Contact Phone Number


    
      

    

    Exhibit
      4.5

    


    SEQUIAM
      CORPORATION

    


    CERTIFICATE
      OF DETERMINATION OF PREFERENCES,

    RIGHTS
      AND LIMITATIONS

    OF

    SERIES
      A 9% CONVERTIBLE PREFERRED STOCK

    


    PURSUANT
      TO SECTION 401 OF THE

    CALIFORNIA
      GENERAL CORPORATION LAW

    


    The
      undersigned, Nicholas VandenBrekel and Mark L. Mroczkowski, do hereby certify
      that:

    


    1. 
        They are the President and Secretary, respectively, of Sequiam
      Corporation, a California corporation (the “Corporation”).

    


    2.   
      The Corporation is authorized to issue 50,000,000 shares of preferred stock,
      none of which have been issued.

    


    3.   
      The number of shares of Series A preferred stock shall be 1,575
      shares.

    


    4.   
      The following resolutions were duly adopted by the Board of
      Directors:

    


    WHEREAS,
      the Certificate of Incorporation of the Corporation provides for a class of
      its
      authorized stock known as preferred stock, comprised of 50,000,000 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
      Determination 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
      1,575 shares of the Series A 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:


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    


    TERMS
      OF PREFERRED STOCK

    


    Section
      1.   Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement shall have the meanings given such terms in the Purchase
      Agreement. For the purposes hereof, the following terms shall have the following
      meanings:

    


    “Alternate
      Consideration”
shall
      have the meaning set forth in Section 7(e).

     

    “Bankruptcy
      Event”
means
      any of the following events: (a) the Corporation or any Significant Subsidiary
      (as such term is defined in Rule 1-02(w) of Regulation S-X, as promulgated
      by
      the Securities and Exchange Commission) 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 7(b).

    


    “Buy-In”
shall
      have the meaning set forth in Section 6(e)(iii).

    


    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (i) 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 40% of the voting securities of the
      Corporation, or (ii) the Corporation merges into or consolidates with any other
      Person, or any Person merges into or consolidates with the Corporation and,
      after giving effect to such transaction, the stockholders of the Corporation
      immediately prior to such transaction own less than 60% of the aggregate voting
      power of the Corporation or the successor entity of such transaction, or (iii)
      the Corporation sells or transfers its assets, as an entirety or substantially
      as an entirety, to another Person and the stockholders of the Corporation
      immediately prior to such transaction own less than 60% of the aggregate voting
      power of the acquiring entity immediately after the transaction, (iv) 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 (v) 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 (i) through (iv).


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    “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 for the Preferred Stock and (ii) the
      Corporation’s obligations to deliver the Securities have been satisfied or
      waived.

    


    “Commission”
means
      the Securities and Exchange Commission.

    


    “Common
      Stock”
means
      the Corporation’s common stock, par value $0.001 per share, and stock of any
      other class of securities into which such securities may hereafter have been
      reclassified or changed into.

    


    “Common
      Stock Equivalents”
means
      any securities of the Corporation or the Subsidiaries which would entitle the
      holder thereof to acquire at any time Common Stock, including, without
      limitation, any debt, preferred stock, rights, options, warrants or other
      instrument that is at any time convertible into or exchangeable for, or
      otherwise entitles the holder thereof to receive, Common Stock.

    


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

    


    “Conversion
      Date”
shall
      have the meaning set forth in Section 6(a).

    


    “Conversion
      Price”
shall
      have the meaning set forth in Section 6(b). 

    


    “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 7(b).


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    “Dilutive
      Issuance Notice”
shall
      have the meaning set forth in Section 7(b).

    


    “Dividend
      Payment Date”
shall
      have the meaning set forth in Section 3(a).

     

    “Dividend
      Share Amount”
shall
      have the meaning set forth in Section 3(a).

    


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

    


