EXHIBIT 4.2
                          CERTIFICATE OF DESIGNATIONS,

                            PREFERENCES AND RIGHTS OF

                     SERIES A CONVERTIBLE PREFERRED STOCK OF

                  AMERICAN INTERNATIONAL PETROLEUM CORPORATION

                    PURSUANT TO SECTION _______ OF THE NEVADA

                             GENERAL CORPORATION LAW


     1.  Number  of  Shares  of Series A  Convertible  Preferred  Stock.  Of the
7,000,000  shares of authorized  but unissued  Preferred  Stock,  $.01 par value
("Preferred Stock") of the Corporation,  eighteen thousand (18,000) shares shall
be designated and known as Series A Convertible  Preferred Stock, par value $.01
per share ("Series A Convertible Preferred Stock").

     2. Voting.

     (a) Unless required by law, no holder of any shares of Series A Convertible
Preferred  Stock shall be entitled to vote at any meeting of stockholders of the
Corporation  (or any written  actions of  stockholders in lieu of meetings) with
respect to any matter presented to the stockholders of the Corporation for their
action or consideration.  Notwithstanding  the foregoing,  the Corporation shall
provide  each  holder of record of Series A  Convertible  Preferred  Stock  with
timely  notice of every meeting of  stockholders  of the  Corporation  and shall
provide each holder with copies of all proxy materials distributed in connection
therewith.

     (b) So  long  as  shares  of  Series  A  Convertible  Preferred  Stock  are
outstanding, the Corporation shall not, without first obtaining the approval (by
vote or written consent,  as provided by the Nevada General  Corporation Law) of
the  holders  of at  least  85% of the  then  outstanding  shares  of  Series  A
Convertible Preferred Stock:

          (i) alter or change  the  rights,  preferences  or  privileges  of the
     Series A Convertible Preferred Stock;

          (ii)  create  any new class or series of  capital  stock  ranking on a
     parity with ("Pari Passu  Securities")  or a  preference  over the Series A
     Convertible  Preferred Stock as to distribution of assets upon liquidation,
     dissolution or winding up of the Corporation ("Senior Securities") or alter
     or change the rights, preferences or privileges of any Senior Securities so
     as to affect adversely the Series A Convertible Preferred Stock;


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          (iii) increase the authorized number of shares of Series A Convertible
     Preferred Stock;

          (iv)  do any act or  thing  not  authorized  or  contemplated  by this
     Certificate of  Designations  which would result in taxation of the holders
     of shares of the Series A Convertible  Preferred Stock under Section 305 of
     the Internal Revenue Code of 1986, as amended (or any comparable  provision
     of the Internal Revenue Code as hereafter from time to time amended); or

          (v) issue any additional  shares of Series A Preferred Stock except as
     pursuant to the Securities Purchase Agreement (defined below).

     In the  event  holders  of at least 85% of the then  outstanding  shares of
Series A Convertible  Preferred Stock agree to allow the Corporation to alter or
change  the  rights,  preferences  or  privileges  of the  shares  of  Series  A
Convertible  Preferred Stock,  pursuant to subsection (b) above, so as to affect
the Series A Convertible  Preferred  Stock,  then the  Corporation  will deliver
notice  of such  approved  change to the  holders  of the  Series A  Convertible
Preferred Stock that did not agree to such alteration or change (the "Dissenting
Holders")  and  Dissenting  Holders  shall have the right for a period of thirty
(30)  days to  convert  any and all  shares of then  held  Series A  Convertible
Preferred Stock pursuant to the terms of this  Certificate of Designations as in
effect  prior to such  alteration  or change,  or else to continue to hold their
shares of Series A Convertible Preferred Stock.

     3. Dividends

     No holder of any shares of Series A  Convertible  Preferred  Stock shall be
entitled to receive any dividends.

     4. Liquidation

     (a) If the  Corporation  shall  commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy,  insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the  appointment of a receiver,  liquidator,  assignee,
custodian,  trustee, sequestrator (or other similar official) of the Corporation
or of any  substantial  part of its  property,  or make  an  assignment  for the
benefit of its  creditors,  or admit in writing its  inability  to pay its debts
generally  as they  become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having  jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal  or  state  bankruptcy,  insolvency  or  similar  law  resulting  in the
appointment   of  a  receiver,   liquidator,   assignee,   custodian,   trustee,
sequestrator  (or  other  similar   official)  of  the  Corporation  or  of  any
substantial  part of its property,  or ordering the winding up or liquidation of
its affairs,  and any such decree or order shall be unstayed and in effect for a
period of thirty (30)  consecutive  days and, on account of any such event,  the
Corporation  shall liquidate,  dissolve or wind up, or if the Corporation  shall
otherwise  liquidate,  dissolve or wind up (each such event being  considered  a
"Liquidating Event"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation upon liquidation,  dissolution or winding up
unless prior thereto, the holders of shares of Series A


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Convertible  Preferred Stock shall have received the Liquidation  Preference (as
defined in Paragraph 4(c)) with respect to each share. If upon the occurrence of
a Liquidation  Event, the assets and funds available for distribution  among the
holders of the Series A  Convertible  Preferred  Stock and holders of Pari Passu
Securities  shall be  insufficient  to permit the payment to such holders of the
preferential  amounts payable  thereon,  then the entire assets and funds of the
Corporation  legally  available  for  distribution  to the Series A  Convertible
Preferred Stock and the Pari Passu Securities shall be distributed ratably among
such shares in proportion to the ratio that  Liquidation  Preference  payable on
each such share bears to the  aggregate  Liquidation  Preference  payable on all
such shares.

