Document:

EXHIBIT 10.1

                       MEMBER INTEREST PURCHASE AGREEMENT

         THIS MEMBER INTEREST PURCHASE AGREEMENT ("Agreement") is dated as of
the 1ST day of July, 2008, and entered into by and between Gateway Processing
Company, a Texas corporation ("Buyer"), and Allen Drilling Acquisition Company,
a Nebraska corporation ("Seller").

                               W I T N E S S E T H

         WHEREAS, Buyer and Seller are parties to that certain Regulations of
Gateway-ADAC Pipeline, LLC, dated August 29, 2005 (the "Operating Agreement"),
whereby Buyer and Seller formed Gateway-ADAC Pipeline, LLC, a Texas limited
liability company (the "Company") (capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Operating Agreement); and

         WHEREAS, Seller desires to sell all of its Interest in the Company to
the Buyer, and the Buyer is willing to purchase such Interest from Seller, for
the consideration and on the terms and conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements made herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, represent, warrant and agree as follows:

         1. Sale and Purchase of Interest.

            1.1 Purchase of Interest. Seller shall sell, assign and transfer to
Buyer, and Buyer shall purchase from Seller all of Seller's right, title and
interest in and to Seller's Interest in the Company, the Transportation System
and any other assets of the Company for a purchase price consisting of the
following:

               (a)  Five Hundred Thirty-Nine Thousand One Hundred Sixty-Six and
                    67/100 Dollars ($539,166.67), of which, Seventeen Thousand
                    and No/100 Dollars ($17,000.00) shall be paid to Seller as
                    reimbursement of Seller's attorneys' fees and costs related
                    to this Agreement; and

               (b)  One Hundred Thousand (100,000) shares of common stock
                    ("Common Stock"), par value $0.25 per share, of Gateway
                    Energy Corporation, a Delaware corporation ("Gateway").

            1.2 Purchase Price. On the date hereof, Buyer will deliver to the
Seller (i) a certified or cashiers check payable in an amount equal to the cash
purchase price indicated above to the order of the Seller, and (ii) a stock
certificate evidencing 100,000 shares of Common Stock issued to Seller. At the
Closing, Seller shall deliver to Buyer a fully executed transfer document
directing the Company to transfer the Interest to Buyer.

<PAGE>

            1.3 Distributions. Buyer shall cause the Company to make
distributions to Seller for the month ending on June 30, 2008 consistent with
past practices and in accordance with the Operating Agreement of the Company. At
the Closing, Buyer shall cause the Company to pay Seller an estimated amount
determined by Buyer to approximate the distribution for the month of June 2008
(the "Estimated Distribution"). Prior to August 1, 2008, the Board of Directors
of the Company shall make a final determination of the Net Cash Flow (as defined
in the Operating Agreement) distributable pursuant to the Operating Agreement
and consistent with past practices (the "Final Distribution"). If the Estimated
Distribution is less than the Final Distribution, Buyer shall cause the Company
to pay to Seller the difference within five (5) business days. If the Estimated
Distribution is more than the Final Distribution, Seller shall pay the Company
the difference within five (5) business days.

         2. The Closing.

            2.1 Closing Date. The closing of the purchase of the Interest
provided for in this Agreement (the "Closing") shall take place at the offices
of Stinson Morrison Hecker, LLP at 1201 Walnut Street, Suite 2900, Kansas City,
Missouri, commencing at 10:00 a.m., on July 1, 2008, or on such other date or at
such other time or place as the parties may mutually agree (such date is herein
called the "Closing Date"), provided that the effective date and time for the
redemption and purchase of the Shares shall be 7:00 a.m. Houston, Texas time,
July 1, 2008.

            2.2 Deliverables by the Buyers. At the Closing, the Buyer shall
deliver to Seller the following:

               (a)  the cash purchase price set forth in Section 1.1 payable in
                    the form of two (2) certified or cashiers' checks to the
                    order of Seller in the amounts of $522,166.67 and
                    $17,000.00; and

               (b)  a stock certificate evidencing the Common Stock set forth in
                    Section 1.1.

            2.3 Deliverables by the Seller. At the Closing, the Seller shall
deliver to the Buyer and the Company the following:

               (a)  a transfer document transferring the Interests to Buyer; and

               (b)  the resignation of Charles A. Holtgraves as a director of
                    the Company.

         3. Seller's Representations and Warranties. Seller hereby makes the
following representations and warranties to Buyer, each of which is true and
correct on the date hereof and will be true and correct at the Closing on the
Closing Date, each of which shall be unaffected by any investigation heretofore
or hereafter made by Buyer and each of which shall survive the Closing and the
transactions contemplated hereby:

                                       2

<PAGE>

            3.1 Ownership of Shares. Seller is the sole record and beneficial
owner of the Interest to be sold to Buyer as set forth in Section 1.1 of this
Agreement. Upon the delivery of and payment for such Interest as herein
contemplated, the Buyer will receive good, valid and marketable title to the
Interest purchased by the Buyer from Seller, free and clear of all liens,
encumbrances, claims, charges, security interests, restrictions on transfer,
shareholders' agreements, voting trusts and other defects in title whatsoever.

            3.2 Authority and Validity. Seller has full legal right, power,
authority and capacity to execute, deliver and perform this Agreement and the
transactions contemplated hereby. This Agreement constitutes the legal, valid
and binding obligations of the Seller, enforceable against Seller in accordance
with its terms, except to the extent that the enforcement hereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, readjustment of debts, fraudulent conveyance or other similar
laws now or hereafter in effect affecting the enforcement of creditors' rights
generally, and (ii) general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law.

            3.3 Conflicts and Violations. The execution, delivery and
performance of this Agreement by Seller and the consummation of the transactions
contemplated hereby will not (i) conflict with or result in the breach of any of
the terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) or require consent
under, or result in the creation or imposition of any lien, encumbrance, claim,
charge, security interest or restriction on transfer upon any property or assets
of Seller pursuant to the terms of any agreement, instrument, franchise, license
or permit to which Seller is a party or by which Seller or any of Seller's
property or assets may be bound, or (ii) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over Seller or
Seller's properties or assets. Neither the execution, delivery or performance by
Seller of this Agreement, nor the consummation of the transactions contemplated
by this Agreement, requires the consent, approval of, authorization by, or the
giving of notice by Seller to, or the registration or the making of any filing
by Seller with, or the taking of any other action by Seller in respect of, any
court or any public, governmental or regulatory agency or body having
jurisdiction over Seller or Seller's properties or assets, or any third party.

            3.4 Investment Intent. The Seller is acquiring the shares of Common
Stock for its own account with the present intention of holding the shares for
purposes of investment, and not with the intention of selling such shares in a
public distribution in violation of the federal securities laws or any
applicable state securities laws. The Seller understands that the shares are
"restricted securities" as defined in Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), and have not been registered pursuant to the
provisions of the Securities Act, inasmuch as the shares are being acquired from
the Buyer and Gateway in a transaction not involving a public offering and the
purchase of the shares pursuant to this Agreement is taking place in a
transaction not involving any public offering. The Seller is able to bear the
economic risk of its investment in the shares for an indefinite period of time
because the shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available.