    “Equity
      Conditions”
shall
      mean, during the period in question, (i) the Corporation shall have duly honored
      all conversions scheduled to occur or occurring by virtue of one or more Notices
      of Conversion of the Holder on or prior to the dates so requested or required,
      if any, (ii) all liquidated damages and other amounts owing to the Holder in
      respect of the Preferred Stock shall have been paid, (iii) there is an effective
      Conversion Shares Registration Statement pursuant to which the Holder is
      permitted to utilize the prospectus thereunder to resell all of the shares
      of
      Common Stock issuable pursuant to the Transaction Documents (and the Corporation
      believes, in good faith, that such effectiveness will continue uninterrupted
      for
      the foreseeable future), (iv) the Common Stock is trading on the Trading Market
      and all of the shares issuable pursuant to the Transaction Documents are listed
      for trading on a Trading Market (and the Corporation believes, in good faith,
      that trading of the Common Stock on a Trading Market will continue uninterrupted
      for the foreseeable future), (v) there is a sufficient number of authorized
      but
      unissued and otherwise unreserved shares of Common Stock for the issuance of
      all
      of the shares of Common Stock issuable pursuant to the Transaction Documents,
      (vi) there is then existing no Triggering Event or event which, with the passage
      of time or the giving of notice, would constitute a Triggering Event, (vii)
      the
      issuance of the shares in question to the Holder would not violate the
      limitations set forth in Section 6(c), (viii) no public announcement of a
      pending or proposed Fundamental Transaction, Change of Control Transaction
      or
      acquisition transaction has occurred that has not been consummated and (ix)
      for
      a period of 10 consecutive Trading Days prior to the applicable date in
      question, the daily trading volume for the Common Stock on the Trading Market
      exceeds 250,000 shares per Trading Day (subject to adjustment for forward and
      reverse stock splits and the like).

    


    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    


    “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 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 approved by a majority of the disinterested directors, 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.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    “Forced
      Conversion Amount”
shall
      mean (i) the greater of (A) 20% of the aggregate Stated Value of all Preferred
      Stock then outstanding or (B) 25% of the aggregate dollar trading volume of
      the
      Common Stock for the 15 Trading Days immediately prior to the Forced Conversion
      Date, (ii) accrued but unpaid dividends and (iii) all liquidated damages and
      other amounts due in respect of the Preferred Stock.

    


    “Forced
      Conversion Date”
shall
      have the meaning set forth in Section 8(a).

    


    “Forced
      Conversion Notice”
shall
      have the meaning set forth in Section 8(a).

    


    “Forced
      Conversion Notice Date”
shall
      have the meaning set forth in Section 8(a).

    


    “Fundamental
      Transaction”
shall
      have the meaning set forth in Section 7(e).

    


    “Holder”
shall
      have the meaning given such term in Section 2.

    


    “Junior
      Securities”
means
      the Common Stock and all other equity or equity equivalent securities of the
      Corporation other than those securities which are explicitly senior or pari
      passu in rights or liquidation preference to the Preferred Stock.

    


    “Liquidation”
shall
      have the meaning given such term in Section 5.

    


    “New
      York Courts”
shall
      have the meaning given such term in Section 11(d).

    


    “Notice
      of Conversion”
shall
      have the meaning given such term in Section 6(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.

    


    “Optional
      Redemption”
shall
      have the meaning set forth in Section 8(b).


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    “Optional
      Redemption Amount”
shall
      mean the sum of (i) 100% of the aggregate Stated Value then outstanding, (ii)
      accrued but unpaid dividends and (iii) all liquidated damages and other amounts
      due in respect of the Preferred Stock.

    


    “Optional
      Redemption Date”
shall
      have the meaning set forth in Section 8(b).

    


    “Optional
      Redemption Notice”
shall
      have the meaning set forth in Section 8(b).

    


    “Optional
      Redemption Notice Date”
shall
      have the meaning set forth in Section 8(b).

    


    “Permitted
      Indebtedness”
      shall
      mean (a) the
      Indebtedness existing on the Original Issue Date and set forth on Schedule
      3.1(gg)
      attached
      to the Purchase Agreement and (b) lease obligations and purchase money
      Indebtedness of up to $1,000,000, in the aggregate, incurred in connection
      with
      the acquisition of capital assets and lease obligations with respect to newly
      acquired or leased assets.

    


    “Permitted
      Lien”
shall
      mean the individual and collective reference to the following: (a) Liens for
      taxes, assessments and other governmental charges or levies not yet due or
      Liens
      for taxes, assessments and other governmental charges or levies being contested
      in good faith and by appropriate proceedings for which adequate reserves (in
      the
      good faith judgment of the management of the Corporation) have been established
      in accordance with GAAP, (b) Liens imposed by law which were incurred in the
      ordinary course of business, such as carriers’, warehousemen’s and mechanics’
Liens, statutory landlords’ Liens, and other similar Liens arising in the
      ordinary course of business, and (x) which do not individually or in the
      aggregate materially detract from the value of such property or assets or
      materially impair the use thereof in the operation of the business of the
      Corporation and its consolidated Subsidiaries or (y) which are being contested
      in good faith by appropriate proceedings, which proceedings have the effect
      of
      preventing the forfeiture or sale of the property or asset subject to such
      Lien
      and (c) Liens incurred in connection with Permitted Indebtedness under clause
      (b) thereunder provided that such Liens are not secured by assets of the
      Corporation or its Subsidiaries other than the assets so acquired or
      leased.

