Document:

Exhibit
      10.7

    

    SECOND
      AMENDMENT

    TO
      

    CELSIA
      TECHNOLOGIES, INC. 2005 STOCK INCENTIVE PLAN

     

    THIS
      SECOND AMENDMENT (the “Second Amendment”) to CELSIA TECHNOLOGIES, INC. 2005
      STOCK INCENTIVE PLAN (“Plan”) is effective as of the 25th day of May,
      2007.

     

    1. RECITALS.

     

    (i) The
      Board
      of Directors of Celsia Technologies, Inc. (the “Company”) adopted the Plan on
      July 8, 2005, and the Plan was approved by the shareholders of the Company
      on
      July 8, 2005.

     

    (ii) The
      Company entered into an Amendment to the Plan effective as of December 5,
      2006.

     

    (iii) The
      Company desires to further amend the Plan pursuant to this Second
      Amendment.

     

    2. AMENDMENT.
      Section
      4 of the Plan is hereby amended to read as follows:

     

    Subject
      to adjustments as provided in Section 7(d)
      of the Plan, the shares of Common Stock that may be issued with respect to
      Awards granted under the Plan shall not exceed an aggregate of 30,000,000 shares
      of Common Stock. The Company shall reserve such number of shares for Awards
      under the Plan, subject to adjustments as provided in Section 7(d)
      of the Plan. If any Award, or portion of an Award, under the Plan expires or
      terminates unexercised, becomes unexercisable or is forfeited or otherwise
      terminated, surrendered or canceled as to any shares, or if any shares of Common
      Stock are repurchased by or surrendered to the Company in connection with any
      Award (whether or not such surrendered shares were acquired pursuant to any
      Award), or if any shares are withheld by the Company, the shares subject to
      such
      Award and the repurchased, surrendered and withheld shares shall thereafter
      be
      available for further Awards under the Plan; provided, however, that any such
      shares that are surrendered to or repurchased or withheld by the Company in
      connection with any Award or that are otherwise forfeited after issuance shall
      not be available for purchase pursuant to incentive stock options intended
      to
      qualify under Code section 422. Such per-individual limit shall not be adjusted
      to effect a restoration of shares of Common Stock with respect to which the
      related Award is terminated, surrendered or canceled.

     

    3. PLAN
      IN FULL FORCE AND EFFECT.
      After
      giving effect to this Second Amendment, the Plan remains in full force and
      effect.

     

    * * * *CERTIFICATE
      OF DESIGNATION

     

    OF

     

    SERIES
      B CONVERTIBLE ADJUSTABLE PREFERRED STOCK

     

    OF

     

    WHERIFY
      WIRELESS, INC.

     

    Pursuant
      to Section 151 of the General Corporation Law

    of
      the
      State of Delaware

     

    WHERIFY
      WIRELESS, INC.
      (the
“Corporation”),
      a
      corporation organized and existing under the General Corporation Law of the
      State of Delaware, in accordance with the provisions of Section 103 thereof,
      DOES HEREBY CERTIFY:

     

    That
      pursuant to the authority vested in the Board of Directors of the Corporation
      (the “Board”)
      in
      accordance with the provisions of the Amended and Restated Certificate of
      Incorporation of the Corporation (the “Certificate
      of Incorporation”),
      the
      Board on July 27, 2007 adopted the following resolution creating a series
      of 15,000
      shares of Preferred Stock designated as “Series B Convertible Adjustable
      Preferred Stock”:

     

    RESOLVED,
      that pursuant to the authority vested in the Board of Directors of this
      Corporation in accordance with the provisions of the Certificate of
      Incorporation of the Corporation, a series of Preferred Stock, par value $0.01
      per share, of the Corporation be and hereby is created, and that the designation
      and number of shares thereof and the voting and other powers, preferences and
      relative, participating, optional or other rights of the shares of such series
      and the qualifications, limitations and restrictions thereof are as
      follows:

     

    Series
      B Convertible Adjustable Preferred Stock

     

    1.  Designation
      and Amount.
      There
      shall be a series of preferred stock that shall be designated as “Series
      B Convertible Adjustable Preferred Stock,”
which
      shall initially have a stated
      value
      of
      $1,000 per share (the “Stated
      Value”)
      subject to adjustment as provided in Section 6 below, and the number of shares
      constituting such series shall be 15,000.
      Such
      number of shares may be increased or decreased by resolution of the Board;
      provided,
      however,
      that
      notwithstanding anything to the contrary provided herein or elsewhere, no
      decrease thereof shall reduce the number of shares of Series B Convertible
      Adjustable Preferred Stock to less than the number of shares thereof then issued
      and outstanding plus the number of shares thereof issuable upon exercise of
      outstanding rights, options or warrants or upon conversion of outstanding
      securities issued by the Corporation. The Series B Convertible Adjustable
      Preferred Stock shall initially have no maturity date, subject to adjustment
      as
      provided in Section 6 below. The Series B Convertible Adjustable Preferred
      Stock
      shall rank senior to the Common Stock, par value $0.01 per share, of the
      Corporation (the “Common
      Stock”)
      as to
      the payment of dividends and as to the distribution of assets upon liquidation,
      dissolution, winding up or certain circumstances in connection with a
Change
      of
Control
      (as
      defined below) and shall rank pari
      passu
      with the
      Corporation’s Series A Convertible Preferred Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.  Dividends
      and Distribution.

     

     

    (a)  The
      holders of shares of Series B Convertible Adjustable Preferred Stock will be
      entitled to receive cumulative dividends out of funds legally available
      therefor, payable in preference and priority to any payment of any dividend
      on
      Common Stock. Such dividends shall be payable in arrears on a quarterly basis
      on
      the last business day of March, June, September and December in each year,
      with
      the first payment being due on December 31, 2007 (each such date being referred
      to herein as a “Quarterly
      Dividend Payment Date”).
      Accrued but unpaid dividends shall not bear interest. Any dividends paid on
      the
      shares of Series B Convertible Adjustable Preferred Stock, whether in cash
      or
      through the issuance of additional shares of Series B Convertible Adjustable
      Preferred Stock as stock dividends as provided in Section 2(b) below, shall
      be
      allocated pro rata on a share-by-share basis among all such then-outstanding
      shares of Series B Convertible Adjustable Preferred Stock.

