance with its terms.

    


    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

    


    “Set
      Price”
shall
      have the meaning set forth in Section 5(c)(i).

    


    “Share
      Delivery Date”
shall
      have the meaning given such term in Section 5(b). 

    


    “Stated
      Value”
shall
      have the meaning given such term in Section 1.

    


    “Subscription
      Amount”
shall
      mean, the amount to be paid by the Purchaser for the Preferred Stock purchased
      pursuant to the Purchase Agreement as specified therein.

    


    “Subsidiary”
shall
      have the meaning given to such term in the Purchase Agreement.

    


    “Trading
      Day”
shall
      mean any day during which the Principal Market shall be open for
      business.

    


    “Transaction
      Documents”
shall
      mean the Purchase Agreement and all agreements entered into in connection
      therewith, including the Registration Rights Agreement.

    


    “Triggering
      Event”
shall
      have the meaning set forth in Section 7(b).

    


    “Triggering
      Redemption Amount”
for
      each share of Preferred Stock means the sum of (i) the greater of (A) 130%
      of
      the Stated Value and (B) the product of (a) the VWAP on the Trading Day
      immediately preceding the date of the Triggering Event and (b) the Stated Value
      divided by the then Set Price, (ii) all accrued but unpaid dividends thereon
      and
      (iii) all liquidated damages and other amounts due in respect of the Preferred
      Stock

    


    


    
      
        
           

        

        
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    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Principal Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Principal Market on which the Common Stock
      is
      then listed or quoted as reported by Bloomberg Financial L.P. (based on a
      Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)  if
      the Common Stock is not then listed or quoted on a Principal Market and if
      prices for the Common Stock are then quoted on the OTC Bulletin Board, the
      volume weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c)  if the Common Stock is not
      then listed or quoted on the OTC Bulletin Board and if prices for the Common
      Stock are then reported in the “Pink Sheets” published by the National Quotation
      Bureau Incorporated (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of the
      Common Stock so reported; or (d) in all other cases, the fair market value
      of a share of Common Stock as determined by an independent appraiser selected
      in
      good faith by the Purchasers and reasonably acceptable to the
      Corporation.

    


    Section
      9. Fundamental
      Transactions and Change of Control Transactions.
      If a
      Fundamental Transaction occurs, then upon any subsequent conversion of shares
      of
      Preferred Stock, the Holder shall have the right to receive, for each Conversion
      Share that would have been issuable upon such conversion absent such Fundamental
      Transaction, the same kind and amount of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of one share of Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Set Price shall be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Corporation shall apportion
      the
      Set Price among the Alternate Consideration in a reasonable manner reflecting
      the relative value of any different components of the Alternate Consideration.
      If holders of Common Stock are given any choice as to the securities, cash
      or
      property to be received in a Fundamental Transaction, then the Holder shall
      be
      given the same choice as to the Alternate Consideration it receives upon any
      conversion of shares of Preferred Stock following such Fundamental Transaction.
      To the extent necessary to effectuate the foregoing provisions, any successor
      to
      the Corporation or surviving entity in such Fundamental Transaction shall issue
      to the Holder new preferred stock consistent with the foregoing provisions
      and
      evidencing the Holder’s right to convert such preferred stock into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this Section 9 and insuring
      that the Preferred Stock (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental Transaction
      or Change of Control Transaction. In the event of a Fundamental Transaction
      or a
      Change of Control Transaction, then at the request of the Holder delivered
      before the 90th day after such Fundamental Transaction, the Corporation (or
      any
      such successor or surviving entity) will purchase the Preferred Stock from
      the
      Holder for a purchase price, payable in cash within five Trading Days after
      such
      request (or, if later, on the effective date of the Fundamental Transaction),
      equal to the Triggering Redemption Amount on such date.

     

     

    
      
        
           

        

        
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    Section
      10. Miscellaneous.
      