     

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

    


    “Preferred
      Stock”
shall
      have the meaning given such term in Section 2.

    


    “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.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    “Purchasers”
means
      the Series A preferred stockholders.

    


    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated as of the date of the Purchase
      Agreement, to which the Corporation and the original Holder 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.

    


    “Share
      Delivery Date”
shall
      have the meaning given such term in Section 6(e).

    


    “Stated
      Value”
shall
      have the meaning given such term in Section 2.

    


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

    


    “Three
      Year Redemption”
shall
      have the meaning set forth in Section 8(c).

    


    “Three
      Year Redemption Date”
shall
      have the meaning set forth in Section 8(c).

    


    “Three
      Year Redemption Amount”
shall
      mean the sum of (i) 100% of the aggregate Stated Value then outstanding, (ii)
      accrued but unpaid dividends and (iii) all liquidated damages and other amounts
      due in respect of the Preferred Stock 

     

    “Threshold
      Period”
shall
      have the meaning set forth in Section 8(a). 

    


    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

    


    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq SmallCap Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      OTC Bulletin Board.

    


    “Transaction
      Documents”
shall
      have the meaning set forth in the Purchase Agreement.

    


    “Triggering
      Event”
shall
      have the meaning set forth in Section 9(a).

    


    “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 Conversion Price, (ii) all accrued but unpaid dividends
      thereon and (iii) all liquidated damages and other amounts due in respect of
      the
      Preferred Stock.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    “Triggering
      Redemption Payment Date”
shall
      have the meaning set forth in Section 9(b).

    


    “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 Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading 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 the OTC Bulletin Board and if
      prices for the Common Stock are then reported in the “Pink Sheets” published by
      the Pink Sheets, LLC (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 (c) 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, each
      as
      approved by the Board of Directors of the Corporaion.

    


    Section
      2.   Determination,
      Amount and Par Value.
      The
      series of preferred stock shall be designated as its Series A 9% Convertible
      Preferred Stock (the “Preferred
      Stock”)
      and
      the number of shares so designated shall be 1,575 (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 $.001 per share and a stated
      value equal to $1,000 subject to increase set forth in Section 3(a) below (the
      “Stated
      Value”).
      Capitalized terms not otherwise defined herein shall have the meaning given
      such
      terms in Section 1 hereof.

     

    
      
        Section
          3.   Dividends.

      

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    
      	 	
              a)

            	
              Dividends
                in Cash or in Kind.
                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 9% per annum (subject to increase pursuant to
                Section
                9(b)),
                payable semiannually on January 1 and July 1, beginning with the
                first
                such date after the Original Issue Date and on any Conversion Date
                (except
                that, if such date is not a Trading Day, the payment date shall be
                the
                next succeeding Trading Day) (“Dividend
                Payment Date”)
                in cash or duly authorized, fully paid and non-assessable shares
                of Common
                Stock as set forth in this Section 3(a), or a combination thereof
                (the
                amount to be paid in share of Common Stock, the “Dividend
                Share Amount”).
                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 during the
                10
                Trading Days immediately prior to the applicable Dividend Payment
                Date, in
                cash only, (ii) if funds are legally available for the payment of
                dividends and the Equity Conditions have been met during the 10
                consecutive Trading Days immediately prior to the applicable Dividend
                Payment Date, at the sole election of the Corporation, in cash or
                shares
                of Common Stock which shall be valued solely for such purpose at
                90% of
                the average of the VWAPs for the 10 consecutive Trading Days ending
                on the
                Trading Day that is 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 during the 10 consecutive Trading
                Days
                immediately prior to the applicable Dividend Payment Date, in shares
                of
                Common Stock which shall be valued at 90% of the average of the VWAPs
                for
                the 10 consecutive Trading Days ending on the Trading Day that is
                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 90% of the average of the VWAPs for the 10 consecutive Trading
                Days
                ending on the Trading Day that is 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 during the
                10
                Trading Days immediately prior to the applicable Dividend Payment
                Date,
                then, at the election of such Holder, such dividends shall accrue
                to the
                next Dividend Payment Date or shall be accreted to, and increase,
                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 6. 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). At any time the Corporation
                delivers a notice to the Holders of its election to pay the dividends
                in
                shares of Common Stock, the Corporation shall file a prospectus supplement
                pursuant to Rule 424 disclosing such
                election.