     (b) The  Liquidation  Preference  shall be the  Stated  Value of $1,000 per
share of Series A Convertible Preferred Stock.

     5.  Optional  Conversion.  The  holders  of shares of Series A  Convertible
Preferred Stock shall have the following conversion rights:

     (a) Right to Convert;  Conversion Price. Subject to the terms,  conditions,
and  restrictions of this Paragraph 5, commencing on the Original  Issuance Date
(as  hereinafter  defined),  the  holder of any  shares of Series A  Convertible
Preferred  Stock  shall  have the right to  convert  each such share of Series A
Convertible   Preferred   Stock  (except  that  upon  any   liquidation  of  the
Corporation, the right of conversion shall terminate at the close of business on
the business day fixed for payment of the amount  distributable  on the Series A
Convertible  Preferred  Stock) into a number of shares of Common  Stock equal to
the Stated Value of such share or shares of Series A Convertible Preferred Stock
divided by (i) 92% of the average of the three lowest  volume  weighted  average
sales prices,  as reported by Bloomberg  L.P.,  on the principal  market for the
Corporation's  Common Stock (the "Principal Market") during the period of twenty
Trading  Days ending with the last  Trading Day prior to the date of  conversion
(the "Market Price"),  (the "Conversion  Price").  To illustrate,  if the Market
Price as of the Conversion  Date is $1.35 and 100 shares of Series A Convertible
Preferred  Stock are  being  converted,  the  Stated  Value  for which  would be
$100,000,  then the  Conversion  Price shall be $1.24 per share of Common  Stock
($1.35 x .92),  whereupon  the Stated Value of $100,000 of Series A  Convertible
Preferred  Stock would  entitle the holder  thereof to convert the 100 shares of
Series A  Convertible  Preferred  Stock  into  80,645  shares  of  Common  Stock
($100,000  divided by $1.24 equals 80,645).  The right of each holder to convert
shares of Series A  Convertible  Preferred  Stock into shares of Common Stock is
subject  to the  limitations  set forth in  Paragraph  5(b)  below,  and for the
purpose of complying with the limitation set forth in Paragraph 5(b)(ii),  shall
be prorated among the original  purchasers of the shares of Series A Convertible
Preferred Stock (the "Initial  Holders') and their  subsequent  transferees,  if
any,  based upon the number of shares of Series A  Convertible  Preferred  Stock
purchased by the Initial Holders. As used herein, "Original Issuance Date" means
the date upon which shares of Series A Convertible Preferred Stock are initially
issued.

     (b) Numerical Limitations.  (i) No shares of Series A Convertible Preferred
Stock may be  converted  into Common  Stock,  to the extent  that,  after giving
effect to the conversion and issuance of the Common Stock to be issued  pursuant
to the applicable  Conversion  Notice (as defined in Paragraph 5(c) below),  the
total number of shares of Common Stock deemed beneficially


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owned by the holder requesting conversion (other than by virtue of the ownership
of unconverted  shares of Series A Convertible  Preferred Stock or the ownership
of other  securities  that have  limitations  on a holder's  rights to exchange,
convert or exercise  similar to those  limitations  set forth herein),  together
with all  shares of Common  Stock  deemed  beneficially  owned by such  holder's
Affiliates  (as defined in Rule 405 of the  Securities  Act of 1933, as amended)
that would be  aggregated  for  purposes  of  determining  whether a group under
Section 13(d) of the Securities Exchange Act of 1934, as amended,  and the rules
promulgated  thereunder,  would exceed 9.99% of the total issued and outstanding
shares of Common Stock. If any court of competent  jurisdiction  shall determine
that the  foregoing  limitation  is  ineffective  to prevent a holder from being
deemed the beneficial owner of more than 9.99% of the then outstanding shares of
Common Stock,  then the Corporation shall redeem so many of such holder's shares
of Series A Convertible Preferred Stock pursuant to Paragraph 7(a) hereof as are
necessary  to cause such  holder to be deemed the  beneficial  owner of not more
than 9.99% of the then  outstanding  shares of Common Stock;  provided that such
conversion  limitation  shall not apply following the occurrence of any Event of
Default  which is not cured within ten days of the  occurrence  of such Event of
Default.

          (ii) Unless the  Corporation  shall have  obtained the approval of its
     voting  stockholders  to such issuance,  if required in accordance with the
     rules of the Principal  Market,  the Corporation  shall not issue shares of
     Common  Stock  upon  conversion  of any  shares  of  Series  A  Convertible
     Preferred Stock if such issuance of Common Stock,  when added to the number
     of  shares of  Common  Stock  previously  issued  by the  Corporation  upon
     conversion of shares of the Series A Convertible  Preferred Stock, together
     with shares of Common Stock issued and issuable  upon  exercise of warrants
     issued  in  connection  with the sale of  shares  of  Series A  Convertible
     Preferred  Stock,  would  result in the  issuance of more than 19.9% of the
     number of shares of Common Stock which were issued and  outstanding  on the
     Original  Issuance Date. To the extent the number of shares of Common Stock
     issuable upon  conversion  would but for the  limitation  set forth in this
     Paragraph 5(b)(ii) exceed such limit, the Corporation shall redeem promptly
     (but not later than the fifth Trading Day after  receipt of the  applicable
     Conversion Notice) the shares of Series A Convertible  Preferred Stock that
     may not be  converted  into  shares  of  Common  Stock as a result  of such
     limitation in accordance with Section 7(a) hereof.