                                       3

<PAGE>

            3.5 Reliance. Seller is actively involved in the management of the
Company and, in connection with his decision to sell the Shares pursuant to this
Agreement, is not relying upon any representation or warranty of Buyer or the
Company regarding the Company or its business, financial condition or results of
operations, except as expressly set forth herein.

         4. Representations and Warranties by Buyer. Buyer hereby makes the
following representations and warranties to Seller, each of which is true and
correct on the date hereof and will be true and correct at the Closing on the
Closing Date, each of which shall be unaffected by any investigation heretofore
or hereafter made by Seller and each of which shall survive the Closing and the
transactions contemplated hereby:

            4.1 Authority and Validity. The Buyer has the full legal right,
power, authority and capacity to execute, deliver and perform this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes a legal, valid and binding obligation of
the Buyer and is enforceable against the Buyer in accordance with its terms,
except to the extent that the enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, readjustment of debts, fraudulent conveyance or other similar
laws now or hereafter in effect affecting the enforcement of creditors' rights
generally, and (ii) general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law.

            4.2 Conflicts and Violations. The execution, delivery and
performance of this Agreement by the Buyer and the consummation of the
transactions contemplated hereby will not (i) conflict with or result in the
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
or require consent under, or result in the creation or imposition of any lien,
encumbrance, claim, charge, security interest or restriction on transfer upon
any property or assets of the Buyer pursuant to the terms of any agreement,
instrument, franchise, license or permit to which the Buyer is a party or by
which the Buyer or any of his or her property or assets may be bound, or (ii)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Buyer or his or her properties or assets. Neither
the execution, delivery or performance by the Buyer of this Agreement, nor the
consummation of the transactions contemplated by this Agreement, requires the
consent, approval of, authorization by, or the giving of notice by the Buyer to,
or the registration or the making of any filing by the Buyer with, or the taking
of any other action by the Buyer in respect of, any court or any public,
governmental or regulatory agency or body having jurisdiction over the Buyer or
his or her properties or assets, or any third party.

            4.3 Reliance. The Buyer is actively involved in the management of
the Company and, in connection with his or her decision to purchase the
Interests pursuant to this Agreement, is not relying upon any representation or
warranty of Seller or the Company regarding the Company or its business,
financial condition or results of operations, except as expressly set forth
herein

                                       4

<PAGE>

         5. Miscellaneous.

            5.1 General. This Agreement shall not be assigned by any party
without the prior written consent of each of the other parties. This Agreement
and all of its provisions and conditions are for the sole and exclusive benefit
of the parties to this Agreement and their successors and assigns. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment. This Agreement embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all prior agreements between the parties with respect to its
subject matter. This Agreement shall be governed by the law of the State of
Texas, without regard to conflict of law principles thereunder. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.

            5.2 Rule 144 Compliance. With a view to making available to Seller
the benefits of Rule 144 promulgated under the Securities Act of 1933, as
amended, Buyer shall cause Gateway, so long as Gateway is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to:

           (i) Make and keep public information available, as those terms
      are understood and defined in Rule 144;

           (ii) File with the SEC in a timely manner all reports and other
      documents required of Gateway under the Securities Act and the
      Exchange Act; and

           (iii) Within five (5) days after the written request of Seller,
      cause legal counsel of Gateway to provide an opinion of counsel in
      substantially the form attached hereto as Exhibit A regarding the
      removal of the restrictive legend from the certificate evidencing the
      shares of Common Stock issued pursuant to this Agreement in accordance
      with Rule 144(b)(1) at such time as such transfer is permitted
      thereunder.

            5.3 Expenses. The parties hereto will each be solely responsible for
and bear all of their respective expenses, including, without limitation,
expenses of legal counsel, accountants and other advisers, incurred at any time
in connection with pursuing, negotiating, drafting, executing or consummating
this Agreement and the transactions contemplated hereby.

                                       5

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                             GATEWAY PROCESSING COMPANY

                                             By:  /s/  Robert Panico
                                                --------------------------------
                                                       Robert Panico, President

                                             ALLEN DRILLING ACQUISITION COMPANY

                                             By:  /s/  Charles A. Holtgraves
                                                -------------------------------
                                                Name:  Charles A. Holtgraves
                                                Title: President

                                       6

<PAGE>

                                                                       EXHIBIT A

Ladies and Gentlemen:

          Our client, Gateway Energy Corporation, a Delaware corporation (the
"Company"), has requested us to provide you with our opinion as to whether the
Shareholder may have the restrictive legend removed from stock certificate
number ______, which certificate is registered in the name of the Shareholder,
evidencing an aggregate of 100,000 shares (the "Shares") of the Company's Common
Stock, par value $0.25 per share (the "Common Stock"), pursuant to the
provisions of Rule 144(b)(1) promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act").

          We have made such investigations as we deemed necessary and
appropriate under the circumstances in order to allow us to render the opinion
expressed herein and, in this regard, we have been provided with the following:

          o    a copy of a the Shareholder's Representation Letter, dated
               _________, 2008, a form of which is attached hereto as Schedule 1
               (the "Representation Letter"); and

          o    copy of the stock certificate numbered _____.

We have also relied on other written and oral representations of the Company,
its directors or officers.

          We have assumed without independent investigation (i) the authenticity
of the Representation Letters and the certificate representing the Shares
(collectively, the "Documents"), (ii) the conformity to the original Documents
of the copies thereof furnished to us, (iii) the genuineness of the signatures
on the Documents, (iv) the authority and capacity of the persons who signed the
Documents, (v) our ability to rely on the statements and representations
contained in the Documents and other written or oral representations of the
Company, its directors and officers, and (vi) that the representations set forth
in the Documents and those made by the Company, its directors and officers
remain true and correct as of the date hereof.

          Based solely upon the foregoing, we are of the opinion that the
Shareholder may rely upon Rule 144(b)(1), and a new certificate representing the
Shares may be issued without including thereon the legend restricting transfer
under the Act currently set forth on certificate number _____.

          In rendering the foregoing opinion, we have assumed and relied upon
the completeness and accuracy of all statements, representations and agreements
provided to us by or on behalf of the Company and the Shareholder (including the
statements, representations and agreements contained in the Representation
Letters).