     

    (b)  Dividends
      on each share of Series B Convertible Adjustable Preferred Stock shall begin
      to
      accrue and be cumulative at an annual rate of ten percent (10%) of the
Stated
      Value
      (the
“Series
      B Preferred Stock Dividend”),
      beginning on the date each such share of Series B Convertible Adjustable
      Preferred Stock is issued (including upon issuance as a stock dividend).

     

    (c)  Dividends
      payable on Series B Convertible Adjustable Preferred Stock shall be payable
      either (i) in cash or (ii) through the Corporation’s issuance of added shares of
      Series B Convertible Adjustable Preferred Stock
      as a
      stock dividend in an amount equal to (x) the dollar amount of the dividend
      otherwise payable in cash divided by (y) the Stated Value or (iii) any
      combination of the foregoing as the Board may determine in its sole discretion.
      Any cash dividends paid in respect of the Series B Convertible Adjustable
      Preferred Shares shall be made ratably between the Corporation’s Series A
      Convertible Preferred Stock and the Series B Convertible Adjustable Preferred
      Stock. No fractional shares of Series B Convertible Adjustable Preferred Stock
      shall be issued as stock dividends pursuant to Section 2(c)(ii). 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 Stated
      Value.

     

    (d)  The
      record
      date with respect to the dividends payable on the last business day of March,
      June, September and December of each year, shall be March 15, June 15, September
      15 and December 15 of each year, respectively, or such other record date, not
      more than 60 days and not less than 10 days preceding the applicable Quarterly
      Dividend Payment Date, as shall be fixed by the Board.

     

    (e)  The
      per
      share amounts in this Section 2 will be adjusted for any recapitalization,
      stock
      combinations, stock dividends, stock splits or similar events occurring after
      the date of issuance of any shares of Series B Convertible Adjustable Preferred
      Shares (each a “Recapitalization”).
      

     

    (f)  Upon
      conversion of any shares of Series B Convertible Adjustable Preferred Stock
      to
      shares of Common Stock, any cumulative dividends with respect thereto that
      are
      accrued, payable and/or in arrears as of the date such Share of Series B
      Convertible Adjustable Preferred Stock is surrendered for conversion (the
“Conversion
      Date”)
      shall,
      if not paid in cash within 5 business days after such Conversion Date, shall
      be
      paid through the issuance of stock dividends in accordance with Section 2(c)(ii)
      hereof and the subject stock dividend shall also immediately convert into shares
      of Common Stock.
      Dividends shall only cease to occur when certificates for shares of Common
      Stock
      representing the dividend payments are received by the person to whom the
      dividends are being paid to. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.  Voting
      Rights.

     

    (a)  Except
      as
      otherwise required by law or expressly provided herein, each share of Series
      B
      Convertible Adjustable Preferred Stock shall be entitled to vote on all matters
      submitted or required to be submitted to a vote of the stockholders of the
      Corporation and shall be entitled to the number of votes equal to the number
      of
      whole shares of Common Stock into which such shares of Series B Convertible
      Adjustable Preferred Stock are convertible pursuant to the provisions hereof,
      at
      the record date for the determination of stockholders entitled to vote on such
      matters or, if no such record date is established, at the date such vote is
      taken or any written consent of stockholders is solicited. In each such case,
      except as otherwise required by law or expressly provided herein, the holders
      of
      shares of Series B Convertible Adjustable Preferred Stock, the Series A
      Convertible Preferred Stock and Common Stock shall vote together and not as
      separate classes. Fractional votes shall not, however, be permitted and any
      fractional voting rights resulting from the above formula (after aggregating
      all
      shares of Common Stock into which shares of Series B Convertible Adjustable
      Preferred Stock held by each holder could be converted) shall be rounded down
      to
      the nearest whole number. 

     

    (b)  Except
      as
      required by law and by Section 3(c) hereof, holders of Series B Convertible
      Adjustable Preferred Stock shall have no special voting rights and their consent
      shall not be required (except to the extent they are entitled to vote with
      holders of Common Stock as set forth herein) for taking any corporate
      action.

     

    (c)  So
      long
      as twenty-five (25%) percent of the shares of Series B Convertible Adjustable
      Preferred Stock sold by the Corporation pursuant to the Corporation’s
      Confidential Information Memorandum dated May 11, 2007 (the “Preferred
      Memorandum”)
      remain
      outstanding (as appropriately adjusted for any recapitalization, stock
      combinations, stock dividends, stock splits or similar events occurring after
      the original issuance date of any shares of Series B Convertible Adjustable
      Preferred Stock, the “Original
      Issuance Date”),
      the
      Corporation will not, directly or indirectly, including without limitation
      through merger, consolidation or otherwise, without the affirmative vote or
      written consent of the holders of more than fifty percent (50%) of the
      then-outstanding shares
      of
      Series B
      Convertible Adjustable Preferred Stock, voting as a separate class, given in
      writing or by resolution adopted at a duly-called meeting of the holders of
      Series B Convertible Adjustable Preferred Stock:

     

    (i)  Declare
      or pay any dividends on any shares of Common Stock without first paying in
      full,
      in addition to any Series A Preferred Stock Dividend (as such term is defined
      in
      the Certificate of Designation of the Corporation’s Series A Convertible
      Preferred Stock (the “Series
      A Certificate”))
      or
      any Series B Preferred Stock Dividend accrued and unpaid through and including
      such date, the amount that the holders of the Corporation’s Series A Convertible
      Preferred Stock and Series B Convertible Adjustable Preferred Stock would have
      received had the shares of Series A Convertible Preferred Stock and Series
      B
      Convertible Adjustable Preferred Stock been converted for shares of Common Stock
      at the then-applicable Series A Conversion Price (as such term is defined in
      the
      Series A Certificate) or the then-applicable Series B Optional Conversion Price
      (defined below), as the case may be; or 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)  Directly
      and/or indirectly, designate, issue, create or otherwise permit to exist, any
      additional shares of preferred stock or other securities of the Corporation
      that, as to the payment of dividends, distribution of assets, redemptions,
      voting, interest payments, liquidation payments and/or any other type of payment
      or right, including, without limitation, distributions to be made upon the
      liquidation, dissolution or winding up of the Corporation, or upon the merger,
      Change
      of
Control,
      consolidation or sale of the assets thereof, is directly and/or indirectly
      senior to or pari
      passu
      with the
      Series B Convertible Adjustable Preferred Stock.