     (c) Notice of Conversion. The right of conversion shall be exercised by the
holder  thereof  by giving  written  notice  (the  "Conversion  Notice")  to the
Corporation,  by facsimile or by registered mail or overnight  delivery service,
with a copy by facsimile to the Corporation's then transfer agent for its Common
Stock,  as  designated  by the  Corporation  from time to time,  that the holder
elects to convert a specified number of shares of Series A Convertible Preferred
Stock  representing  a specified  Stated Value thereof into Common Stock and, if
such  conversion will result in the conversion of all of such holder's shares of
Series  A  Convertible  Preferred  Stock,  by  surrender  of  a  certificate  or
certificates  for  the  shares  so to be  converted  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 the Series A
Convertible  Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion Notice, together with a statement of


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the name or names (with address) in which the  certificate or  certificates  for
shares of Common Stock shall be issued.  The  Conversion  Notice  shall  include
therein the Stated Value of shares of Series A Convertible Preferred Stock to be
converted, and a calculation (i) of the Market Price, (ii) the Conversion Price,
and (iii) the number of shares of Common Stock to be issued in  connection  with
such conversion.

     (d) Issuance of Certificates;  Time Conversion Effected.  (i) Promptly, but
in no event more than five  Trading  Days,  after the receipt of the  Conversion
Notice referred to in Subparagraph 5(c) (the "Deadline"),  the Corporation shall
issue  and  deliver,  or  cause  to be  issued  and  delivered,  to the  holder,
registered  in such name or names as such holder may direct,  a  certificate  or
certificates  for the  number of whole  shares of Common  Stock  into which such
shares of Series A  Convertible  Preferred  Stock are  converted.  To the extent
permitted by law, such  conversion  shall be deemed to have been effected on the
date on which such Conversion Notice shall have been received by the Corporation
and at the time specified stated in such Conversion Notice, which must be during
the calendar  day of such  notice,  and at such time the rights of the holder of
such share or shares of Series A Convertible  Preferred  Stock shall cease,  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.
Issuance of shares of Common Stock issuable upon conversion  which are requested
to be  registered  in a name other than that of the  registered  holder shall be
subject to compliance with all applicable  federal and state securities laws. In
lieu of delivering physical certificates  representing the Common Stock issuable
upon conversion,  provided the Corporation's  transfer agent is participating in
the  Depository  Trust  Company  ("DTC")  Fast  Automated  Securities  Transfers
Program,  upon  initial  request  of the  holder  of the  Series  A  Convertible
Preferred  Stock  and its  compliance  with  the  provisions  contained  in this
Paragraph  5(d) (i),  the  Corporation  shall use its best  efforts to cause its
transfer  agent to  electronically  transmit  the  Common  Stock  issuable  upon
conversion of the Series A Convertible  Preferred Stock by crediting the account
of such  holders'  Prime  Broker with DTC through  its  Deposit  Withdraw  Agent
Commission System.

          (ii) The Corporation  understands  that a delay in the issuance of the
     shares of Common Stock beyond the Deadline could result in economic loss to
     the holder.  As  compensation  to the holder for such loss, the Corporation
     agrees to pay late  payments  to the holder for late  issuance of shares of
     Common Stock upon conversion in the event the Corporation  fails to deliver
     the Common  Stock  issuable  upon  conversion  of the Series A  Convertible
     Preferred  Stock more than one day following  the  Deadline.  Late payments
     will accrue in the amount of $500.00 for each $100,000  Stated Value of the
     Series A Convertible Preferred Stock then outstanding,  per day in cash for
     each of the first ten days  beyond the  Deadline  and,  $1,000.00  for each
     $100,000  Stated  Value of the Series A  Convertible  Preferred  Stock then
     outstanding  per day in cash for each day thereafter that the Company fails
     to deliver  such  Common  Stock.  The  Corporation  shall pay any  payments
     incurred under this Paragraph 5(d) (ii) in immediately available funds upon
     demand.  Nothing  herein shall limit  holder's  right to pursue  injunctive
     relief and/or  actual  damages for the  Corporation's  failure to issue and
     deliver Common Stock to the holder.  Furthermore,  in addition to any other
     remedies  which may be  available  to the  holder,  in the  event  that the
     Corporation  fails  for any  reason to effect  delivery  of such  shares of
     Common Stock by the Deadline, the holder will be entitled to


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     revoke the relevant Conversion Notice by delivering a notice to such effect
     to the  Corporation  whereupon the Corporation and the holder shall each be
     restored to their  respective  positions  immediately  prior to delivery of
     such Conversion Notice.