                                Very truly yours,

                                            STINSON MORRISON HECKER LLP

                                       7

<PAGE>

                                                                      SCHEDULE 1

Stinson Morrison Hecker LLP
1201 Walnut Street, Suite 2900
Kansas City, Missouri 64106-2150
Attn:  Craig L. Evans

                Re:      Rule 144(b)(1) - Cert. Nos. _________ representing
                         100,000 shares of Common Stock of Gateway Energy
                         Corporation (the "Company") registered to Allen
                         Drilling Acquisition Company

Ladies and Gentlemen:

         The undersigned hereby requests that the restrictive legend be removed
from the above referenced stock certificate evidencing a total of 100,000 shares
of Common Stock (the "Shares") of the Company, pursuant to Rule 144(b)(1)
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act").

         The undersigned hereby represents to you that it is not, and has not
been during the preceding three months, an affiliate (as defined in Rule 144 of
the Act) of the Company and is not directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with, the
Company.

Dated:  _____________, 20___

                                            ALLEN DRILLING ACQUISITION COMPANY

                                            By:  /s/
                                               ---------------------------------
                                                      Charles A. Holtgraves,
                                                      Presidentex4-1.htm

     

     

     

    Exhibit
4.1

     

    
      CERTIFICATE
OF DESIGNATION

       

      OF

       

      SERIES
B-2 CONVERTIBLE PREFERRED STOCK

       

      OF

       

      MRU
HOLDINGS, INC.

       

      The undersigned, being the Chief
Executive Officer of MRU Holdings, Inc. (the “Corporation”), a corporation
duly organized and existing under the General Corporation Law of the state of
Delaware (“DGCL”) does
hereby certify, in accordance with Section 151 and Section 103 of the DGCL, that
the Board of Directors of the Corporation, by unanimous written consent, dated
June 30, 2008, adopted the following resolution creating a series of the
Corporation’s preferred stock, par value $0.001 per share, designated as the
“Series B-2 Convertible Preferred Stock”:

      

      RESOLVED, that pursuant to
authority expressly granted by Article FOURTH (B) of the Amended and Restated
Certificate of Incorporation of the Corporation, the Board hereby creates and
authorizes the issuance of a new series of preferred stock of the Corporation,
par value $0.001 per share, to consist of 2,500,000 shares, designated as
“Series B-2 Convertible Preferred Stock,” with the powers, designations,
preferences and relative, participating, optional and other rights and
qualifications, limitations and restrictions as set forth in the Certificate of
Designation (the “Certificate of
Designation”) attached hereto as Exhibit
C;

      

      That said Exhibit C states that
the powers, designations, preferences and relative, participating, optional and
other rights and qualifications, limitations and restrictions thereof as
follows:

      

      1.  Designation and
Amount.  Two million five hundred thousand (2,500,000) shares
of the Twenty-Five Million (25,000,000) authorized shares of Preferred Stock of
the Corporation are designated as shares of Series B-2 Convertible Preferred
Stock (the “Series B-2
Preferred”).  The Series B-2 Preferred will be issued at a
purchase price equal to $2.25 per share (the “Series B-2 Original Issue
Price”).  The holders of record of the Series B-2 Preferred are
sometimes referred to herein as the “Series B-2
Holders.”  Capitalized terms used herein without definition
shall have the respective meanings given them in Section 12 hereof.

       

      2.  Dividends.

       

      (a)  The
Series B-2 Holders of record, as of the Series B-2 Record Date (as defined
below), shall be entitled to receive when, as and if declared by the Board of
Directors out of funds legally available therefor, dividends on the Series B-2
Preferred at a simple annual rate equal to nine percent (9%) of the Series B-2
Original Issue Price (the “Series B-2 Dividend Rate”), up
to but not including September 30, 2008 (the “Alternate Interest Rate Date”)
and at

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      a simple
annual interest rate of eighteen percent (18%) of the Series B-2 Original Issue
Price (the “Alternate
Rate”) from and after the Alternate Interest Rate Date until the Series
B-2 Preferred is converted in accordance with Section 5 hereof, exchanged
pursuant to Section 6 hereof or redeemed pursuant to Section 10 hereof; provided,
however,  dividends shall not be declared unless permitted
under that certain subordination agreement dated as of June 30, 2008 among the
Corporation, Battery Venture VII, L.P., Battery Investment Partners VII, L.P.
and Viking Asset Management L.L.C. (the “Subordination Agreement”), and
each Series B-2 Holder shall be bound by the provisions of the Subordination
Agreement, a copy of which is available from the Corporation upon
request.  Subject to the foregoing, dividends may be paid by the
Corporation in cash or shares of Common Stock; provided, however, that
dividends shall not be paid in Common Stock if, after giving effect to such
dividends, the aggregate number of shares of Common Stock beneficially owned by
a Series B-2 Holder and its Affiliates exceeds 19.99% of the voting power of the
Corporation (the “Issuance
Limitation”), unless the Corporation obtains the requisite shareholder
approval under NASDAQ Marketplace Rule 4350(i)(1)(B), in which case the Issuance
Limitation shall no longer apply to the Series B-2 Holders.  Dividends
paid in Common Stock will be paid in Common Stock by dividing the amount of such
dividends by the higher of (i) the Series B-2 Original Issue Price and (ii) the
average VWAP for the Common Stock over the ten (10) Trading Days immediately
preceding Series B-2 Dividend Payment Date (as defined in Section 2(b)
below).

       

      (b)  All
dividends shall accrue on any given share of Series B-2 Preferred from the most
recent date on which a dividend has been paid with respect to such share of
Series B-2 Preferred or, if no dividends have been paid, from the date of
original issuance of such share of Series B-2 Preferred. All dividends shall
accrue from day to day, whether or not declared, based on the actual number of
days elapsed and, subject to Section 2(a) hereof, be payable annually in arrears
on June 30th of each
year unless such date is not a Business Day, in which case payment shall be made
on the next succeeding Business Day (each such date being referred to herein as
a “Series B-2 Dividend Payment
Date”), and any accumulated and unpaid dividend will be added to the
Liquidation Preference set forth in Section 4(a)(i) hereof.  Dividends
shall be paid to the holders of record of the Series B-2 Preferred as their
names appear on the stock transfer records of the Corporation on the date (the
“Series B-2 Record
Date”) designated by the Board of Directors as the date of record for the
payment of such dividend; provided, that such Series
B-2 Record Date may not precede the date upon which the resolution fixing the
Series B-2 Record Date is adopted and may not be more than sixty (60) days prior
to the Series B-2 Dividend Payment Date.

       

      (c)  No
dividends may be paid or set apart for such payment on any Series B-2 Junior
Securities (as defined below) and no Series B-2 Junior Securities may be
repurchased or otherwise retired for value nor may funds be set apart for
payment with respect thereto, if dividends have not been paid in full on the
Series B-2 Preferred as provided in this Section 2.