     

    (iii)  Directly
      and/or indirectly create, incur or assume any liability or indebtedness for
      borrowed money (collectively, “New
      Indebtedness”),
      unless, after the creation, incurrence or assumption of such New Indebtedness,
      the Corporation shall have an EBITDA Debt Service Coverage Ratio, calculated
      on
      a pro
      forma trailing
      twelve-month basis that is greater than or equal to two (2). For the purpose
      of
      this Section 3(c)(iii), “EBITDA”
means,
      in any fiscal period, the Corporation’s net income or net loss (other than
      extraordinary or non-recurring items of the Corporation for such period), plus
      (x) the amount of all interest expense, income tax expense, depreciation expense
      and amortization expense of the Corporation for such period, and plus or minus
      (as the case may be) (y) any other non-cash charges that have been added or
      subtracted, as the case may be, in calculating the Corporation’s net income for
      such period. If the Corporation’s accounting is prepared on a consolidated
      basis, EBITDA shall be calculated on a consolidated basis. For the purpose
      of
      this Section 3(c)(iii), “Debt
      Service”
means,
      as of the last day of each fiscal quarter of the Corporation, on a consolidated
      basis, principal due within twelve (12) months after such day, and interest
      on
      any indebtedness for the current fiscal quarter calculated on an annualized
      basis. For purposes of this Section 3(c)(iii) “EBITDA
      Debt Service Coverage Ratio”
means
      EBITDA divided by Debt Service

     

    4.  Conversion

     

    (a)  Optional
      Conversion.
      Subject
      to any adjustment as provided in Section 6, and provided that the Corporation
      has sufficient authorized shares of Common Stock for issuance upon conversion,
      each share of Series B Convertible Adjustable Preferred Stock shall be
      convertible, at the option of the holder thereof, at any time and from time
      to
      time after the date of issuance of such share at the office of the Corporation
      or any transfer agent for the Series B Convertible Adjustable Preferred Stock
      into such number of fully paid and nonassessable shares of Common Stock as
      is
      determined by dividing the Stated Value by the Series B Optional Conversion
      Price (determined as hereinafter provided) in effect at the time of any
      conversion. Subject to any adjustment as provided in Section 6 hereof, the
      conversion price which shares of Common Stock shall be deliverable upon
      conversion of shares of Series B Convertible Adjustable Preferred Stock shall
      initially be equal to the greater of (i) $0.16 per share of Common Stock or
      (ii)
      80% of the Trailing 10-Day VWAP (as such term is hereinafter defined), but
      in
      any event, not more than $0.20 per share of Common Stock with respect to each
      share of Series B Convertible Adjustable Preferred Stock (the “Series
      B Optional Conversion Price”).
      For
      purposes hereof, the “Trailing
      10-day VWAP”
      means the average of the Daily VWAP (as hereinafter defined) for the Common
      Stock for each of the ten (10) consecutive trading days immediately preceding
      the Conversion Date. “Daily
      VWAP”
      means the per share volume-weighted average price as displayed under the heading
      “Bloomberg VWAP” in respect of the period from 9:30 a.m. to 4:00 p.m. (New York
      City time) on such trading day (or if such volume-weighted average price is
      unavailable, the market value of one share of Common Stock on such trading
      day
      as the independent members of the Board and the holders owning 50.1% of the
      then
      issued and outstanding Series B Convertible Adjustable Preferred Stock shall
      mutually determine in good faith using a volume-weighted method).

     

    (b)  Mandatory
      Conversion.
      Subject
      to any adjustment as provided for in Section 6, and provided that the
      Corporation has sufficient authorized Common Stock for issuance upon conversion,
      each share of Series B Convertible Adjustable Preferred Stock shall
      automatically be converted into shares of Common Stock at the then effective
      Series B Optional Conversion Price at any time that the Corporation’s Series A
      Convertible Preferred Stock is required by its terms to be converted into Common
      Stock, which generally shall be upon the earlier of: 

     

    (i)  the
      closing of an underwritten public offering pursuant to an effective registration
      statement under the Securities Act of 1933, as amended (the “Securities
      Act”),
      in
      connection with the offer and sale of shares of Common Stock for the account
      of
      the Corporation resulting in gross proceeds to the Corporation of not less
      than
      $20,000,000 (a “Qualified
      Offering”);
      provided that
      the
      shares of Common Stock issuable upon the conversion of the Series B Convertible
      Adjustable Preferred Stock (the “Conversion
      Shares”)
      are
      (A) trading or quoted (as the case may be), on the Bulletin Board, NASDAQ,
      AMEX
      or the NYSE (any of which shall hereinafter be referred to as an “Eligible
      Trading Medium”),
      and
      (B) registered under the Securities Act for resale without any direct and/or
      indirect selling limitations and/or restrictions longer than 180 days following
      the closing date of the Qualifying Offering;

     