    


    (a) If
      (i)
      the Corporation shall declare a dividend (or any other distribution) on the
      Common Stock, (ii) the Corporation shall declare a special nonrecurring cash
      dividend on or a redemption of the Common Stock, (iii) the Corporation shall
      authorize the granting to all holders of Common Stock rights or warrants to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights, (iv) the approval of any stockholders of the Corporation shall be
      required in connection with any reclassification of the Common Stock, any
      consolidation or merger to which the Corporation is a party, any sale or
      transfer of all or substantially all of the assets of the Corporation, of any
      compulsory share exchange whereby the Common Stock is converted into other
      securities, cash or property;, or (v) the Corporation shall authorize the
      voluntary or involuntary dissolution, liquidation or winding up of the affairs
      of the Corporation; then the Corporation shall cause to be filed at each office
      or agency maintained for the purpose of conversion of the Preferred Stock,
      and
      shall caused to be mailed to the Holders at their last addresses as they shall
      appear upon the stock books of the Corporation, at least 20 calendar days prior
      to the applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of such
      dividend, distribution, redemption, rights or warrants, or if a record is not
      to
      be taken, the date as of which the holders of the Common Stock of record to
      be
      entitled to such dividend, distributions, redemption, rights or warrants are
      to
      be determined or (y) the date on which any such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of Common Stock
      of
      record shall be entitled to exchange their shares of Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange; provided, that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. Holders are entitled to convert the Conversion Amount of
      Preferred Stock during the 20-day period commencing the date of such notice
      to
      the effective date of the event triggering such notice.

    


    (b) The
      Corporation covenants that it will at all times reserve and keep available
      out
      of its authorized and unissued shares of Common Stock solely for the purpose
      of
      issuance upon conversion of Preferred Stock, each as herein provided, free
      from
      preemptive rights or any other actual contingent purchase rights of persons
      other than the Holders, not less than such number of shares of Common Stock
      as
      shall be issuable upon the conversion of all outstanding shares of Preferred
      Stock. The Corporation covenants that all shares of Common Stock that shall
      be
      so issuable shall, upon issue, be duly and validly authorized, issued and fully
      paid and nonassessable.

    


    (c)
      Upon
      a conversion hereunder the Corporation shall not be required to issue stock
      certificates representing fractions of shares of Common Stock, but may if
      otherwise permitted, make a cash payment in respect of any final fraction of
      a
      share based on the VWAP at such time. If any fraction of a Conversion Share
      would, except for the provisions of this Section, be issuable upon a conversion
      hereunder, the Corporation shall pay an amount in cash equal to the VWAP
      immediately prior to the applicable conversion multiplied by such
      fraction.

     

     

    
 

    
      
        
           

        

        
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    (d)
      The
      issuance of certificates for Common Stock on conversion of Preferred Stock
      shall
      be made without charge to the Holders thereof for any documentary stamp or
      similar taxes that may be payable in respect of the issue or delivery of such
      certificate, provided that the Corporation shall not be required to pay any
      tax
      that may be payable in respect of any transfer involved in the issuance and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of such shares of Preferred Stock so converted.

    


    (e)
      To
      effect conversions or redemptions, as the case may be, of shares of Preferred
      Stock, a Holder shall not be required to surrender the certificate(s)
      representing such shares of Preferred Stock to the Corporation unless all of
      the
      shares of Preferred Stock represented thereby are so converted, in which case
      the Holder shall deliver the certificate representing such share of Preferred
      Stock promptly following the Conversion Date at issue. Shares of Preferred
      Stock
      converted into Common Stock or redeemed in accordance with the terms hereof
      shall be canceled and may not be reissued.