       

      3.  Rank.  The
Series B-2 Preferred shall rank (i) junior to any additional class or series of
capital stock that has been approved as senior to the Series B-2 Preferred by
the Series B-2 Majority Holders (any such additional classes or series,
collectively, the “Series B-2
Senior Securities”), and (ii) senior to (a) the Corporation’s Series B
Convertible Preferred Stock (the “Series B Preferred”), (b) all
shares of the Common Stock and (c) any additional class or

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

       

      series of
capital stock of the Corporation hereafter created other than those approved as
being senior to the Series B-2 Preferred by the Series B-2 Majority Holders (the
Series B Preferred, the Common Stock and any such additional classes or series
of capital stock, collectively, the “Series B-2 Junior
Securities”), in each case, as to any distribution of assets upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary (all such distributions being referred to collectively as “Distributions”).

       

      4.  Liquidation
Preference.

       

      (a)  In the
event of any Distribution, Liquidating Transaction or Fundamental Change (each
referred to herein as a “Liquidation Event”), the
holders of Series B-2 Preferred will be entitled to receive, prior and in
preference to any distribution of any of the assets of the Corporation to the
holders of Series B-2 Junior Securities, the greater of:

       

      (i)  any and
all accrued and unpaid dividends (whether or not declared) compounded annually
up to the date of the Liquidation Event  and an amount per share equal
to the Series B-2 Original Issue Price of the Series B-2 Preferred;
and

       

      (ii)  the
consideration per share of Series B-2 Preferred that each Series B-2 Holder
would have received if such Series B-2 Holder had converted its shares of Series
B-2 Preferred, together with all compounded and accrued and unpaid dividends
(whether or not declared) on each such share of Series B-2 Preferred up until
the date of the Liquidation Event, into Common Stock immediately prior to the
Liquidation Event.

       

      (b)  If upon
the occurrence of a Liquidation Event, the assets available to be distributed to
the Series B-2 Holders shall be insufficient to pay to the Series B-2 Holders
the full preferential amounts due to the Series B-2 Holders pursuant to Section
4(a)(i) hereof, then the entire assets of this Corporation legally available for
distribution shall be distributed among the Series B-2 Holders pro
rata.

       

      (c)  The
Corporation may condition any payment pursuant to this  Section 4 (a
“Liquidation Payment”)
upon the surrender by the Series B-2 Holder of the certificate or certificates
representing the shares of Series B Preferred for which a Liquidation Payment is
to be made.  Notwithstanding that the certificate or certificates
evidencing any of the shares of Series B-2 Preferred for which a Liquidation
Payment is received by a Series B-2 Holder pursuant to this Section 4 shall not
have been surrendered to the Corporation, dividends with respect to such shares
of Series B-2 Preferred shall cease and all rights with respect to such shares
shall forthwith after the payment of the Liquidation Payment terminate and such
shares shall be cancelled and retired.

       

      5.  Conversion.  The
holders of Series B-2 Preferred have conversion rights (the “Series B-2 Conversion Rights”)
as follows:

       

      (a)  Automatic Conversion into
Equity Securities.  Upon the consummation by the Corporation of
the issuance of equity securities (the “Equity Securities”) pursuant
to an equity financing (including the issuance of Equity Securities upon the
conversion or exchange of debt securities (the “Automatically
Converting  Debt Securities”) issued after the date hereof in
connection with an equity financing) in which the Corporation receives at
least

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

       

      Seventy
Five Million Dollars ($75,000,000) (inclusive of the consideration received for
the Series B-2 Preferred) in gross proceeds and 60% of such gross proceeds (at
least $45,000,000) are attributable to one investor or a group of related
investors (the “Equity
Financing”), the shares of Series B-2 Preferred held by each Series B-2
Holder shall automatically convert into such number of shares of Equity
Securities (or Alternative Equity Securities as specified in Section 7(b)
hereof), as is determined by dividing (A) the sum of (i) any and all accrued and
unpaid dividends (whether or not declared) through the date of conversion
(which, for a conversion pursuant to this Section 5(a), shall be the first date
on which the Equity Financing is consummated (the “Equity Financing Closing
Date”)) on all shares of Series B-2 Preferred held by such Series B-2
holder on the Equity Financing Closing Date and  (ii) the aggregate
Series B-2 Original Issue Price for all the outstanding shares Series B-2
Preferred held by such Series B-2 Holder on the Equity Financing Closing Date,
by (B) the per share price of the Equity Securities sold in the Equity
Financing.  Subject to Section 7(b) hereof, such conversion shall be
on the same terms and conditions as those agreed to among the Corporation and
the other purchasers in the Equity Financing.

       

      (b)  Optional Conversion into
Common Stock.  Subject to Section 5(d) below, in the event that
the Series B-2 Preferred is not automatically converted in connection with an
Equity Financing as provided in Section 5(a) above before the Alternate Interest
Rate Date, on and after the Alternate Interest Rate Date, each share of Series
B-2 Preferred shall be convertible, at the option of the Series B-2 Holder
thereof, into a share or shares of Common Stock without the payment of any
additional consideration, at the office of the Corporation or any transfer agent
for the Series B-2 Preferred, into the number of fully paid and nonassessable
shares of Common Stock that results from dividing (A) the sum of (i) the Series
B-2 Original Issue Price plus (ii) accrued and unpaid dividends on the Series
B-2 Preferred (regardless of whether declared), by (B) the conversion value per
share in effect for each share of Series B-2 Preferred (the “Series B-2 Conversion Value”)
at the time of conversion.  The Series B-2 Conversion Value shall
initially be equal to the Series B-2 Original Issue Price and shall be adjusted
from time to time pursuant to the provisions of Section 5(e) and shall be
subject to adjustment from time to time as provided below. The number of shares
of Common Stock into which a share of Series B-2 Preferred is convertible is
hereinafter referred to as the “Series B-2 Conversion
Rate.”

       

      (c)  Mechanics of
Conversion.

       

      (i)  Automatic Conversion Pursuant to
Section 5(a) Hereof.  As soon as practicable after the Equity
Financing Closing Date, the Corporation shall deliver to each Series B-2 Holder
a certificate or certificates at the address for such Series B-2 Holder listed
on the records of the Corporation (or make a book entry if the Equity Securities
are issued through a direct registration system) for the number of shares of
Equity Securities (or Alternative Equity Securities) to which such holder shall
be entitled pursuant to Section 5(a) hereof and a check payable to such holder
in the amount of any cash amounts payable as a result of a conversion into
fractional shares of Equity Securities.  Such conversion shall be
deemed to have been made immediately prior to the close of business on the
Equity Financing Closing Date, and the person or persons entitled to receive the
shares of Equity Securities (or Alternative Equity Securities) issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Equity Securities (or Alternative Equity Securities) on such
date.  Upon receipt of Equity

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

       

      Securities
(or Alternative Equity Securities) issued pursuant to Section 5(a), each Series
B-2 Holder shall surrender all certificates representing the shares of Series
B-2 Preferred converted pursuant Section 5(a) to the Corporation’s Secretary at
the principal executive offices of the Corporation.  Notwithstanding
that the certificates evidencing any of the shares of Series B-2 Preferred
converted pursuant to Section 5(a) shall not have been surrendered, dividends
with respect to such shares of Series B-2 Preferred shall cease to accrue after
the Equity Financing Closing Date and all rights with respect to such shares
shall forthwith after the Equity Financing Closing Date terminate.