    (ii)  the
      date
      (A) the Common Stock has for 20 consecutive trading days (x) closed at a price
      equal to not less than 250% the then-applicable Series B Optional Conversion
      Price and (y) averaged not less than 500,000
      shares
      traded per day on
      the
      particular Eligible Trading Medium, (B)
      there
      is an effective resale registration statement covering the resale of the
      Conversion Shares and the Conversion Shares have no direct and/or indirect
      selling limitations and/or restrictions, and (C) the Conversion Shares are
      traded and/or quoted on an Eligible Trading Medium; or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii)  a
      Change
      of Control, in which case, immediately prior to such automatic conversion,
      holders of the Series B Convertible
      Adjustable Preferred
      Stock
      shall first receive the Series B Liquidation Preference Amount (defined below).
      As used herein, “Change
      of Control”
shall
      mean (A) the sale of all or substantially all of the assets of the Corporation
      to an Independent Third Party (defined below), or (B) the sale by the
      Corporation of 50% or more of the Corporation’s then issued and outstanding
      voting stock (on a fully diluted and fully converted/exercised basis) in one
      transaction or series of directly related transactions, unrelated to the sale
      by
      the Corporation of its securities for capital raising purposes or (C) a merger
      or consolidation of the Corporation into or with another corporation for cash
      and/or other consideration (other than any merger or consolidation in which
      stockholders of the Corporation immediately prior to such merger or
      consolidation beneficially own more than 50% of the voting shares of the
      surviving corporation immediately following such merger or consolidation).
      As
      used herein, “Independent
      Third Party”
means
      any person (and/or “group” as defined in Section 13 of the Securities Exchange
      Act of 1934, as amended, who, immediately prior to a contemplated transaction,
      (a) does not beneficially own in excess of the 10% of the Corporation’s issued
      and outstanding Common Equivalents (defined below) (a “10%
      Owner”),
      (b)
      is not a controlling, controlled by or under common control with any 10% Owner,
      (c) is not the spouse or descendant (by birth or adoption) of any 10% Owner,
      or
      (d) is not a trust for the benefit of (i) any 10% Owner, (ii) an entity
      controlling, controlled by or under common control with any 10% Owner, and/or
      (iii) the spouse or descendant (by birth or adoption) of any 10% Owner.
“Common
      Equivalents”
means
      (i) any Common Stock and (ii) any Preferred Stock, option, warrant or other
      security of the Corporation that is convertible into or exercisable for Common
      Stock (or into securities that are convertible into Common Stock), with the
      quantity of Common Equivalents that such a security constitutes being the number
      of shares of Common Stock issuable upon the exercise or conversion of such
      security.

     

    (c)  Mechanics
      of Conversion.
      No
      fractional shares of Common Stock shall be issued upon conversion of the Series
      B Convertible Adjustable Preferred Stock. 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 greater of (i) the
      then-effective
      Series B Optional Conversion Price
      or (ii)
      the then-applicable fair market value of a share of Common Stock, as calculated
      pursuant to Section 7(d).
      Before
      any holder of Series B Convertible Adjustable Preferred Stock shall be entitled,
      pursuant to Section 4(a), to convert such Series B Convertible Adjustable
      Preferred Stock into full shares of Common Stock and to receive certificates
      therefore (assuming the holder received certificates for its Series B
      Convertible Adjustable Preferred Stock), the holder shall surrender the
      certificate or certificates therefor, duly endorsed, at the office of the
      Corporation or of any transfer agent for the Series B Convertible Adjustable
      Preferred Stock (or a Lost Stock Certificate Affidavit (defined below)), and
      shall give written notice to the Corporation at such office that the holder
      elects to convert the same. In the event of an automatic conversion pursuant
      to
      Section 4(b), a holder’s outstanding shares of Series B Convertible Adjustable
      Preferred Stock shall be converted automatically without any further action
      by
      the holder of such shares and whether or not the certificates representing
      such
      shares are surrendered to the Corporation or its transfer agent; provided,
      however,
      that
      the Corporation shall not be obligated to issue certificates evidencing the
      shares of Common Stock issuable upon such automatic conversion unless the
      certificates evidencing such shares of Series B Convertible Adjustable Preferred
      Stock are either delivered to the Corporation or its transfer agent as provided
      above (assuming the holder received from the Corporation certificates for its
      Series B Convertible Adjustable Preferred Stock), or the holder notifies the
      Corporation or its transfer agent that such certificates have been lost, stolen
      or destroyed and executes and delivers to the Corporation an affidavit
      acknowledging the same (a “Lost
      Stock Certificate Affidavit”).
      The
      Corporation shall be responsible for the cost of any transfer agent bond
      required in connection with a lost stock certificate. The Corporation shall,
      as
      soon as practicable after the delivery of such Certificates or such Lost Stock
      Certificate Affidavit, issue and deliver to the holder, at the holder’s address
      set forth in the Corporation’s books and records, the required certificate or
      certificates for the number of shares of Common Stock to which such holder
      is to
      receive as aforesaid and a check payable to the holder in the amount of any
      cash
      amounts payable as the result of a conversion into fractional shares of Common
      Stock; provided,
      however,
      that
      notwithstanding anything to the contrary provided herein or elsewhere, in no
      event shall the Corporation deliver certificates for Conversion Shares (which
      shall be without any restrictive legend upon the resale of such Conversion
      Shares covered by an effective registration statement or pursuant to a Rule
      144
      or Rule 144K opinion) later than three (3) business days following receipt
      by
      the Corporation of the Certificates for the Series B Convertible Adjustable
      Preferred Stock or a Lost Stock Certificate Affidavit . 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 Convertible Adjustable Preferred
      Stock to be converted (or delivery of a Lost Stock Certificate Affidavit),
      or,
      in the case of automatic conversion, on the date of the occurrence of a
      transaction or event requiring automatic conversion as set forth in Section
      4(b)(i), (ii) or (iii) of this Certificate. The person or persons 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
      such
      date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)  Adjustment
      for Stock Splits and Combinations.
      If the
      Corporation at any time or from time to time after the effective date of this
      Certificate of Designation (the “Effective
      Date”)
      effects a division of the outstanding shares of Common Stock, the Series B
      Optional Conversion Price then in effect immediately prior to that division
      shall be proportionately decreased and, conversely, if the Corporation at any
      time, or from time to time, after the Effective Date combines the outstanding
      shares of Common Stock, the Series B Optional Conversion Price then in effect
      immediately prior to that combination shall be proportionately increased. Any
      adjustment under this Section 4(d) shall be effective on the close of business
      on the date such division or combination becomes effective.