            


    


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    
      	 	
              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 6 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
                without the prior written consent of each
                Holder.

            


    

    
       

    

    Section
      4.   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 75% 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 Determination, (b)
      authorize or create any class of stock ranking as to dividends, redemption
      or
      distribution of assets upon a Liquidation (as defined in Section 5) senior
      to or
      otherwise pari passu with the Preferred Stock, (c) amend its certificate 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
      5.   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.


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    
      
        Section
          6.   Conversion.

      

    

    


    a)  
       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 Section 6(c)) determined
      by dividing the Stated Value of such share of Preferred Stock by the Conversion
      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
      and
      which is incorporated by reference as if fully set forth herein (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.
      To
      effect conversions, 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.

    


    b)   
       Conversion
      Price.
      The
      conversion price for the Preferred Stock shall equal $0.21
      the
      “Conversion
      Price”),
      subject to adjustment herein.


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    c)  
       Beneficial
      Ownership Limitation. The
      Corporation shall not effect any conversion of the Preferred Stock, and a Holder
      shall not have the right to convert any portion of the Preferred Stock to the
      extent that after giving effect to such conversion, such Holder (together with
      such Holder’s affiliates, and any other person or entity acting as a group
      together with such Holder or any of such 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 such 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 such Holder or any of
      its
      affiliates and (B) exercise or conversion of the unexercised or nonconverted
      portion of any other securities of the Corporation (including the Warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein beneficially owned by such Holder or any of its
      affiliates.  Except as set forth in the preceding sentence, for purposes of
      this Section 6(c), beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder. To the extent that the limitation contained in this Section 6(c)
      applies, the determination of whether the Preferred Stock is convertible (in
      relation to other securities owned by such 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, each 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.
      In
      addition, a determination as to any group status as contemplated above shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder. For
      purposes of this Section 6(c), in determining the number of outstanding shares
      of Common Stock, a 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-QSB or Form 10-KSB, 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 a
      Holder, the Corporation shall within two Trading Days confirm orally and in
      writing to such 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 such 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 6(c) may be waived
      by
      such Holder, at the election of such Holder, upon not less than 61 days’ prior
      notice to the Corporation, and the provisions of this Section 6(c) shall
      continue to apply until such 61st
      day (or
      such later date, as determined by such Holder, as may be specified in such
      notice of waiver). The
      provisions of this paragraph shall be implemented in a manner otherwise than
      in
      strict conformity with the terms of this Section 6(c) to correct this paragraph
      (or any portion hereof) which may be defective or inconsistent with the intended
      4.99% beneficial ownership limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such 4.99%
      limitation. The limitations contained in this paragraph shall apply to a
      successor holder of Preferred Stock.


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    
      	 	
              d)

            	
              [RESERVED].

            


    

    


    
      	 	
              e)

            	
              Mechanics
                of Conversion

            


    

    


    i.     Delivery
      of Certificate Upon Conversion.
      Not
      later than three Trading Days after each Conversion Date (the “Share
      Delivery Date”),
      the
      Corporation shall deliver or cause to be delivered 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
      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.

     

    ii.    Obligation
      Absolute; Partial Liquidated Damages.
      The
      Corporation’s obligations to issue and deliver the Conversion Shares upon
      conversion 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 6(e)(i) within two Trading
      Days of 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 six 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.


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    iii.     Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      If the
      Corporation fails to deliver to the Holder such certificate or certificates
      pursuant to Section 6(e)(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.


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    iv.     Reservation
      of Shares Issuable Upon Conversion.
      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 the Preferred Stock and payment of dividends on
      the
      Preferred Stock, each as herein provided, free from preemptive rights or any
      other actual contingent purchase rights of persons other than the Holder (and
      the other Holders of the Preferred Stock), not less than such number of shares
      of the Common Stock as shall (subject to any additional requirements of the
      Corporation as to reservation of such shares set forth in the Purchase
      Agreement) be issuable (taking into account the adjustments and restrictions
      of
      Section 7) 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,
      nonassessable and, if the Conversion Shares Registration Statement is then
      effective under the Securities Act, registered for public sale in accordance
      with such Conversion Shares Registration Statement.