       

      (ii)   
Optional Conversion Pursuant to
Section 5(b) Hereof.  Before any Series B-2 Holder shall be
entitled to convert such shares into full shares of Common Stock and to receive
certificates therefor pursuant to Section 5(b) hereof, such Series B-2 Holder
shall surrender the certificate or certificates for such shares of Series B-2
Preferred (the “Converting
Shares”), duly endorsed, at the office of the Corporation or of any
transfer agent for the Series B-2 Preferred, as the case may be, and shall give
written notice substantially in the form attached hereto as Exhibit A (the “Notice”) to the Corporation at
such office (i) stating that the Series B-2 Holder desires to convert the
Converting Shares, or a specified number of such Converting Shares, evidenced by
such certificate(s) into shares of Common Stock, and (ii) giving the name(s)
(with addresses) and denominations in which the certificate(s) evidencing the
Common Stock shall be issued, and instructions for the delivery
thereof.  The Corporation shall, as soon as practicable thereafter,
issue and deliver a certificate or certificates (or make a book entry if the
Common Stock is to be issued through a direct registration system) for the
number of shares of Common Stock to which such Series B-2 Holder shall be
entitled as aforesaid and a check payable to such Series B-2 Holder in the
amount of any cash amounts payable as a result of a conversion into fractional
shares of Common Stock.  Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Series B-2 Preferred to be converted with a properly completed
Notice (the “Surrender
Date”), and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the Surrender
Date.  Dividends with respect shares of Series B-2 Preferred
surrendered pursuant to this Section 5(b)(ii) shall cease to accrue after the
Surrender Date and all rights with respect to such shares shall forthwith after
the  Surrender Date terminate.

       

      (iii)   
Cash in Lieu of Fractional
Shares.  No fractional shares of Equity Securities, Alternative
Equity Securities or Common Stock shall be issued upon conversion of Series B-2
Preferred.  In lieu of any fractional shares to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Series B-2 Conversion Value.

       

      (iv)     Taxes.  The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issuance or delivery of shares of Common Stock, Equity Securities
or Alternative Equity Securities upon conversion of shares of Series B-2
Preferred pursuant to this Section 5.  The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involving the issuance and delivery of shares of Common Stock, Equity
Securities or Alternative Equity Securities in a name other than that in which
the shares of Series B-2 Preferred so converted were registered, and no such
issuance or delivery shall be made unless and until the person or entity
requesting such issuance has paid to

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      the
Corporation the amount of any tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.

       

      (d)  Issuance
Limitation.  The Corporation shall not effect any optional
conversion of Series B-2 Preferred pursuant to Section 5(b) hereof and a Series
B-2 Holder shall not have the right to convert shares of Series B-2 Preferred
pursuant to Section 5(b) hereof to the extent that, upon giving effect to such
conversion, the aggregate number of shares of Common Stock beneficially owned by
such Series B-2 Holder and its Affiliates exceeds the Issuance Limitation, unless the Corporation
obtains the requisite shareholder approval under NASDAQ Marketplace Rule
4350(i)(1)(B), in which case, the Issuance Limitation shall no longer apply to
the Series B-2 Holders.  For purposes of the foregoing proviso, the
aggregate number of shares of Common Stock beneficially owned by the Series B-2
Holder and its Affiliates shall include the shares of Common Stock issuable upon
conversion of such Series B-2 Holder’s and its Affiliates’ Series B-2 Preferred
shares pursuant to this Certificate of Designation, subject in all cases to the
Issuance Limitation.  Upon the written request of a Series B-2 Holder,
the Corporation shall promptly, but in no event later than two (2) Business Days
following the delivery of such request, confirm in writing to such Series B-2
Holder the number of shares of Common Stock then outstanding.  For the
avoidance of doubt, the Issuance Limitation set forth in this Section 5(d) shall
not apply to any automatic conversion pursuant to Section 5(a)
above.

       

      (e)  Adjustment to the Conversion
Value due to Stock Split. Stock Dividend or Other Similar
Event.  If, prior to the conversion of all the Series B-2
Preferred, the number of outstanding shares of Common Stock is increased by a
stock split, stock dividend or other similar event, the Series B-2 Conversion
Value shall be proportionately reduced, or if the number of outstanding shares
of Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Series B-2 Conversion Value shall be proportionately
increased.

       

      (f)  Certificates as to
Adjustments.  Upon each adjustment or readjustment of the
Series B-2 Conversion Value pursuant to Sections 5(e) above, the Corporation at
its expense promptly shall compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series B-2
Preferred a certificate of the Chief Financial Officer of the Corporation
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.  The Corporation
shall, upon the written request at any time of any holder of Series B-2
Preferred, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the then effective
Series B-2 Conversion Value, and (iii) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of each share of such Series B-2 Preferred.

       

      (g)  No
Impairment.  The Corporation will not, by amendment of this
Certificate of Designation or through any reorganization, transfer of assets,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions hereof and in the
taking of all such action as may be necessary or appropriate to protect the
Series B-2 Conversion Rights against impairment.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      (h)  Reservation of Stock
Issuable Upon Conversion.  The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock solely for the purpose of effecting the conversion of the shares of Series
B-2 Preferred such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all authorized shares of Series
B-2 Preferred.  If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of Series B-2 Preferred, the Corporation shall take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.

       

      6.  Optional Exchange into
Convertible Debt.

       

      (a)  Exchange.  If
the Corporation issues Automatically Converting Debt Securities, each holder of
Series B-2 Preferred shall have the right, but not the obligation, to exchange
all, but not less than all, of the Series B-2 Preferred held by such Series B-2
Holder for Automatically Converting Debt Securities on the same terms and
conditions applicable to the purchasers of the Automatically Converting Debt
Securities.  Upon exchange of the Series B-2 Preferred pursuant to
this Section 6, a Series B-2 Holder shall be entitled to a principal amount of
Automatically Converting Debt Securities equal to the sum of (i) any and all
accrued and unpaid dividends (whether or not declared) on the shares of Series
B-2 Preferred then held by such Series B-2 Holder through the date of issuance
of the Automatically Converting Debt Securities and (ii) the aggregate Series
B-2 Original Issue Price for all shares of Series B-2 Preferred held by such
Series B-2 Holder (clauses (i) and (ii) of this sentence collectively are
referred to herein as the “Exchange
Amount”).  The voting rights of any securities received upon
the conversion of Automatically Converting Debt Securities may be limited as set
forth in Section 7(b) hereof.