     

    (e)  Adjustment
      for Certain Dividends and Distributions.
      If the
      Corporation at any time or from time to time after the Effective Date pays
      or
      fixes a record date for the determination of holders of shares of Common Stock
      entitled to receive a dividend or other distribution in the form of shares
      of
      Common Stock, then in each such event the Series B Optional Conversion Price
      then in effect shall be decreased, as of the time of such payment or, in the
      event a record date is fixed, as of the close of business on such record date,
      by multiplying the Series B Optional Conversion Price then in effect by a
      fraction (i) the numerator of which shall be the total number of shares of
      Common Stock outstanding immediately prior to the time of such payment or the
      close of business on such record date and (ii) the denominator of which shall
      be
      (A) the total number of shares of Common Stock outstanding immediately prior
      to
      the time of such payment or the close of business on such record date plus
      (B)
      the number of shares of Common Stock issuable in payment of such dividend or
      distribution; provided, however, that if a record date is fixed and such
      dividend is not fully paid or such other distribution is not fully made on
      the
      date fixed therefor, the Series B Optional Conversion Price then in effect
      shall
      not be decreased as of the close of business on such record date as hereinabove
      provided as to the portion not fully paid or distributed, and thereafter the
      Series B Optional Conversion Price then in effect shall be decreased pursuant
      to
      this Section 4 as of the date or dates of actual payment of such dividend or
      distribution.

     

    (f)  Adjustments
      for Other Dividends and Distributions.
      If the
      Corporation, at any time or from time to time after the Effective Date, pays
      or
      fixes a record date for the determination of holders of shares of Common Stock
      entitled to receive, a dividend or other distribution in the form of securities
      of the Corporation (other than shares of Common Stock or rights or options
      for
      the purchase of, or securities convertible into, Common Stock), then in each
      such event provision shall be made so that all holders of outstanding shares
      of
      Series B Convertible Adjustable Preferred Stock shall receive the amount of
      securities of the Corporation that they would have received had their respective
      shares of Series B Convertible Adjustable Preferred Stock been converted at
      the
      then-effective Conversion Price into shares of Common Stock on the date of
      such
      event. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (g)  Adjustment
      for Reclassification, Exchange and Substitution.
      If, at
      any time or from time to time after the Effective Date, the number of shares
      of
      Common Stock issuable upon conversion of the shares of Series B Convertible
      Adjustable Preferred Stock is changed into the same or a different number of
      shares of any other class or classes of stock or other securities, whether
      by
      recapitalization, reclassification or otherwise (other than a Change
      of Control, Reorganization (as defined below),
      division or combination of shares or stock dividend provided
      for elsewhere in this Section 4), then in any such event each holder of
      outstanding shares of Series B Convertible Adjustable Preferred Stock shall
      have
      the right thereafter to convert such shares of Series B Convertible Adjustable
      Preferred Stock into the same kind and amount of stock and other securities
      receivable upon such recapitalization, reclassification or other change, as
      the
      maximum number of shares of Common Stock into which such shares of Series B
      Convertible Adjustable Preferred Stock could have been converted immediately
      prior to such recapitalization, reclassification or change, all subject to
      further adjustment as provided herein.

     

    (h)  Reorganizations.
      If, at
      any time or from time to time after the Effective Date, there is a capital
      reorganization of the Common Stock with a party not otherwise an Independent
      Third Party (other than a Change
      of Control
      provided
      for elsewhere in this Section 4) (a
      “Reorganization”),
      then,
      as
      a part of such Reorganization,
      provision shall be made so that the holders of outstanding shares of Series
      B
      Convertible Adjustable Preferred Stock shall thereafter receive upon conversion
      thereof the number of shares of stock or other securities or property of the
      Corporation, or of the successor corporation resulting from such Reorganization,
      to
      which a holder of the number of shares of Common Stock into which their shares
      of Series B Convertible Adjustable Preferred Stock were convertible would have
      been entitled on such Reorganization.
      In any
      such case, appropriate adjustment shall be made in the application of the
      provisions of this Section 4 with respect to the rights of the holders of the
      outstanding shares of Series B Convertible Adjustable Preferred Stock after
      the
Reorganization
      to the
      fullest extent that the provisions of this Section 4 (including adjustment
      of
      the Series B Optional Conversion Price then in effect and the number of shares
      into which the shares of Series B Convertible Adjustable Preferred Stock then
      outstanding may be converted) shall be applicable after that event and be as
      nearly equivalent to such Series B Optional Conversion Price and number of
      shares as may be practicable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i)  Sale
      of Shares Below Series B Optional Conversion Price.
      If, at
      any time or from time to time after the Effective Date, the Corporation issues
      or sells, or is deemed by the express provisions of this Section 4(i) to have
      issued or sold, Additional Shares of Common Stock (as hereinafter defined)
      for
      an Effective Price (as hereinafter defined) less than the then current Series
      B
      Optional Conversion Price, other than (A) as a dividend or other distribution
      on
      any class of stock as provided in Section 4(e) or 4(f) above or (B) upon a
      division or combination of shares of Common Stock as provided in Section 4(d)
      above, then, in any such event, the Series B Optional Conversion Price shall
      be
      reduced, as of the close of business on the date of such issuance or sale,
      to an
      amount determined by multiplying the Series B Optional Conversion Price by
      a
      fraction (A) the numerator of which shall be (x) the number of shares of Common
      Stock outstanding at the close of business on the day immediately preceding
      the
      date of such issuance or sale, plus (y) the number of shares of Common Stock
      that the aggregate consideration received (or by the express provisions hereof
      deemed to have been received) by the Corporation for the total number of
      Additional Shares of Common Stock so issued or sold would purchase at the Series
      B Optional Conversion Price then in effect and (B) the denominator of which
      shall be the number of shares of Common Stock outstanding at the close of
      business on the date of such issuance or sale of the Additional Shares of Common
      Stock (after giving effect to such issuance or sale). For the purpose of the
      calculation described in this Section 4(i), the number of shares of Common
      Stock
      outstanding shall include, in addition to the number of shares of Common Stock
      actually outstanding, (A) the number of shares of Common Stock into which the
      then outstanding shares of Series B Convertible Adjustable Preferred Stock
      could
      be converted if fully converted on the day immediately preceding the issuance
      or
      sale or deemed issuance or sale of Additional Shares of Common Stock; and (B)
      the number of shares of Common Stock that would be obtained through the exercise
      or conversion of all rights, options and Convertible Securities (as hereinafter
      defined) outstanding on the day immediately preceding the issuance or sale
      or
      deemed issuance or sale of Additional Shares of Common Stock. 