    


    (f)
      Any
      and all notices or other communications or deliveries to be provided by the
      Holders of the Preferred Stock hereunder, including, without limitation, any
      Notice of Conversion, shall be in writing and delivered personally, by facsimile
      or sent by a nationally recognized overnight courier service, addressed to
      the
      attention of the President of the Corporation addressed to One Technology Drive,
      Building H, Irvine, California, 92618, Fax Number: 949-949-727-2043, or to
      such
      other address or facsimile number as shall be specified in writing by the
      Corporation for such purpose. Any and all notices or other communications or
      deliveries to be provided by the Corporation hereunder shall be in writing
      and
      delivered personally, by facsimile or sent by a nationally recognized overnight
      courier service, addressed to each Holder at the facsimile telephone number
      or
      address of such Holder appearing on the books of the Corporation, which address
      shall initially be the address of such Holder set forth on the signature pages
      of the Purchase Agreement, or such other address as the Corporation or a Holder
      may designate by ten days advance written notice to the other parties hereto.
      Any notice or other communication or deliveries hereunder shall be deemed given
      and effective on the earliest of (i) the date of transmission, if such notice
      or
      communication is delivered via facsimile at the facsimile telephone number
      specified in this Section prior to 6:30 p.m. (New York City time) (with
      confirmation of transmission), (ii) the date after the date of transmission,
      if
      such notice or communication is delivered via facsimile at the facsimile
      telephone number specified in this Section later than 6:30 p.m. (New York City
      time) on any date and earlier than 11:59 p.m. (New York City time) on such
      date
      (with confirmation of transmission), (iii) five days after having been sent
      by
      registered or certified mail, return receipt requested, postage prepaid, (iv)
      one day after deposit with a nationally recognized overnight courier service,
      specifying next day delivery, with written verification of service, or (v)
      upon
      actual receipt by the party to whom such notice is required to be
      given.

    


    (g) For
      purposes hereof, a share of Preferred Stock is outstanding until such date
      as
      the Holder shall have received the Conversion Shares or redemption amount (as
      the case may be) issuable or payable to it in accordance with this Certificate
      of Designations.

     

    


    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

     

     

    (h) Except
      as
      expressly provided herein, no provision of this Certificate of Designation
      shall
      alter or impair the obligation of the Corporation, which is absolute and
      unconditional, to pay the liquidated damages (if any) on, the shares of
      Preferred Stock at the time, place, and rate, and in the coin or currency,
      herein prescribed. 

    


    (i) If
      a
      Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or
      destroyed, the Corporation shall execute and deliver, in exchange and
      substitution for and upon cancellation of a mutilated certificate, or in lieu
      of
      or in substitution for a lost, stolen or destroyed certificate, a new
      certificate for the shares of Preferred Stock so mutilated, lost, stolen or
      destroyed but only upon receipt of evidence of such loss, theft or destruction
      of such certificate, and of the ownership hereof, and indemnity, if requested,
      all reasonably satisfactory to the Corporation. 

    


    (j) All
      questions concerning the construction, validity, enforcement and interpretation
      of this Certificate of Designation shall be governed by and construed and
      enforced in accordance with the internal laws of the State of New York, without
      regard to the principles of conflicts of law thereof. Each party agrees that
      all
      legal proceedings concerning the interpretations, enforcement and defense of
      the
      transactions contemplated by any of the Transaction Documents (whether brought
      against a party hereto or its respective affiliates, directors, officers,
      shareholders, employees or agents) shall be commenced in the state and federal
      courts sitting in the City of New York, Borough of Manhattan (the “New York
      Courts”). Each party hereto hereby irrevocably submits to the exclusive
      jurisdiction of the New York Courts for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated hereby
      or discussed herein (including with respect to the enforcement of any of the
      Transaction Documents), and hereby irrevocably waives, and agrees not to assert
      in any suit, action or proceeding, any claim that it is not personally subject
      to the jurisdiction of any such court, or such New York Courts are improper
      or
      inconvenient venue for such proceeding. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof via registered or certified
      mail or overnight delivery (with evidence of delivery) to such party at the
      address in effect for notices to it under this Certificate of Designation and
      agrees that such service shall constitute good and sufficient service of process
      and notice thereof. Nothing contained herein shall be deemed to limit in any
      way
      any right to serve process in any manner permitted by law. Each party hereto
      hereby irrevocably waives, to the fullest extent permitted by applicable law,
      any and all right to trial by jury in any legal proceeding arising out of or
      relating to this Certificate of Designation or the transactions contemplated
      hereby. If either party shall commence an action or proceeding to enforce any
      provisions of this Certificate of Designation, then the prevailing party in
      such
      action or proceeding shall be reimbursed by the other party for its attorneys
      fees and other costs and expenses incurred with the investigation, preparation
      and prosecution of such action or proceeding.