    


    v.     Fractional
      Shares.
      Upon a
      conversion hereunder, the Corporation shall not be required to issue stock
      certificates representing fractions of shares of the 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 the Corporation elects not, or is
      unable, to make such a cash payment, the Holder shall be entitled to receive,
      in
      lieu of the final fraction of a share, one whole share of Common
      Stock.

    


    vi.     Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Preferred Stock shall be made without charge to the Holder hereof 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
      and
      the Corporation shall not be required to issue or deliver such certificates
      unless or until the person or persons requesting the issuance thereof shall
      have
      paid to the Corporation the amount of such tax or shall have established to
      the
      satisfaction of the Corporation that such tax has been paid.


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    
      
        Section
          7.   Certain
          Adjustments.

      

    

    


    a) 
       Stock
      Dividends and Stock Splits.
      If the
      Corporation, at any time while this Preferred Stock is outstanding: (A) pays
      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 (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Corporation pursuant to this Preferred
      Sock), (B) subdivides outstanding shares of Common Stock into a larger number
      of
      shares, (C) combines (including by way of reverse stock split) outstanding
      shares of Common Stock into a smaller number of shares, or (D) issues by
      reclassification of shares of the Common Stock any shares of capital stock
      of
      the Corporation, then the Conversion 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 immediately before such event and of which
      the denominator shall be the number of shares of Common Stock outstanding
      immediately after such event. Any adjustment made pursuant to this Section
      7(a)
      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 re-classification.

     

    b) 
       Subsequent
      Equity Sales.
      If the
      Corporation or any Subsidiary thereof, as applicable, at any time while this
      Preferred Stock is outstanding, shall offer, sell, grant any option 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 Common Stock Equivalents
      entitling any Person to acquire shares of Common Stock, at an effective price
      per share less than the then Conversion 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
      Equivalents 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 is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Conversion Price, such
      issuance shall be deemed to have occurred for less than the Conversion Price
      on
      such date of the Dilutive Issuance), then the Conversion Price shall be reduced
      to equal the Base Conversion Price. Notwithstanding
      the foregoing, no adjustment will be made under this Section 7(b) in respect
      of
      an Exempt Issuance.
      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.


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    c) 
       Subsequent
      Rights Offerings.
      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
      Conversion 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.

     

    d) 
       Pro
      Rata Distributions.
      If the
      Corporation, at any time while Preferred Stock is outstanding, shall distribute
      to all holders of Common Stock (and not to Holders) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security, then in each such case the Conversion
      Price shall be adjusted by multiplying such Conversion 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 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 Holder 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.

    


    e) 
       Fundamental
      Transaction.
      If, at
      any time while this Preferred Stock is outstanding, (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 (in any such case, a “Fundamental
      Transaction”),
      then
      upon any subsequent conversion of this Preferred Stock, the Holder shall have
      the right to receive, for each Conversion Share that would have been issuable
      upon such conversion immediately prior to the occurrence of 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 Conversion 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
      Conversion 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 this Preferred Stock following such Fundamental
      Transaction. The Corporation agrees that it will not enter into a Fundamental
      Transaction that would result in: (a) the holders of the Preferred Stock not
      receiving the same terms and conditions as set forth herein and (b) the holders
      of the Preferred Stock not receiving 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
      7(e)
      and insuring that this Preferred Stock (or any such replacement security) will
      be similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    f) 
       Calculations.
      All
      calculations under this Section 7 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      7,
      the number of shares of Common Stock deemed to be issued and 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.

    


    
      	 	
              g)

            	
              Notice
                to Holders.

            


    

    


    i.     Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any of this Section 7,
      the
      Corporation shall promptly mail to each Holder a notice setting forth the
      Conversion Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment. 

     

    ii.     Notice
      to Allow Conversion by Holder.
      If (A)
      the Corporation shall declare a dividend (or any other distribution) on the
      Common Stock; (B) the Corporation shall declare a special nonrecurring cash
      dividend on or a redemption of the Common Stock; (C) the Corporation shall
      authorize the granting to all holders of the Common Stock rights or warrants
      to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights; (D) 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; (E) the
      Corporation shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Corporation; then, in each
      case,
      the Corporation shall cause to be filed at each office or agency maintained
      for
      the purpose of conversion of this Preferred Stock, and shall cause to be
mailed
      to
      the Holder at its last address as its 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 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 the Common Stock
      of record shall be entitled to exchange their shares of the 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. The Holder is entitled to convert the Conversion Amount of
      this
      Preferred Stock (or any part hereof) during the 20-day period commencing the
      date of such notice to the effective date of the event triggering such notice.
      


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    
      
        Section
          8.   Forced
          Conversion and Optional and Three Year Redemption.