     

    (i)  For
      the
      purpose of making any adjustment required under this Section 4(i), the
      consideration received by the Corporation for any issuance or sale of securities
      shall (A) to the extent it consists of property other than cash, be the fair
      value of that property as mutually agreed upon in good faith by the then
      independent members of the Board of Directors and holders owning no less than
      50.1% of the then issued and outstanding shares of Series B Convertible
      Adjustable Preferred Stock (the “Required
      B Amount”);
      and
      (B) if Additional Shares of Common Stock, Convertible Securities (as hereinafter
      defined) or rights or options to purchase either Additional Shares of Common
      Stock or Convertible Securities are issued or sold together with other stock
      or
      securities or other assets of the Corporation for a consideration that covers
      both, be the portion of the consideration so received mutually agreed upon
      in
      good faith by the Board of Directors and the holders of the Required B Amount
      to
      be allocable to such Additional Shares of Common Stock, Convertible Securities
      or rights or options.

     

    (ii)  For
      the
      purpose of the adjustment required under this Section 4(i), if the Corporation
      issues or sells any rights, warrants or options for the purchase of, or stock
      or
      other securities convertible into, Additional Shares of Common Stock (such
      convertible stock or securities being hereinafter referred to as “Convertible
      Securities”)
      and if
      the Effective Price (as defined in Clause (iv) of this Section 4(i) below)
      of
      such Additional Shares of Common Stock is less than the then current Series
      B
      Optional Conversion Price, the Corporation shall be deemed to have issued,
      at
      the time of the issuance of such rights, options or Convertible Securities,
      the
      maximum number of Additional Shares of Common Stock issuable upon exercise
      or
      conversion thereof and to have received as consideration therefor an amount
      equal to (A) the total amount of the consideration, if any, received by the
      Corporation for the issuance of such rights or options or Convertible Securities
      plus (B) in the case of such rights or options, the minimum amount of
      consideration, if any, payable to the Corporation upon the exercise of such
      rights or options or, in the case of Convertible Securities, the minimum amount
      of consideration, if any, payable to the Corporation upon the conversion
      thereof. Thereafter, no further adjustment of the Series B Optional Conversion
      Price shall be made as a result of the actual issuance of Additional Shares
      of
      Common Stock on the exercise of any such rights or options or the conversion
      of
      any such Convertible Securities, unless the price is subsequently again amended.
      If any such rights or options or the conversion privilege represented by any
      such Convertible Securities shall expire or otherwise terminate without having
      been exercised, the Series B Optional Conversion Price shall thereafter be
      the
      Series B Optional Conversion Price that would have been in effect had an
      adjustment been made on the basis that the only Additional Shares of Common
      Stock so issued were the Additional Shares of Common Stock, if any, actually
      issued or sold on the exercise of such rights or options or rights of conversion
      of such Convertible Securities, and were issued or sold for the consideration
      actually received by the Corporation upon such exercise plus (A) the
      consideration, if any, actually received for the granting of all such rights
      or
      options, whether or not exercised, (B) the consideration, if any, actually
      received by issuing or selling the Convertible Securities actually converted,
      and (C) the consideration, if any, actually received on the conversion of such
      Convertible Securities. However, if any such rights or options or Convertible
      Securities by their terms provide, with the passage of time or otherwise, for
      any increase in the consideration payable to the Corporation, upon the exercise,
      conversion or exchange thereof, the Optional Conversion Price for the Series
      B
      Convertible Adjustable Preferred Stock, and any subsequent adjustments based
      thereon, shall, upon any such increase or decrease becoming effective, be
      recomputed to reflect such increase or decrease insofar as it affects such
      rights, options or the rights of conversion or exchange under such Convertible
      Securities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii)  For
      the
      purpose of any adjustment required under this Section 4(i), if (A) the
      Corporation issues or sells any rights or options for the purchase of
      Convertible Securities and (B) if the Effective Price of the Additional Shares
      of Common Stock underlying such Convertible Securities is less than the Series
      B
      Optional Conversion Price then in effect, then in each such event the
      Corporation shall be deemed to have issued at the time of the issuance of such
      rights or options the maximum number of Additional Shares of Common Stock
      issuable upon conversion of the total number of Convertible Securities covered
      by such rights or options (as set forth in the legal instruments setting forth
      the terms of such Convertible Securities) and to have received as consideration
      for the issuance of such Additional Shares of Common Stock an amount equal
      to
      the amount of consideration, if any, received for the issuance of such rights
      or
      options plus (I) the minimum amount of consideration, if any, payable upon
      the
      exercise of such rights or options and (II) the minimum amount of consideration,
      if any, payable upon the conversion of such Convertible Securities, unless
      the
      price is subsequently amended. No further adjustment of the Series B Optional
      Conversion Price shall be made as a result of the actual issuance of the
      Convertible Securities upon the exercise of such rights or options or upon
      the
      actual issuance of Additional Shares of Common Stock upon the conversion of
      such
      Convertible Securities. The provisions of Section 4(i)(ii) for the adjustment
      of
      the Series B Optional Conversion Price upon the expiration of rights or options
      or the rights of conversion of Convertible Securities shall apply mutatis
      mutandis
      upon the
      expiration of the rights, options and Convertible Securities referred to in
      this
      Section 4(i)(iii).