          (iii)  The  holder  shall  be  entitled  to  exercise  its  conversion
     privilege   notwithstanding   the   commencement   of  any  case  under  11
     U.S.C.ss.101  et seq.  (the  "Bankruptcy  -- ---- Code").  In the event the
     Corporation is a debtor under the Bankruptcy  Code, the Corporation  hereby
     waives to the  fullest  extent  permitted  any rights to relief it may have
     under 11 U.S.C.ss.362 in respect of the holder's conversion privilege.  The
     Corporation  hereby  waives to the fullest  extent  permitted any rights to
     relief it may have under 11  U.S.C.ss.362  in respect of the  conversion of
     the Series A Convertible  Preferred Stock. The Corporation agrees,  without
     cost or  expense  to the  holder,  to take or consent to any and all action
     necessary to effectuate relief under 11 U.S.C.ss.362.

     (e) Fractional Shares. No fractional shares shall be issued upon conversion
of Series A Convertible Preferred Stock into Common Stock. All fractional shares
shall be rounded up to the nearest whole share.

     (f) Share Reorganization. If and whenever the Corporation shall:

          (i)  subdivide the  outstanding  shares of Common Stock into a greater
     number of shares;

          (ii) consolidate the outstanding shares of Common Stock into a smaller
     number of shares;  (iii) issue Common Stock or securities  convertible into
     or  exchangeable  for shares of Common Stock as a stock  dividend to all or
     substantially all the holders of Common Stock; or

          (iv) make a  distribution  on the  outstanding  Common Stock to all or
     substantially  all the holders of Common  Stock  payable in Common Stock or
     securities convertible into or exchangeable for Common Stock;

any of such events being herein  called a "Share  Reorganization,"  then in each
such  case  the  applicable  Conversion  Price  shall  be  adjusted,   effective
immediately  after the  record  date at which the  holders  of Common  Stock are
determined for the purposes of the Share Reorganization or, if no record date is
fixed,  the  effective  date of the Share  Reorganization,  by  multiplying  the
applicable  Conversion  Price in effect on such record or effective date, as the
case may be, by a fraction of which:

               (A) the  numerator  shall be the number of shares of Common Stock
          outstanding on such record or effective date (without giving effect to
          the transaction); and

               (B) the denominator shall be the number of shares of Common Stock
          outstanding   after  giving  effect  to  such  Share   Reorganization,
          including, in the case of a


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distribution of securities convertible into or exchangeable for shares of Common
Stock,  the number of shares of Common Stock that would have been outstanding if
such  securities  had been  converted into or exchanged for Common Stock on such
record or effective date.

     (g) Rights Offering.  If and whenever the Corporation shall issue to all or
substantially all the holders of Common Stock, rights, options or warrants under
which such holders are entitled,  during a period expiring not more than 45 days
after the record date of such issue,  to subscribe for or purchase  Common Stock
(or  securities  convertible  into or  exchangeable  or  exercisable  for equity
securities  "Derivative  Securities"),  at a price per share (or, in the case of
securities  convertible into or exchangeable for Common Stock, at an exchange or
conversion price per share at the date of issue of such securities) of less than
95% of the Closing  Bid Price of the Common  Stock on such record date (any such
event  being  herein  called a  "Rights  Offering"),  then in each such case the
applicable  Conversion Price shall be adjusted,  effective immediately after the
record date at which holders of Common Stock are  determined for the purposes of
the Rights Offering, by multiplying the applicable Conversion Price in effect on
such record date by a fraction of which:

          (i) the numerator shall be the sum of:

               (A) the  number of shares of  Common  Stock  outstanding  on such
          record date; and

               (B) a number obtained by dividing: either, (i) the product of the
          total number of shares of Common Stock so offered for  subscription or
          purchase  and the price at which such shares are so  offered,  or (II)
          the  product of the maximum  number of shares of Common  Stock into or
          for which the  convertible or  exchangeable  securities so offered for
          subscription  or  purchase  may be  converted  or  exchanged  and  the
          conversion or exchange price of such  securities,  or, as the case may
          be, by the Closing Bid Price of the Common  Stock on such record date;
          and

          (ii) the denominator shall be the sum of:

               (A) the  number of shares of  Common  Stock  outstanding  on such
          record date; and

               (B)  the  number  of  shares  of  Common  Stock  so  offered  for
          subscription  or purchase (or, in the case of  Derivative  Securities,
          the  maximum  number of shares of Common  Stock for or into  which the
          securities so offered for subscription or purchase may be converted or
          exchanged).  To the extent that such  rights,  options or warrants are
          not  exercised  prior  to the  expiry  time  thereof,  the  applicable
          Conversion Price shall be readjusted effective  immediately after such
          expiry time to the applicable  Conversion  Price which would then have
          been in  effect  upon  the  number  of  shares  of  Common  Stock  (or
          Derivative  Securities)  actually  delivered upon the exercise of such
          rights, options or warrants.


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     (h) Special  Distribution.  If and whenever the Corporation  shall issue or
distribute to all or substantially all the holders of Common Stock:

          (i) shares of the Corporation of any class, other than Common Stock;

          (ii) rights, options or warrants; or

          (iii)  any other  assets  (excluding  cash  dividends  and  equivalent
     dividends in shares paid in lieu of cash dividends in the ordinary course);

and if such issuance or distribution does not constitute a Share  Reorganization
or  a  Rights   Offering   (any  such  event  being  herein  called  a  "Special
Distribution"),  then in each such case the applicable Conversion Price shall be
adjusted,  effective  immediately  after the record date at which the holders of
Common  Stock are  determined  for  purposes  of the  Special  Distribution,  by
multiplying the applicable  Conversion  Price in effect on such record date by a
fraction of which: the numerator shall be the difference between (x) the product
of the number of shares of Common Stock  outstanding on such record date and the
Closing  Bid Price of the  Common  Stock on such date;  and (y) the fair  market
value, as determined by the Directors (whose determination shall be conclusive),
to the  holders  of  Common  Stock of the  shares,  rights,  options,  warrants,
evidences of  indebtedness  or other assets issued or distributed in the Special
Distribution  (net of any  consideration  paid therefor by the holders of Common
Stock),  and the  denominator  shall be the  product  of the number of shares of
Common  Stock  outstanding  on such record date and the Closing Bid Price of the
Common Stock on such date.