      

    

     

    a) 
       Forced
      Conversion.
      Notwithstanding anything herein to the contrary, if after the Effective Date
      (i)
      the VWAP for each of any 10 consecutive Trading Days (“Threshold
      Period”),
      which
      10 consecutive Trading Day period shall have commenced only after the Effective
      Date, exceeds 300% of the then effective Conversion Price and (ii) the daily
      volume for any such Threshold Period, which Threshold Period shall have
      commenced only after the Effective Date, exceeds 250,000 shares of Common Stock
      per Trading Day, the Corporation shall, within 1 Trading Day after any such
      Threshold Period, deliver a written notice to all Holders (a “Forced
      Conversion Notice”
and
      the
      date such notice is received by the Holders, the “Forced
      Conversion Notice Date”)
      to
      cause each Holder to convert up to a Stated Value of its Preferred Stock equal
      to all or part of such Holder’s pro-rata portion of the Forced Conversion
      Amount, it being understood that the “Conversion
      Date”
for
      purposes of Section 6 shall be deemed to occur on the third Trading Day
      following the Forced Conversion Notice Date (such third Trading Day being
      referred to as the “Forced
      Conversion Date”).
      As to
      each Holder, a Forced Conversion Notice shall contain the aggregate Forced
      Conversion Amount, such Holder’s pro-rata portion of such amount, confirmation
      of the satisfaction of the conditions set forth above for the Threshold Period
      and the Equity Conditions, and the portion of such Holder’s pro-rata portion of
      the Forced Conversion Amount to be converted on each Forced Conversion Date.
      The
      Corporation may not deliver a Forced Conversion Notice, and any Forced
      Conversion Notice delivered by the Corporation shall not be effective, unless
      all of the Equity Conditions have been met on each Trading Day occurring during
      the Threshold Period through and including the later of each Forced Conversion
      Date and the date that the Conversion Shares issuable pursuant to such
      conversion are delivered to the Holder pursuant to the Forced Conversion Notice.
      Notwithstanding anything herein to the contrary, the Corporation may only
      deliver another Forced Conversion Notice provided that the most recent Forced
      Conversion Notice Date is at least 15 days prior to the new Forced Conversion
      Notice Date. Any Forced Conversion Notices shall be applied ratably to all
      of
      the Holders in proportion to each Holder’s initial purchases of Preferred Stock
      hereunder, provided that any voluntary conversions by a Holder shall be applied
      against such Holder’s pro-rata allocation thereby decreasing the aggregate
      amount forcibly converted hereunder.


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    b)  
       Optional
      Redemption at Election of the Holder.
      Subject
      to the provisions of this Section 8, at any time after the date hereof, in
      the
      event of a Change of Control Transaction that results in an non-Affiliated
      third
      party acquiring more than 50% of the voting securities of the Corporation in
      one
      transaction or a series of related transactions, in addition to any other rights
      hereunder, the Holder may deliver a notice to the Corporation (an “Optional
      Redemption Notice” and the date such notice is deemed delivered hereunder, the
“Optional Redemption Notice Date”) of its irrevocable election to cause the
      Corporation redeem some or all of the then outstanding Preferred Stock, for
      an
      amount, in cash, or, subject to the conditions set forth below, at the
      Corporation’s option, in shares of registered Common Stock, equal to the
      Optional Redemption Amount on the 20th Trading Day following the Optional
      Redemption Notice Date (such date, the “Optional Redemption Date” and such
      redemption, the “Optional Redemption”). The Corporation shall deliver notice of
      its election to pay the Optional Redemption Amount in shares of Common Stock
      within 1 Trading Day of its receipt of an Optional Redemption Notice. Failure
      to
      so deliver a notice to pay an Option Redemption Amount in shares of Common
      Stock
      within 1 Trading Day shall be deemed an election by the Corporation to pay
      such
      amount in cash. The Optional Redemption Amount is due in full on the Optional
      Redemption Date. If the Corporation elects to pay an Optional Redemption Amount
      in shares of Common Stock, such shares shall based on a conversion price equal
      to the lesser of (i) the then Conversion Price and (ii) 90% of the average
      of
      the VWAPs for the 10 consecutive Trading Days ending on the Trading Day that
      is
      immediately prior to the applicable Optional Redemption Date. The Corporation
      may only elect to pay the Optional Redemption Amount in shares of Common Stock
      if during the period commencing on the Optional Redemption Notice Date through
      to the Optional Redemption Date and through and including the date such shares
      of Common Stock are issued to the Holder, each of the Equity Conditions shall
      have been met. If any of the Equity Conditions shall cease to be satisfied
      at
      any time during the required period, then the Holder may elect to nullify the
      Optional Redemption Notice by notice to the Corporation within 3 Trading Days
      after the first day on which any such Equity Condition has not been met
      (provided that if, by a provision of the Transaction Documents, the Corporation
      is obligated to notify the Holder of the non-existence of an Equity Condition,
      such notice period shall be extended to the third Trading Day after proper
      notice from the Corporation) in which case the Optional Redemption Notice shall
      be null and void, ab initio or require the Corporation to pay such Optional
      Redemption Amount in cash. The Corporation covenants and agrees that it will
      honor all Notices of Conversion tendered from the time of delivery of the
      Optional Redemption Notice through the date all amounts owing thereon are due
      and paid in full.