     

    (iv)  "Additional
      Shares of Common Stock"
      shall
      mean all shares of Common Stock issued or deemed to be issued under this Section
      4(i) after the Effective Date, other than (A) shares
      of
      Common Stock issued upon conversion of the shares of Series B Convertible
      Adjustable Preferred Stock; (B) shares of Common Stock (or options, warrants
      or
      rights therefor) granted or issued subsequent to the Effective Date to
      employees, officers, directors or consultants of the Corporation or any
      subsidiary pursuant to incentive agreements, stock purchase or stock option
      plans, stock bonuses or awards that are approved by the Board of Directors;
      (C)
      any additional Series B Convertible Adjustable Preferred Stock by way of a
      dividend to the holders of the Series B Convertible Adjustable Preferred Stock;
      (D) securities issued pursuant to any anti-dilution rights of the holders of
      Series B Convertible Adjustable Preferred Stock; (E) securities issued in
      connection with or pursuant to the acquisition of all or any portion of another
      company by the Corporation whether by merger or any other reorganization or
      by
      the purchase of all or any portion of the assets of another company, pursuant
      to
      a plan, agreement or other arrangement approved by the independent Directors
      of
      the Board, which transaction is effectuated with persons not affiliated with
      the
      Corporation; (F) securities issued or issuable upon the exercise of any
      warrants, options or other rights that are outstanding as of the Effective
      Date
      (unless the exercise, conversion or exchange price of any such securities is
      reduced, in which case the anti-dilution provisions of this Section 4(i) shall
      apply); (G) shares of Common Stock issued by way of dividend or other
      distribution on shares of Common
      Stock in transactions pursuant to Sections 4(d), 4(e) and 4(f) excluded from
      the
      definition of Additional Shares of Common Stock by the clauses
      (A)
      through
      (F) hereof; and (H) any other issuance or offering of Additional Shares of
      Common Stock that
      holders
      of at least a majority of the then issued and outstanding Series B Convertible
      Adjustable Preferred Stock
      agree (as
      evidenced by a written consent of such holders) should
      not
      be
      deemed to
      be
      Additional Shares of Common Stock for purposes of adjusting the Series B
      Optional Conversion Price under this Section 4. The “Effective
      Price”
of
      Additional Shares of Common Stock shall mean the quotient obtained by dividing
      the total number of Additional Shares of Common Stock issued or sold, or deemed
      to have been issued or sold, under this Section 4 into the aggregate
      consideration received, or deemed to have been received for such Additional
      Shares of Common Stock. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (j)  No
      Impairment.
      The
      Corporation will not, by amendment of this Certificate, its Certificate of
      Incorporation or any other document or through any reorganization, transfer
      of
      assets, consolidation, merger, dissolution, issue or sale of securities or
      any
      other voluntary action, directly and/or indirectly 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 of this Section 4 and in the taking of all
      such action as may be necessary, as requested by the Required B Amount, or
      appropriate in order to protect the conversion rights of the holders of the
      Series B Convertible Adjustable Preferred Stock against impairment.

     

    (k)  Certificate
      as to Adjustments. Upon
      the
      occurrence of each adjustment or readjustment of the Series B Optional
      Conversion Price pursuant to this Section 4, the Corporation at its expense
      shall promptly (but in no event later than three (3) business days after each
      and every such event) compute such adjustment or readjustment in accordance
      with
      the terms hereof and furnish in writing to each holder of Series B Convertible
      Adjustable Preferred Stock affected by such adjustment, a certificate setting
      forth such adjustment or readjustment and showing in detail the facts upon
      which
      such adjustment or readjustment is based. 

     

    5.  Redemption.
      Shares
      of
      Series B Convertible Adjustable Preferred Stock shall not directly and/or
      indirectly be subject to redemption and/or any similar right by the
      Corporation.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.  Mandatory
      Adjustment.

     

    (a)  In
      the
      event that, on or before December 31, 2007, the Corporation has not for any
      reason (1) increased its authorized shares of Common Stock by no less than
      100
      million additional shares of Common Stock by filing the Share Increase Amendment
      (as hereinafter defined) and (2) reserved sufficient shares of Common Stock
      to
      permit the full issuance of (W) all shares of Common Stock issuable upon
      exercise or conversion of all securities issued by the Company in connection
      with the Series B Convertible Adjustable Preferred Stock, (X) the
      five
      (5)
      year warrants issued to investors in the Corporation to purchase that number
      of
      shares of Common Stock equal to 25% of the number of shares of Common Stock
      issuable upon conversion of the Series B Convertible Adjustable Preferred Stock
      at an exercise price equal to 130% of the Optional Conversion Price of the
      Series B Convertible Adjustable Preferred Stock pursuant to the Preferred
      Memorandum (the “Investor
      Warrants”),
      and
      (Y) the five (5) year warrant issued to Laidlaw & Company (UK) Limited to
      purchase that number of shares of Common Stock equal to 10% of the shares of
      Common Stock issuable upon conversion of the Series B Convertible Adjustable
      Preferred Stock pursuant to the Preferred Memorandum (the “Laidlaw
      Warrant”)
      and
      (Z) all shares of Common Stock issuable upon conversion of any shares of Series
      B Convertible Adjustable Preferred Stock issued as dividend payments, such
      actions, the “Proposed
      Share Increase”,
      the
      terms of the Series B Convertible Adjustable Preferred Stock shall automatically
      without any further direct and/or indirect action be adjusted (the “Adjustment”)
      as
      follows: 

     

    (i)  the
      then
      Stated Value of each share of Series B Convertible Adjustable Preferred Stock
      outstanding shall be increased by 150% (to $1,500 assuming the Stated Value
      remains at $1,000); and 

     

    (ii)  on
      December 31, 2008 (the “Maturity
      Date”),
      the
      then Stated Value of each share of Series B Convertible Adjustable Preferred
      Stock and all accrued but unpaid dividends thereon (through and including the
      date payment is actually received in immediately available funds by the holder
      of the Series B Convertible Adjustable Preferred Stock) shall be paid in
      immediately available funds by the Corporation to each respective holder of
      the
      Series B Convertible Adjustable Preferred Stock.