       

      (b)  Mechanics of
Exchange.   The Corporation shall
provide at least two (2) Business Days’ prior written notice to each Series B-2
Holder before any issuance of Automatically Converting Debt Securities,
including the terms of the Automatically Converting Debt Securities to be issued
(the “Exchange
Notification”).  To the extent a Series B-2 Holder elects to
exchange such Series B-2 Holder’s shares of Series B-2 Preferred into
Automatically Converting Debt Securities (“Exchanging Holder”), such
Series B-2 Holder must provide written notice substantially in the form attached
hereto as Exhibit
B (the “Exchange
Notice”) to the Secretary of the Corporation of such election on the
Business Day following the date of delivery of the Exchange Notification to such
Series B-2 Holder. The Exchange Notice must include the names of the Persons to
whom the Automatically Converting Debt Securities are to be
issued.  Before any Series B-2 Holder shall be entitled to exchange
shares of Series B-2 Preferred for Automatically Converting Debt Securities,
such Series B-2 Holder shall surrender the certificate or certificates for such
shares of Series B-2 Preferred, duly endorsed, at the Corporation’s principal
executive office.  The Corporation shall, as soon as practicable after
receiving the Exchange Notice, issue and deliver Automatically Converting Debt
Securities to the Exchanging Holder in a principal amount equal to the Exchange
Amount.

       

      (c)  Taxes.  The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issuance or delivery of shares of Automatically Converting Debt
Securities upon exchange of shares of Series B-2 Preferred pursuant to this
Section 6.  The Corporation shall not, however, be required to pay any
tax which may be payable in respect of

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

       

      any
transfer involving the issuance and delivery of Automatically Converting Debt
Securities in a name other than that in which the shares of Series B-2 Preferred
so converted were registered, and no such issuance or delivery shall be made
unless and until the person or entity requesting such issuance has paid to the
Corporation the amount of any tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.

       

      7.  Voting
Rights.

       

      (a)  Voting Rights of Series B-2
Preferred.  In addition to any rights of the Series B-2
Preferred with respect to voting as a class under the DGCL, and in addition to
the rights of the Series B-2 Holders set forth in Section 8 below, the Series
B-2 Holders shall vote as one class together with the Common Stock and the
Series B Preferred, and each Series B-2 Holder shall have the number of votes
equal to the number of shares of Common Stock into which the shares of Series
B-2 Preferred held by such Series B-2 Holder may be converted pursuant to
Section 5(b) (excluding accrued and unpaid dividends), and the Series B-2
Holders shall be entitled to vote or otherwise participate in any proceeding in
which actions shall be taken by the Corporation or the stockholders thereof or
be entitled to notification as to any meeting of the stockholders; provided, however, in no
event shall voting power of any Series B-2 Holder, together with its Affiliates,
exceed 19.99% of the voting power of the Corporation (the “Voting Limitation”), unless the Corporation
obtains the requisite shareholder approval under NASDAQ Marketplace Rule
4350(i)(1)(B), in which case, the Voting Limitation shall no longer apply to the
Series B-2 Holders.

       

      (b)  Possible Limitation on Voting Rights
of Equity Securities Acquired upon Automatic Conversion of Series B-2 Preferred
or Automatically Converting Debt Securities.  If the Series B-2
Preferred automatically convert into Equity Securities pursuant to Section 5(a)
hereof or are exchanged for Automatically Converting Debt Securities pursuant to
Section 6 above that are to subsequently convert into Equity Securities and the
per share price of the Equity Securities is less than the Series B-2 Original
Issue Price, then the Series B-2 Preferred shall instead convert into
alternative equity securities (the “Alternative Equity
Securities”), which shall have as identical rights as the Equity
Securities as possible under the DGCL, except the voting rights of the
Alternative Equity Securities will be decreased such that the initial number of
votes attributable to the Alternative Equity Securities will equal to the number
of Equity Securities that would have been received upon the conversion of the
Series B-2 Preferred into or exchange of Automatically Converting Debt
Securities for Equity Securities at the Series B-2 Original Issue
Price.

       

      8.  Protective
Provisions.  So long as at least 1,089,033 shares of Series B-2
Preferred are outstanding (subject to adjustment as provided in this Certificate
of Designation), the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by the DGCL) of the Series B-2 Majority
Holders:

       

      (i)  enter
into any sale of all or substantially all of its assets, or Fundamental Change,
or any liquidation or winding up of the Corporation, in each case where such
transaction or event results in net proceeds, on a per share basis, received by
each Series B-2 Holder of less than three times the Series B-2 Original Issue
Price;

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      (ii)  other
than in connection with the issuance of Equity Securities and the Automatically
Converting Debt Securities, amend this Certificate of Designation or the
Corporation’s Certificate of Incorporation or bylaws in a manner adverse to the
Series B-2 Preferred;

       

      (iii)    
other
than the Equity Securities, authorize or designate any equity security senior to
or on parity with the Series B-2 Preferred or any additional shares of Series
B-2 Preferred;

       

      (iv)    other
than the Equity Securities and the Automatically Converting Debt Securities,
issue any Additional Shares of Common Stock or any shares of Preferred Stock
(other than with respect to the Series B Preferred outstanding on the date
hereof and the Series B-2 Preferred), or any Options or Convertible
Securities;

       

      (v)     other
than with respect to the Equity Securities, the Series B Preferred and the
Series B-2 Preferred, pay any dividend on or purchase, redeem or otherwise
acquire any Series B-2 Junior Securities; or

       

      (vi)    other
than in connection with the issuance of the Equity Securities and the
Automatically Converting Debt Securities, decrease or increase the size of the
Corporation’s Board of Directors.

       

      If the
Series B-2 Majority Holders agree to allow the Corporation to alter or change
the rights, preferences or privileges of the shares of Series B-2 Preferred,
pursuant to this Section 8, so as to affect adversely the Series B-2 Preferred,
then the Corporation will deliver notice of such approved alteration or change
to the Series B-2 Holders that did not vote in favor of such alteration or
change (the “Series B-2
Dissenting Holders”), and each Series B-2 Dissenting Holder shall
thereafter have the right for a period of 30 days after the date of such notice
to convert all, but not less than all, of the shares of Series B-2 Preferred
held by such Series B-2 Dissenting Holder into shares of Common Stock pursuant
to the terms of this Certificate of Designation as such terms exist prior to
such alteration or change.  Any shares of Series B-2 Preferred not so
converted shall thereafter be subject to the approved alteration or change of
the rights, preferences or privileges of the Series B-2 Preferred.

       

      9.   
Status of Converted
Stock.  Whenever any shares of Series B-2 Preferred are
converted pursuant to Section 5 or exchanged pursuant to Section 6 or redeemed pursuant to
Section 10, the shares
so converted shall be canceled, shall return to the status of authorized but
unissued preferred stock of no designated series, regardless of whether such
shares are actually surrendered to the Corporation, and shall not be issuable by
the Corporation as Series B-2 Preferred.