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    c)  
       Three
      Year Redemption.
      On the
      third anniversary of the Original Issue Date (the “Three
      Year Redemption Date”),
      the
      Corporation shall redeem all of the then outstanding Preferred Stock, for an
      amount in cash equal to the Three Year Redemption Amount (such redemption,
      the
“Three
      Year Redemption”).
      The
      Corporation covenants and agrees that it will honor all Conversion Notices
      tendered up until such amounts are paid in full.

    


    d)  
       Redemption
      Procedure.
      The
      payment of cash pursuant to a Three Year Redemption shall be made on the Three
      Year Redemption Date. If any portion of the cash payment for a Three Year
      Redemption shall not be paid by the Corporation by the respective due date,
      interest shall accrue thereon at the rate of 18% per annum (or the maximum
      rate
      permitted by applicable law, whichever is less) until the such payment, plus
      all
      amounts owing thereon, is paid in full.

    

      
        
          Section
            9.   Redemption
            Upon Triggering Events.

        

      

    

     

    a)  
       “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 180th
      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
      60
      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 60
      calendar days (which need not be consecutive days) during any 12 month
      period;


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    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 fifth 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.     If
      (1) a
      Registration Statement is not filed on or prior to its Filing Date (if the
      Company files a Registration Statement without affording the Holders the
      opportunity to review and comment on the same, the Company shall not be deemed
      to have satisfied this clause (1)), or (2) the Company fails to file with the
      Securities and Exchange Commission a request for acceleration in accordance
      with
      Rule 461 promulgated under the Securities Act of 1933, as amended, within five
      Trading Days of the date that the Company is notified (orally or in writing,
      whichever is earlier) by the Securities and Exchange Commission that a
      Registration Statement will not be “reviewed,” or not subject to further review,
      or (3) prior to its Effectiveness Date, the Company fails to file a
      pre-effective amendment and otherwise respond in writing to comments made by
      the
      Securities and Exchange Commission in respect of such Registration Statement
      within 25 calendar days after the receipt of comments by or notice from the
      Securities and Exchange Commission that such amendment is required in order
      for
      a Registration Statement to be declared effective, and any of (1), (2) or (3)
      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 180th day after the Original Issue Date, which
      shall be covered by Section 9(a)(i));

    


    v.     the
      Corporation shall fail for any reason to pay in full the amount of cash due
      pursuant to a Buy-In within five 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.     on
      or
      before the 60th
      day
      following the Original Issue Date, the Company shall have failed to amend the
      Company’s certificate or articles of incorporation to increase the number of
      authorized but unissued shares of Common Stock such that at least 130% of the
      Actual Minimum at such time (minus the number of shares of Common Stock
      previously issued pursuant to the Transaction Documents) is reserved from the
      Company’s duly authorized shares of Common Stock;


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    viii.     unless
      specifically addressed elsewhere in this Certificate of Determination as a
      Triggering Event, the Corporation shall fail to observe or perform any other
      covenant, agreement or warranty 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;

    


    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; 

    


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

    


    xiii.    
 any
      monetary judgment, writ or similar final process shall be entered or filed
      against the Corporation, any Subsidiary or any of their respective property
      or
      other assets for than $50,000, and shall remain unvacated, unbonded or unstayed
      for a period of 45 calendar days.

    


    b)  
       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
      redeem all of the Preferred Stock then held by such Holder for a redemption
      price, in cash, equal to the Triggering Redemption Amount. The Triggering
      Redemption Amount shall be due and payable or issuable, as the case may be,
      within five 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, 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.