     

    7.  Liquidation
      Preference. In
      the
      event of any Liquidation Event (defined below), either voluntary or involuntary,
      distributions to the stockholders of the Corporation shall be made in the
      following manner:

     

    (a)  Series
      B Convertible Adjustable Preferred Stock Preference. The
      holders of each share of the Series B Convertible Adjustable Preferred Stock
      then outstanding shall be entitled to be paid, prior and in preference to any
      payment or distribution to the holders of Common Stock or any other stock
      ranking junior to the Series B Convertible Adjustable Preferred Stock and
pari
      passu
      on a pro
      rata basis with the Corporation’s Series A Convertible Preferred Stock, out of
      the capital, surplus or earnings of the Corporation legally available therefor
      an amount equal to the sum of (i) 125% of the then Stated Value of a share
      of
      Series B Convertible Adjustable Preferred Stock ($1,250 per share, based upon
      the initial per share Stated Value of a share of Series B Convertible Adjustable
      Preferred Stock of $1,000) (as adjusted for any stock dividends, combinations
      or
      splits with respect to such shares) (“Appropriately
      Adjusted”),
      plus
      (ii) any and all accrued but unpaid dividends (through and including the date
      payment is actually received in immediately available funds by the holder of
      the
      Series B Convertible Adjustable Preferred Stock) (such liquidation preference,
      the “Series
      B Liquidation Preference Amount”).
      If
      the assets and funds of the Corporation legally available for distribution
      to
      the holders of the Series B Convertible Adjustable Preferred Stock shall be
      insufficient to permit full payment of the Series B Liquidation Preference
      Amount to all holders of Series B Convertible Adjustable Preferred Stock, then
      the entire assets and funds of the Corporation legally available for
      distribution to such holders shall be distributed ratably among the holders
      of
      Series B Convertible Adjustable Preferred Stock on a pari
      passu
      and pro
      rata basis with holders of the Corporation’s Series A Convertible Preferred
      Stock. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)  Remaining
      Assets. After
      full payment has been made to the holders of the Series B Convertible Adjustable
      Preferred Stock of the Series B Liquidation Preference Amount, the entire
      remaining assets and funds of the Corporation legally available for
      distribution, if any, shall be distributed ratably among the holders of the
      Common Stock, including holders of Conversion Shares following an automatic
      conversion under Section 4(b), in proportion to the number of shares of Common
      Stock held by them. If
      any of the assets of the Corporation are to be distributed (other than in cash
      or securities under this Section 7), then the Board of the Corporation shall
      promptly engage and pay for independent competent appraisers to determine the
      value of the assets to be distributed to the holders of the Series B Convertible
      Adjustable Preferred Stock and/or Common Stock. The Corporation shall, upon
      receipt of such appraisers' valuation, give prompt written notice of the
      appraisers' valuation together with copies of any such valuation report prepared
      by the appraisers to each holder of Series B Convertible Adjustable Preferred
      Stock and Common Stock of the Corporation, but in no event later than at least
      twenty (20) days prior to the transaction in question.  

     

    (c)  Reorganization
      or Merger.For
      purposes of this Section 7, the following shall be deemed to be a liquidation,
      dissolution or winding up within the meaning of this Section 7 with respect
      to
      the Series B Convertible Adjustable Preferred (each, a “Liquidation
      Event”):
      (i)
a
      Change in Control transaction or (ii)
      the
      voluntary dissolution, liquidation, or winding up of the affairs of the
      Corporation. 

     

    (d)  Securities
      Valuation. Any
      securities to be delivered to the holders of the Series B Convertible Adjustable
      Preferred Stock and/or Common Stock pursuant to this Section 7 above shall
      be
      valued as follows:

     

    (i)  For
      securities not subject to an investment letter or other similar restrictions
      on
      free marketability:

     

    (A)  If
      traded
      on a securities exchange or the Nasdaq National Market, the value shall be
      deemed to be the average of the closing prices of the securities on such
      exchange over the 30-day period ending three (3) days prior to the
      closing;

     

    (B)  If
      actively traded (meaning no less than 100,000 shares are traded per trading
      day
      on the then applicable Eligible Trading Medium) over-the-counter, the value
      shall be deemed to be the average of the closing bid prices over the 30-day
      period ending three (3) days prior to the closing; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (C)  If
      there
      is no active public market, the value shall be the fair market value thereof,
      as
      mutually agreed upon in good faith by the holders of the Required B Amount
      and
      the independent directors of the Board, provided, that if the Board and the
      holders of the Required B Amount are unable to reach an agreement, then by
      appraisal by an independent investment banker hired and paid by the Corporation,
      who is reasonably acceptable to the holders of the Required B Amount.

     

    (ii)  The
      method of valuation of securities subject to an investment letter or other
      restrictions on marketability shall include an appropriate discount from the
      market value determined in Section 7(d)(i)(A), (B) or (C), above, to reflect
      the
      approximate current fair market value thereof, as mutually agreed upon in good
      faith by the holders of the Required B Amount and the Board.

     

    8.  Board
      of Directors.
      In the
      event the Adjustment is triggered and the Corporation shall fail to pay the
      required funds in immediately available funds owed to the holders of the Series
      B Convertible Adjustable Preferred Stock on the Maturity Date pursuant to the
      terms of this Certificate of Designation, and such default shall be continuing
      for a period of five (5) days, then holders of shares of the Series B
      Convertible Adjustable Preferred Stock shall have the right to designate and
      elect three (3) members to the Corporation’s Board of Directors until such time
      as (i) no shares of Series B Convertible Adjustable Preferred Stock are issued
      and outstanding, and (ii) all Conversion Shares have been sold.

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Certificate this 30th day
      of
      July, 2007.

     

    
      	 	 	 
	 	WHERIFY
              WIRELESS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Vincent
              Sheeran
	 	
              

            
	 	Title:
              Chief Executive Officer

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