     (i) Capital Reorganization. If and whenever there shall occur:

          (i) a reclassification  or redesignation of the shares of Common Stock
     or any change of the shares of Common Stock into other  shares,  other than
     in a Share Reorganization;

          (ii) a consolidation,  merger or amalgamation of the Corporation with,
     or into another body corporate; or

          (iii) the  transfer of all or  substantially  all of the assets of the
     Corporation to another body corporate;

(any such event being herein  called a "Capital  Reorganization"),  then in each
such case the holder who exercises the right to convert  Convertible  Debentures
after the  effective  date of such Capital  Reorganization  shall be entitled to
receive and shall accept, upon the exercise of such right, in lieu of the number
of shares of Common Stock to which such holder was theretofore entitled upon the
exercise of the conversion  privilege,  the aggregate  number of shares or other
securities or property of the  Corporation  or of the body  corporate  resulting
from such Capital  Reorganization  that such holder would have been  entitled to
receive as a result of such Capital  Reorganization  if, on the  effective  date
thereof,  such  holders  had been the  holder of the  number of shares of Common
Stock to which such holder was theretofore  entitled upon conversion;  provided,
however, that no such


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Capital Reorganization shall be consummated in effect unless all necessary steps
shall have been taken so that such  holders  shall  thereafter  be  entitled  to
receive such number of shares or other  securities of the  Corporation or of the
body corporate resulting from such Capital Reorganization, subject to adjustment
thereafter in accordance with provisions the same, as nearly as may be possible,
as those contained above.

     (j) Conversion Price Adjustments. In case at any time and from time to time
the Corporation shall issue any shares of Common Stock or Derivative  Securities
(the number of shares so issued, or issuable upon conversion or exercise of such
Derivative Securities, as applicable, being referred to as "Additional Shares of
Common  Stock") for  consideration  less than the then  Closing Bid Price at the
date of issuance of such shares of Common Stock or such  Derivative  Securities,
in each such case the Conversion Price shall,  concurrently  with such issuance,
be adjusted by multiplying the Conversion Price  immediately prior to such event
by a  fraction:  (i) the  numerator  of which  shall be the  number of shares of
Common Stock  outstanding  immediately  prior to the issuance of such Additional
Shares of Common  Stock  plus the  number  of  shares of Common  Stock  that the
aggregate consideration received by the Corporation for the total number of such
Additional  Shares of Common Stock so issued  would  purchase at the Closing Bid
Price and (ii) the  denominator of which shall be the number of shares of Common
Stock  outstanding  immediately  prior to the issuance of  Additional  Shares of
Common Stock plus the number of such Additional Shares of Common Stock so issued
or sold.

     (k) Conversion Price  Adjustment  Rules. The following terms and procedures
shall be  applicable to  adjustments  to the  Conversion  Price made pursuant to
Paragraphs 5(f) through (j):

          (i) no adjustment in the applicable Conversion Price shall be required
     unless  such  adjustment  would  result  in a change  of at least 1% in the
     applicable  Conversion Price then in effect,  provided,  however,  that any
     adjustments  which,  but for the provisions of this clause would  otherwise
     have been  required  to be made,  shall be carried  forward  and taken into
     account in any subsequent adjustment;

          (ii) if any event occurs of the type  contemplated  by the  adjustment
     provisions  of this  Paragraph  5 but not  expressly  provided  for by such
     provisions,  the  Corporation  will give  notice of such event as  provided
     herein,  and the Corporation's  board of directors will make an appropriate
     adjustment in the Conversion Price so that the rights of the holders of the
     applicable Security shall not be diminished by such event; and

          (iii) if a  dispute  shall  at any  time  arise  with  respect  to any
     adjustment  of the  applicable  Conversion  Price,  such  dispute  shall be
     conclusively  determined by the auditors of the Corporation or, if they are
     unable or unwilling to act, by a firm of independent  chartered accountants
     selected by the Directors and any such determination  shall be binding upon
     the  Corporation  and the  holders  of the Series A  Convertible  Preferred
     Stock.


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<PAGE>


     (l) Certificate as to Adjustment.  The Corporation  shall from time to time
promptly  after the  occurrence of any event which requires an adjustment in the
applicable  Conversion  Price deliver to the holders of the Series A Convertible
Preferred  Stock a certificate  specifying the nature of the event requiring the
adjustment,  the amount of the adjustment  necessitated  thereby, the applicable
Conversion  Price after giving effect to such  adjustment and setting forth,  in
reasonable  detail,  the  method of  calculation  and the facts  upon which such
calculation is based.