       

      10.   
Redemption

       

      (a)  Optional Redemption after
December 31, 2008.  Subject to Section 10(c) hereof, at any
time on or after December 31, 2008, the Series B-2 Majority Holders may, by
written notice to the Corporation substantially in the form attached hereto as
Exhibit C (the
“Redemption Notice”),
require the Corporation to redeem all of the outstanding shares of Series B-2
Preferred and pay the Series B-2 Holders for each share of Series B-2 Preferred
then held by

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

       

      such
Series B-2 Holders (i) any and all accrued and unpaid dividends (whether or not
declared) on such share of Series B-2 Preferred through the Redemption Date
(defined below), and (ii) an amount per share equal to the Series B-2 Original
Issue Price (clauses (i) and (ii) above are collectively referred to herein as
the “Redemption Price”);
provided, however, the
Corporation shall have no obligation to pay the Redemption Price and redeem the
Series B Preferred under this Section 10(a) until the twentieth (20th) Business
Day after all certificates for the Series B-2 Preferred have been surrendered to
the Secretary of the Corporation at the Corporation’s principal executive
offices (the “Redemption
Date”).

       

      (i)  Rights Subsequent to
Redemption.  On the Redemption Date, the Corporation shall mail
a check or wire to each Series B-2 Holder the Redemption Price at the address or
account, as applicable, for such Series B-2 Holder listed on the records of the
Corporation or deposit each Series B-2 Holder’s Redemption Price with an
independent payment agent so as to be available for the Series B-2 Holders on
the Redemption Date.  If on the  Redemption Date, the Series
B-2 Holder’s Redemption Price is mailed or wired to such Series B-2 Holder or
deposited with an independent payment agent so as to be available for each
Series B-2 Holder, then notwithstanding that the certificates evidencing any of
the shares of Series B-2 Preferred to be redeemed shall not have been
surrendered, dividends with respect to such shares of Series B-2 Preferred shall
cease to accrue after the Redemption Date and all rights with respect to such
shares shall forthwith after the  Redemption Date terminate, except
the right of the a Series B-2 Holder to receive the Redemption Price without
interest if not received on the  Redemption Date.

       

      (b)       Redeemed or Otherwise
Acquired Shares.  Any shares of Series B-2 Preferred that are
redeemed or otherwise acquired by the Corporation or any of its subsidiaries
shall be automatically and immediately canceled and retired and shall not be
reissued, sold or transferred.  Neither the Corporation nor any of its
subsidiaries may exercise any voting or other rights granted to the holders of
Series B-2 Preferred following redemption.

       

      (c)  Redemption Subject to
Subordination Agreement.  Redemption of the Series B Preferred
pursuant to this Section 10 shall only occur if permitted under the terms of the
Subordination Agreement.

       

      11.    Covenant Regarding Proposal
to Stockholders.  If all the shares of Series B-2 Preferred do
not automatically convert into Equity Securities pursuant to Section 5(a) hereof
or are not all exchanged for Automatically Converting Debt Securities pursuant
to Section 6 hereof before the Alternate Interest Rate Date, the Corporation
agrees to use its commercially reasonable efforts to include in the proxy
statement for its next annual meeting of stockholders following the Alternate
Interest Rate Date a proposal to allow the Series B-2 Holders to convert their
shares of Series B-2 Preferred into, and to exercise any warrants to purchase
shares of Common Stock, dated as of even date herewith, into such number of
shares of Common Stock issuable to the Series B-2 Holders hereunder and
thereunder without regard to the Issuance Limitation.

       

      12.   
Definitions.  As
used in this Certificate of Designation, the following terms shall have the
following meanings:

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

       

       

      “Additional Shares of Common
Stock” shall mean all shares of Common Stock issued by the Corporation
after the June 30, 2008, other than shares of Common Stock issued or
issuable:

       

      
        	 	(i)	upon conversion of
      the Series B Preferred or the Series B-2
Preferred;

      

       

      
        	 	(ii)	as a dividend or
      distribution on the Series B Preferred or the Series B-2
    Preferred;

      

            

      
        	 	(iii)	to officers,
      directors or employees of, or financial advisors or other consultants to,
      the Corporation pursuant to a Plan or Plans or pursuant to any
  

      

      
        	 	acquisition,
      financing or other  written agreement so long as any such Plan or
      written agreement has been approved by the Board of
  Directors;

      

       

      
        	 	(iv)	upon exercise of any
      warrant granted in connection with the issuance of the Series B Preferred
      or the Series B-2 Preferred;

      

       

      
        	 	(v)	upon exercise or
      conversion of any Options or Convertible Securities issued in connection
      with an institutional loan agreement, line of credit or other
  

      

      
        	 	financing
      arrangement approved by the Series B-2 Majority Holders;
  and

      

       

      
        	 	(vi)	upon exercise or
      conversion of any other Options or Convertible Securities with respect to
      which the Series B-2 Majority Holders have waived the

      

      

        	 	right of the Series
      B-2 Preferred to a Series B-2 Conversion Value adjustment pursuant to the
      terms of this Certificate of Designation.

      

       

       “Affiliate” means, with respect
to any Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
subject Person. For purposes of the term “Affiliate,” the term “control”
(including the terms “controlling,” “controlled by” and “under common control
with”) means the possession, direct or indirect, of the power to direct or to
cause the direction of the management and policies of a Person, whether through
the ownership of securities, by contract or otherwise.

       

       “Board of Directors” means the
Board of Directors of the Corporation.

       

       “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.

       

       “Common Stock” shall mean the
common stock, par value $0.001 per share, of the Corporation.

       

       “Convertible Securities” shall
mean any evidences of indebtedness, shares (other than Common Stock, Series B
Preferred or Series B-2 Preferred) or other securities convertible into or
exchangeable for Common Stock.

       

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

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

       “Fundamental Change”
means

      
         

      

      
        
          (a)    any consolidation or
merger of the Corporation or any Subsidiary with or into another entity (other
than a merger or consolidation of a Subsidiary into the Corporation or a
wholly-owned Subsidiary) that has been approved by the Board of Directors where
the stockholders of the Corporation immediately prior to such transaction do not
collectively own at least 51% of the outstanding voting securities of the
surviving entity of such consolidation or merger immediately following such
transaction; or

           

          (b)    the acquisition by a
Person or entity or group of Persons or entities acting in concert as a
partnership, limited partnership, syndicate or group, as a  result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise approved or consented to by the Board of Directors, of
beneficial ownership of securities of the Corporation representing 50% or more
of the combined voting power of the outstanding voting securities of the
Corporation ordinarily (and apart from voting rights accruing in special
circumstances) having the right to vote in the election of directors other than
any such acquisition that arises from a transfer of outstanding securities of
the Corporation that have voting power and not through action taken by the
Corporation or any Subsidiary.  Notwithstanding the foregoing, no
Fundamental Change shall result from the Equity Financing or distributions on
Equity Securities issued pursuant to the Equity Financing.