    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Section
      10.   Negative
      Covenants.
      So long
      as any shares of Preferred Stock are outstanding, the Corporation will not
      and
      will not permit any of its Subsidiaries to directly or indirectly:

    


    a) 
       other
      than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
      suffer to exist any indebtedness for borrowed money of any kind, including
      but
      not limited to, a guarantee, on or with respect to any of its property or assets
      now owned or hereafter acquired or any interest therein or any income or profits
      therefrom;

     

    b)  
       other
      than Permitted Liens, enter into, create, incur, assume or suffer to exist
      any
      liens of any kind, on or with respect to any of its property or assets now
      owned
      or hereafter acquired or any interest therein or any income or profits
      therefrom;

    


    c)  
       amend
      its
      articles or certificate of incorporation, as the case may be, bylaws or other
      charter documents so as to materially and adversely affect any rights of any
      Holder without obtaining the affirmative vote of at least 51% of the outstanding
      holders of the Series A Preferred Stock;

    


    d)  
       repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a de
      minimis number of shares of its Common Stock or Common Stock Equivalents other
      than as to the Conversion Shares to the extent permitted or required under
      the
      Transaction Documents or as otherwise permitted by the Transaction Documents;
      

    


    e)  
       enter
      into any agreement with respect to any of the foregoing;
      or

    


    f)  
       pay
      cash
      dividends or distributions on any equity securities of the
      Corporation. 

    

      
        
          Section
            11.   Miscellaneous.
            

        

      

       

    

    a)  
       Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder, including, without limitation, any Notice of Conversion, shall be
      in
      writing and delivered personally, by facsimile, sent by a nationally recognized
      overnight courier service, addressed to the Corporation, at300 Sunport Lane,
      Orlando, Florida 32809, facsimile number (407) 240-1431, Attn: Mark L.
      Mroczkowski or
      such
      other address or facsimile number as the Corporation may specify for such
      purposes by notice to the Holders delivered in accordance with this Section.
      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, 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, or if no such facsimile telephone
      number or address appears, at the principal place of business of the Holder.
      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 5:30 p.m. (New York City time), (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
      5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New
      York
      City time) on such date, (iii) the second Business Day following the date of
      mailing, if sent by nationally recognized overnight courier service, or (iv)
      upon actual receipt by the party to whom such notice is required to be
      given.


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    b)  
       Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Certificate of Determination
      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. 

     

    c)  
       Lost
      or Mutilated Preferred Stock Certificate.
      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.

     

    d)  
       Waiver.
      Any
      waiver by the Corporation or the Holder of a breach of any provision of this
      Certificate of Determination 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 Determination. The failure of the Corporation or the Holder
      to insist upon strict adherence to any term of this Certificate of Determination
      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 Determination. Any waiver must be in
      writing.

     

    e)  
       Severability.
      If any
      provision of this Certificate of Determination is invalid, illegal or
      unenforceable, the balance of this Certificate of Determination 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. 


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    f)  
       Next
      Business Day.
      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.

    


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

    


    h)  
       Status
      of Converted or Redeemed Preferred Stock.
      Shares
      of Preferred Stock may only be issued pursuant to the Purchase Agreement. In
      case any shares of Preferred Stock shall be converted, redeemed or reacquired
      by
      the Corporation, such shares shall resume the status of authorized but unissued
      shares of preferred stock and shall no longer be designated as Series A 9%
      Convertible Preferred Stock.]

    


    


    *********************

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    



    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 Determination
      of
      Preferences, Rights and Limitations in accordance with the foregoing resolution
      and the provisions of California law.

    


    RESOLVED,
      FURTHER, that each of the undersigned declares under penalty of perjury under
      the laws of the State of California that the statements contained in the
      foregoing certificate are true and correct and of our knowledge.

    


    IN
      WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day
      of
      December __ 2005.

    


    
      	 	 	 
	
              Name:
                Nicholas VandenBrekel

            	 	
              Name:
                Mark L. Mroczkowski

            
	
              Title:
                President

            	 	
              Title:
                Secretary

            


    


    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    


    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 Series A 9%
      Convertible Preferred Stock indicated below, into shares of common stock, par
      value $0.001 per share (the “Common
      Stock”),
      of
      Sequiam Corporation, a California 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
                Conversion Price:

            	 


    

    


    
      	
              Number
                of shares of Preferred Stock subsequent to Conversion: 

            	 


    

    


    
      	 	
              [HOLDER]

            
	 	 	 
	 	
              By:

            	  

	 	
               

            	Name:
	 	
               

            	Title:


    

     

    31