     (m) Conversion  Default Payments.  If at any time a Notice of Conversion is
submitted  and (x) the  Corporation  does not  have  sufficient  authorized  but
unissued  shares of Common Stock  available to effect such conversion in full in
accordance  with the  provisions of this  Paragraph 5 or (y) the  Corporation is
prohibited by its Principal Market to effect such conversion in full as provided
below  without  stockholder  approval  (each,  a  "Conversion   Default"),   the
Corporation  shall  issue to the holders of the Series A  Convertible  Preferred
Stock exercising such conversion rights, all of the shares of Common Stock which
are then  available  to effect  such  conversion.  The  portion of this Series A
Convertible  Preferred Stock which the holder included in its Conversion  Notice
and which exceeds the amount which is then  convertible into available shares of
Common  Stock (the  "Excess  Amount")  shall,  notwithstanding  anything  to the
contrary  contained  herein,  not be convertible into Common Stock in accordance
with the terms hereof  until (and at the holder's  option at any time after) the
date additional shares of Common Stock are authorized by the Corporation, or its
stockholders,  as  applicable,  at which  time the  Conversion  Price in respect
thereof shall be the lower of (i) the Conversion Price on the Conversion Default
Date (as defined  below) and (ii) the Conversion  Price on the  Conversion  Date
thereafter  elected by the holder in respect thereof.  The Corporation shall pay
to the holder payments  ("Conversion Default Payments") for a Conversion Default
in the  amount of (N/365) x .24 x the Excess  Amount on the  Conversion  Date in
respect of the Conversion Default (the "Conversion Default Date"), where N = the
number of days from the Conversion Default Date to the date (the  "Authorization
Date") that the Corporation,  or its stockholders,  as applicable,  authorizes a
sufficient  number of shares of Common Stock to effect  conversion  of the total
number of  outstanding  shares  of Series A  Convertible  Preferred  Stock.  The
Corporation  shall use its best efforts to authorize,  or cause its stockholders
to  authorize  within 40 days of the  occurrence  of a  Conversion  Default,  as
applicable, a sufficient number of shares of Common Stock as soon as practicable
following the earlier of (i) such time that the holder  notifies the Corporation
or that the Corporation otherwise becomes aware that there are or likely will be
insufficient  shares to allow  full  conversion  thereof  and (ii) a  Conversion
Default. The Corporation shall send notice to the holder of the authorization of
additional  shares of Common  Stock,  the  Authorization  Date and the amount of
holder's accrued  Conversion  Default Payments.  The accrued  Conversion Default
Payments for each calendar month shall be paid in cash by the fifth business day
of the month following the month in which it has accrued.

     6.   Redemption of Series A Convertible Preferred Stock.

     (a) Mandatory Redemption Date. If, upon the occurrence of the events listed
in Paragraphs  6(a)(i) through (vii) below,  there remain issued and outstanding
any shares of Series A Convertible  Preferred Stock,  then the Corporation shall
be required to redeem all of the


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<PAGE>


outstanding  shares of the  Series A  Convertible  Preferred  Stock,  within ten
business days of such occurrence,  for cash at a redemption  price  ("Redemption
Price")  equal to (x) the  number  of  shares of  Common  Stock  into  which the
outstanding   Series  A  Convertible   Preferred  Stock  are  then  convertible,
multiplied  by (y) the Average  Closing  Bid Price of Common  Stock for the five
Trading Days as reported by Bloomberg,  LP immediately  prior to the date of the
event causing such  redemption  of the shares of Series A Convertible  Preferred
Stock:

          (i) the second anniversary of the Original Issuance Date;

          (ii) Upon (w) the  occurrence  of a Change in Control of the  Company,
     (x) a transfer of all or substantially  all of the assets of the Company to
     any Person in a single transaction or series of related transactions, (y) a
     consolidation,  merger or  amalgamation of the Company with or into another
     Person in which the  Company  is not the  surviving  entity  (other  than a
     merger which is effected solely to change the jurisdiction of incorporation
     of the Company and results in a reclassification, conversion or exchange of
     outstanding  shares of Common  Stock  solely into  shares of Common  Stock)
     (each of items (w), (x) and (y) being  referred to as a "Sale  Event"),  or
     (z) the occurrence of a Registration  Default which continues uncured for a
     period of ten (10) days.

          (iii)  Upon the  issuance  of the  Maximum  Number of  Shares  and the
     failure within 40 days of such issuance to obtain  shareholder  approval to
     issue  additional  shares of Common  Stock,  the Company  shall  redeem the
     outstanding Series A Convertible Preferred Stock for the Redemption Price.

          (iv)  failure by the Company to pay or repay when due, all or any part
     of the  principal  and interest on the  Company's  $2,500,000  Bridge Note,
     $1,850,000 Bridge Note or $3,000,000 Bridge Note, held by Purchaser;

          (v) the  trading in the Common  Stock  shall  have been  suspended  or
     delisted by the  Commission  or by the Nasdaq Stock Market  (except for any
     suspension of trading of limited duration solely to permit dissemination of
     material information regarding the Company and except if, at the time there
     is any suspension or delisting on the Nasdaq Stock Market, the Common Stock
     is then  listed  and  approved  for  trading  on either  the New York Stock
     Exchange,  the American Stock Exchange, the Nasdaq Stock Market's Small Cap
     Market, or the Nasdaq Bulletin Board within ten (10) Trading Days thereof);

          (vi) the Registration Statement shall not have been declared effective
     by the Commission by the Required  Effectiveness Date, or the effectiveness
     of  any  registration  statement  required  to be  filed  pursuant  to  the
     Registration  Rights Agreement shall not be maintained for the Registration
     Maintenance Period, in each case which results in the Company incurring the
     Default Fee for a period in excess of 45 days.