           

        

      

       “Liquidating Transaction” means
a sale, conveyance or disposition of all or substantially all the assets of the
Corporation to any entity other than an Affiliate of the
Corporation.

       

       “Options” shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities (other than warrants granted in
connection with the issuance of the Series B-2 Preferred), excluding options or
grants pursuant to any Plan.

       

       “Plan” shall mean a written
stock grant, option plan or purchase plan or other employee stock incentive
program.

       

       “Person” means any individual,
corporation, partnership, association, trust or other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof.

       

       “Preferred Stock” means the
Series B Preferred and the Series B-2 Preferred.

       

       “Principal Market” means the
New York Stock Exchange or the NASDAQ Global Market.

       

       “Securities Act” means the
Securities Act of 1933, as amended.

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

       “Series B-2 Majority Holders”
means at any time the holders of outstanding shares of Series B-2 Preferred
which shares constitute a majority of the outstanding shares of Series B-2
Preferred.

       

       “Securities Purchase Agreement”
means the Securities Purchase Agreement, dated as of June 30, 2008, by and
between the Corporation and the original Series B-2 Holders pursuant to which
the shares of Series B-2 Preferred were issued.

       

       “Subsidiary” of any Person
means any corporation of which at least a majority of the shares of stock having
by the terms thereof ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have voting power by
reason of the happening of any contingency) is directly or indirectly owned or
controlled by any one of or any combinations of the Corporation or one or more
of its Subsidiaries.

       

       “Trading Day” means any day
(other than a Saturday or Sunday) on which the Principal Market is open for
business.

       

       “VWAP” of any security on any
Trading Day means the volume-weighted average closing price of such security on
such Trading Day on the Principal Market, as reported by Bloomberg Financial,
L.P. (based on a Trading Day from 9:30 a.m., Eastern Time, to 4:00 p.m., Eastern
Time), using the AQR Function, for such Trading Day; provided, however, that
during any period the VWAP is being determined, the VWAP shall be subject to
adjustments acceptable to the Series B-2 Majority Holders for stock splits,
stock dividends, combinations, and capital reorganizations, as
applicable.

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

       

      IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Designation as
of June 30, 2008.

       

       

      
        	 	
                           
      /s/ Edwin J. McGuinn,
      Jr.             
      

              
	 	Name:  Edwin
      J. McGuinn, Jr.
	 	Title:  Chief
      Executive Officer

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Exhibit
A

      

      NOTICE OF
CONVERSION

      

      

      To: MRU
Holdings, Inc.

      

      Reference is made to that certain
Certificate of Designation of Series B-2 Convertible Preferred Stock (the “B-2 Preferred
Designation”).  Capitalized terms used but not defined herein
have the meanings set forth in the B-2 Preferred
Designation.  Pursuant to Section 5(b) of the B-2 Preferred
Designation, the undersigned, being a holder of Series B-2 Convertible Preferred
Stock (an “Exercising
Holder”), hereby elects to exercise its conversion rights as to a portion
or portions of its Series B-2 Convertible Preferred Stock, all as specified
opposite its signature below:

      

      Dated:

       

      

      
        	
                EXERCISING
      HOLDER

              	
                NUMBER
      OF SHARES OF 
SERIES B-2 CONVERTIBLE 
PREFERRED STOCK TO BE
      
CONVERTED TO COMMON 
SHARES*

              
	
                NAME

              	
                SIGNATURE

              	 
      
	
                 
      

                 

                 

              	 
      	 
      

      

      

      

      Names and
addresses of Persons to whom such common stock shall be issued:

       

       

      
        

      

       

      
 

      Denominations
in which the certificate(s) evidencing the common stock shall be
issued:

       

       

      
        
          

        

      

      Instructions
for delivery of certificate(s) evidencing the common stock issued:

       

      

      
        
          

        

      

      

      

      

      *Note
that certificates representing shares of Series B-2 Convertible Preferred Stock
to be converted to Common Shares must surrendered to the
Corporation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      Exhibit
B

      

      EXCHANGE
NOTIFICATION

      

      

      To: The
Secretary of MRU Holdings, Inc.

      

      Reference is made to that certain
Certificate of Designation of Series B-2 Convertible Preferred Stock (the “B-2 Preferred
Designation”).  Capitalized terms used but not defined herein
have the meanings set forth in the B-2 Preferred
Designation.  Pursuant to Section 6(a) of the B-2 Preferred
Designation, the undersigned, being a holder of Series B-2 Convertible Preferred
Stock (an “Exchanging
Holder”), hereby elects to exercise its exchange rights as to all of its
Series B-2 Convertible Preferred Stock into Automatically Converting Debt
Securities, all as specified opposite its signature below:

      

      Dated:

      
 

      
        
          	
                  EXCHANGING 
      HOLDER

                	
                  
                    NUMBER
      OF SHARES OF 
SERIES B-2 CONVERTIBLE 
PREFERRED STOCK TO BE
      
EXCHANGED FOR 
AUTOMATICALLY 
CONVERTING DEBT
      
SECURITIES*

                  

                
	
                  NAME/ADDRESS

                	
                  SIGNATURE

                	 
      
	
                   
      

                   

                   

                	 
      	 
      

        

      

       

      

      Name of
Persons to whom the Automatically Converting Debt Securities are to be
issued:

       

    

    
      
        
          

        

      

      

      

      *Note
that certificates representing shares of Series B-2 Convertible Preferred Stock
to be exchanged for Automatically Converting Debt Securities must be surrendered
to the Corporation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Exhibit
C

      

      REDEMPTION
NOTICE

      

      

      To: MRU
Holdings, Inc.

      

      Reference is made to that certain
Certificate of Designation of Series B-2 Convertible Preferred Stock (the “B-2 Preferred
Designation”).  Capitalized terms used but not defined herein
have the meanings set forth in the B-2 Preferred
Designation.  Pursuant to Section 10 of the B-2 Preferred Designation,
the undersigned Series B-2 Majority Holders hereby elect to exercise their
redemption rights as to a portion or portions of their Series B-2 Convertible
Preferred Stock, all as specified opposite their signatures below:

      

      Dated:

      

      

      
        
          
            	
                    REDEEMING 
      HOLDER

                  	
                    
                      
                        NUMBER
      OF SHARES OF 
SERIES B-2 CONVERTIBLE 
PREFERRED STOCK TO BE
      
REDEEMED*

                      

                    

                  
	
                    NAME/ADDRESS

                  	
                    SIGNATURE

                  	 
      
	
                     
      

                     

                     

                  	 
      	 
      

          

        

      

      

      *Note
that certificate(s) evidencing such shares of Series B-2 Convertible Preferred
Stock to be redeemed must be surrendered to the Secretary of the Company at the
Company’s principal executive offices.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]