     

    (k) Any
      waiver by the Corporation or the Holder of a breach of any provision of this
      Certificate of Designation shall not operate as or be construed to be a waiver
      of any other breach of such provision or of any breach of any other provision
      of
      this Certificate of Designation. The failure of the Corporation or the Holder
      to
      insist upon strict adherence to any term of this Certificate of Designation
      on
      one or more occasions shall not be considered a waiver or deprive that party
      of
      the right thereafter to insist upon strict adherence to that term or any other
      term of this Certificate of Designation. Any waiver must be in
      writing.

     

    


    
      
        
           

        

        
          19

          
            

          

        

        
           

        

      

    

    


    


    (l) If
      any
      provision of this Certificate of Designation is invalid, illegal or
      unenforceable, the balance of this Certificate of Designation shall remain
      in
      effect, and if any provision is inapplicable to any person or circumstance,
      it
      shall nevertheless remain applicable to all other persons and circumstances.
      If
      it shall be found that any interest or other amount deemed interest due
      hereunder violates applicable laws governing usury, the applicable rate of
      interest due hereunder shall automatically be lowered to equal the maximum
      permitted rate of interest. 

    


    (m) Whenever
      any payment or other obligation hereunder shall be due on a day other than
      a
      Business Day, such payment shall be made on the next succeeding Business
      Day.

    


    (n) The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Certificate of Designation and shall not be deemed to limit or affect
      any
      of the provisions hereof. 

    


    (o) RESOLVED,
      FURTHER, that the Chairman, the president or any vice-president, and the
      secretary or any assistant secretary, of the Corporation be and they hereby
      are
      authorized and directed to prepare and file a Certificate of Designation of
      Preferences, Rights and Limitations in accordance with the foregoing resolution
      and the provisions of Nevada law.

    


    IN
      WITNESS WHEREOF, the undersigned have executed this Certificate this
      4th
      day of
      August 2006.

    


    __________________________

    Name:
      Lewis Jaffe

    Title:
      President

    


    


    


    


    


    


    


    


    


    


    


    


    
      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    

    


    


    ANNEX
      A

    


    NOTICE
      OF
      CONVERSION

    


    (To
      be
      Executed by the Registered Holder in order to convert shares of Preferred
      Stock)

    


    The
      undersigned hereby elects to convert the number of shares of Convertible
      Preferred Stock indicated below, into shares of common stock, par value $0.001
      per share (the “Common
      Stock”),
      of
      Oxford Media, Inc., a Nevada corporation (the “Corporation”),
      according to the conditions hereof, as of the date written below. If shares
      are
      to be issued in the name of a person other than undersigned, the undersigned
      will pay all transfer taxes payable with respect thereto and is delivering
      herewith such certificates and opinions as reasonably requested by the
      Corporation in accordance therewith. No fee will be charged to the Holder for
      any conversion, except for such transfer taxes, if any.

    


    Conversion
      calculations:

    


    Date
      to
      Effect Conversion

    _________________________________________

     

    Number
      of
      shares of Preferred Stock owned prior to Conversion

    _________________________________________

     

    Number
      of
      shares of Preferred Stock to be Converted

    _________________________________________

     

    Stated
      Value of shares of Preferred Stock to be Converted

    _________________________________________

     

    Number
      of
      shares of Common Stock to be Issued

    _________________________________________

     

    Applicable
      Set Price

    _________________________________________

     

    Number
      of
      shares of Preferred Stock subsequent to Conversion

    _________________________________________

    


    
      	 	
              [HOLDER]

            
	 	 	 
	 	
              By:

            	
              ______________________________

            
	 	 	
              Name:

            
	 	 	
              Title:

            


    

    
 

     

     

     21