     (b) Right to Redeem Series A Convertible  Preferred Stock. At any time, and
from time to time, on and after the Original Issuance Date, the Corporation may,
in its sole  discretion,  but shall not be obligated to, redeem,  in whole or in
part, the then issued and outstanding


                                       11
<PAGE>


shares of Series A Convertible  Preferred  Stock, at the Redemption  Price.  The
Company  shall select the Shares of Series A Convertible  Preferred  Stock to be
redeemed in any redemption in which not all of the outstanding  Shares of Series
A Convertible Preferred Stock are to be redeemed so that the ratio of the Shares
of Series A Convertible  Preferred  Stock of each holder selected for redemption
to the total Shares of Series A Convertible Preferred Stock owned by that holder
shall  be the  same as the  ratio of all such  Shares  of  Series A  Convertible
Preferred  Stock  selected  for  redemption  bears  to the  total  of  all  then
outstanding Shares of Series A Convertible Preferred Stock.

     (c) Notice of  Redemption.  The  Corporation  shall  provide each holder of
record of the Series A Convertible  Preferred  Stock being redeemed with written
notice of redemption  pursuant to Paragraph 6(b) (the  "Redemption  Notice") not
less  than ten days  prior to any date  stipulated  by the  Corporation  for the
redemption of the Series A Convertible  Preferred Stock (the "Redemption Date").
The Redemption  Notice shall contain (i) the Redemption Date, (ii) the number of
shares of Series A Convertible Preferred Stock to be redeemed from the holder to
whom the Redemption Notice is delivered, (iii) instructions for surrender to the
Corporation of the certificate or certificates representing the shares of Series
A  Convertible  Preferred  Stock to be  redeemed,  and (iv) a procedure  for the
holder to specify the number of shares of Series A Convertible  Preferred  Stock
to be converted into Common Stock pursuant to Subparagraph (d) below.

     (d) Right to Convert Series A Convertible  Preferred  Stock upon Receipt of
Redemption Notice.  Upon receipt of the Redemption Notice, the recipient thereof
shall have the option, at its sole election, to submit a Notice of Conversion to
a portion of the Series A Convertible  Preferred  Stock called for redemption in
the  Redemption  Notice;  provided that such Notice of  Conversion  will only be
honored by the  Corporation if the redemption is not completed by the Redemption
Date.

     (e) Surrender of  Certificates;  Payment of Redemption  Price. On or before
the Redemption Date, each holder of the shares of Series A Convertible Preferred
Stock to be redeemed shall  surrender the required  certificate or  certificates
representing  such  shares to the  Corporation,  in the  manner and at the place
designated  in the  Redemption  Notice,  and upon  payment  to the holder of the
Redemption  Price,  each such  surrendered  certificate  shall be  canceled  and
retired. If payment of such Redemption Price is not made in full by the ten days
following  the Notice of  Redemption,  the holder  shall again have the right to
convert the Series A  Convertible  Preferred  Stock as  provided in  Paragraph 5
hereof and the  Corporation's  right of redemption  under Paragraph 6(b),  shall
cease  to exist  from  and  after  the  Redemption  Date.  If a  certificate  is
surrendered and all the shares  evidenced  thereby are not being  redeemed,  the
Corporation  shall issue new  certificates  to be registered in the names of the
person(s)  whose name(s)  appear(s) as the owners on the respective  surrendered
certificates and deliver such certificate to such person(s).

     7. Notices. In case at any time:

     (a) the  Corporation  shall  declare  any  dividend  upon its Common  Stock
payable in cash or stock or make any other pro rata  distribution to the holders
of its Common Stock; or


                                       12
<PAGE>


     (b) the Corporation shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other rights; or

     (c) there  shall  occur any of the  events  set forth in  Paragraphs  5 (f)
through (k) hereof,  or a  consolidation  or merger of the  Corporation  with or
into, or a sale of all or  substantially  all its assets to,  another  entity or
entities; or

     (d) there shall be a voluntary or involuntary  dissolution,  liquidation or
winding up of the Corporation;

then,  in any one or more of said cases,  the  Corporation  shall give, by first
class mail, postage prepaid, or by telex or facsimile or by recognized overnight
delivery service to non-U.S.  residents,  addressed to each holder of any shares
of Series A Convertible  Preferred  Stock at the address of such holder as shown
on the books of the  Corporation,  at least 10 days' 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 such  event set  forth in  Paragraphs  5 (f)
through (k) hereof,  consolidation,  merger, sale,  dissolution,  liquidation or
winding up. Such notice in accordance  with the foregoing  clause (i) shall also
specify, in the case of any such dividend,  distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto and (ii)
shall  also  specify  the date on which the  holders  of Common  Stock  shall be
entitled  to  exchange  their  Common  Stock for  securities  or other  property
deliverable upon such reorganization,  reclassification,  consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.

     8. Stock to be Reserved.  The Corporation,  upon the effective date of this
Certificate of Designations,  has a sufficient  number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding  shares
of Series A  Convertible  Preferred  Stock.  The  Corporation  will at all times
reserve and keep  available out of its authorized  Common Stock,  solely for the
purpose of issuance upon the conversion of Series A Convertible  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 Convertible
Preferred  . The  Corporation  covenants  that all shares of Common  Stock which
shall  be  so  issued  shall  be  duly  and  validly  issued,   fully  paid  and
non-assessable.  The  Corporation  will take all such  action as may be so taken
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 to
have a sufficient  number of authorized  but unissued  shares of Common Stock to
issue  upon  conversion  of  the  Series  A  Convertible  Preferred  Stock.  The
Corporation  will not take any action  which  results in any  adjustment  of the
conversion  rights if the total  number of  shares of Common  Stock  issued  and
issuable after such action upon conversion of the Series A Convertible Preferred
Stock would exceed the total number of shares of Common Stock then authorized by
the Corporation's Articles of Incorporation.


                                       13
<PAGE>


     9. No Reissuance of Series A Convertible  Preferred Stock. Shares of Series
A Convertible Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.

     10. Issue Tax. The issuance of certificates for shares of Common Stock upon
conversion of Series A Convertible  Preferred Stock shall be made without charge
to the holder for any United States  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 Convertible
Preferred Stock which is being converted.

     11. Closing of Books.  The  Corporation  will at no time close its transfer
books against the transfer of any Series A Convertible Preferred Stock or of any
shares of Common Stock issued or issuable  upon the  conversion of any shares of
Series A Convertible  Preferred  Stock in any manner which  interferes  with the
timely  conversion of such Series A Convertible  Preferred Stock,  except as may
otherwise be required to comply with applicable securities laws.

     12.  Definitions.  As used in this  Certificate of  Designations,  the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
$0.08 par value,  as  constituted  on the date of filing of this  Certificate of
Designations  authorizing  the  issuance of the Series A  Convertible  Preferred
Stock,  and shall also include any capital stock of any class of the Corporation
thereafter  authorized  which  shall  neither  be  limited  to a  fixed  sum  or
percentage  of par value in  respect  of the  rights of the  holders  thereof to
participate  in dividends  nor entitled to a preference in the  distribution  of
assets upon the voluntary or involuntary liquidation,  dissolution or winding up
of the  Corporation;  provided that the shares of Common Stock  receivable  upon
conversion of shares of Series A Convertible  Preferred Stock shall include only
shares  designated as Common Stock of the  Corporation  on the date of filing of
this instrument,  or in case of any reorganization,  reclassification,  or stock
split of the  outstanding  shares  thereof,  the  stock,  securities  or  assets
provided for in Paragraphs 5(f) through (k). Any capitalized  terms used in this
Certificate of  Designations  but not defined herein shall have the meanings set
forth  in that  certain  Securities  Purchase  Agreement  ("Securities  Purchase
Agreement") by the Corporation and the other persons  signatory thereto relating
to the  issuance  and sale of the Series A  Convertible  Preferred  Stock to the
holders of the Series A  Convertible  Preferred  Stock,  a copy of which will be
provided to any stockholder of the Corporation  upon request to the Secretary of
the Corporation, without charge.

     13. Loss,  Theft,  Destruction of Preferred Stock. Upon receipt of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
certificates representing shares of Series A Convertible Preferred Stock and, in
the case of any such loss,  theft or  destruction,  upon  receipt  of  indemnity
reasonably  satisfactory to the Corporation (which shall not include the posting
of any  bond),  or,  in the  case of any such  mutilation,  upon  surrender  and
cancellation  of the  Series A  Convertible  Preferred  Stock  certificate,  the
Corporation  shall  make,  issue  and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated  certificates  for Series A Convertible  Preferred Stock,
new certificates for Series A Convertible Preferred Stock of like tenor.


                                       14
<PAGE>


     14. Who Deemed Absolute Owner. The Corporation may deem the person in whose
name the Series A  Convertible  Preferred  Stock  shall be  registered  upon the
registry books of the Corporation to be, and may treat it as, the absolute owner
of the Series A Convertible Preferred Stock for the purpose of conversion of the
Series  A  Convertible  Preferred  Stock  and for all  other  purposes,  and the
Corporation  shall  not be  affected  by any  notice to the  contrary.  All such
payments  and such  conversion  shall be valid  and  effectual  to  satisfy  and
discharge the liability  upon the Series A  Convertible  Preferred  Stock to the
extent of the sum or sums so paid or the conversion so made.

     15. Register. The Corporation shall keep at its principal office a register
in which the  Corporation  shall  provide for the  registration  of the Series A
Convertible  Preferred  Stock.  Upon any  transfer  of the Series A  Convertible
Preferred Stock in accordance with the provisions  hereof, the Corporation shall
register such transfer on the Series A Convertible Preferred Stock register.

     16.  Headings.  The  headings  of  the  Sections  of  this  Certificate  of
Designations  are inserted for convenience  only and do not constitute a part of
this Certificate of Designations.

     IN WITNESS WHEREOF,  Denis J.  Fitzpatrick,  Chief Financial Officer of the
Corporation,  under  penalties of perjury,  does hereby declare and certify that
this is the act and deed of the Corporation and the facts stated herein are true
and accordingly has signed this Certificate of Designations as of this _____ day
of July, 2000.

                                              AMERICAN INTERNATIONAL PETROLEUM
                                              CORPORATION


                                              By:
                                                  ------------------------------
                                                  Denis J. Fitzpatrick
                                                  Chief Financial Officer


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