RASER TECHNOLOGIES INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>ex105.txt
<TEXT>
EXHIBIT A

                           RASER TECHNOLOGIES, INC.

                 CERTIFICATE OF DESIGNATION OF PREFERENCES,
                            RIGHTS AND LIMITATIONS
                                      OF
                     SERIES B CONVERTIBLE PREFERRED STOCK

                    PURSUANT TO SECTION 16-10a-602 OF THE
                    UTAH REVISED BUSINESS CORPORATION ACT

     The undersigned, John C. Ritter and James E. Morton, do hereby certify
that:

          1. They are the President and Secretary, respectively, of RASER
TECHNOLOGIES, INC., a Utah corporation (the "Corporation").

          2. The Corporation is authorized to issue 5,000,000 shares of
preferred stock, none of which are currently outstanding.

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

     WHEREAS, the Certificate of Incorporation of the Corporation provides for
a class of its authorized stock known as preferred stock, comprised of
5,000,000 shares, $0.01 par value, issuable from time to time in one or more
series;

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

     WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the preferred stock,
which shall consist of, except as otherwise set forth in the Purchase
Agreement, up to 7,000 shares of the preferred stock which the corporation has
the authority to issue, as follows:

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

                           TERMS OF PREFERRED STOCK

          Section 1. Designation, Amount and Ranking. The series of preferred
stock shall be designated as its Series B Convertible Preferred Stock (the
"Preferred Stock") and the number of shares so designated shall be 7,000
(which shall not be subject to increase without the consent of all of the
holders of the Preferred Stock (each, a "Holder" and collectively, the
"Holders")). Each share of Preferred Stock shall have a stated value equal to
$1,000 (the "Stated Value").  Capitalized terms not otherwise defined herein
shall have the meaning given such terms in Section 8 hereof.

          Section 2.     Dividends.

               (a) Holders shall be entitled to receive and the Corporation
shall pay, cumulative dividends at the rate per share (as a percentage of the
Stated Value per share) of 7% per annum, payable quarterly on March 1, July1,
September 1 and December 1, beginning with September 1, 2004 and on any
Conversion Date pursuant to the terms hereunder (except that, if such date is
not a Trading Day, the payment date shall be the next succeeding Trading
Day)("Dividend Payment Date").  The form of dividend payments to each Holder
shall be made in the following order: (i) if funds are legally available for
the payment of dividends and the Equity Conditions have not been met, in cash
only, (ii) if funds are legally available for the payment of dividends and the
Equity Conditions have been met, at the sole election of the Corporation, in
cash or shares of Common Stock which shall be valued solely for such purpose
at the lesser of (A) the Set Price and (B) 90% of the average of the 20 VWAPs
immediately prior to the Dividend Payment Date; (iii) if funds are not legally
available for the payment of dividends and the Equity Conditions have been
met, in shares of Common Stock which shall be valued at 90% of the lesser of
(A) the Set Price and (B) the average of the 20 VWAPs immediately prior to the
Dividend Payment Date; (iv)  if funds are not legally available for the
payment of dividends and the Equity Conditions have been waived by such
Holder, as to such Holder only, in shares of Common Stock which shall be
valued at the lesser of (A) the Set Price and (B) 90% of the average of the 20
VWAPs immediately prior to the Dividend Payment Date; and (v) if funds are not
legally available for the payment of dividends and the Equity Conditions have
not been met, then, at the election of such Holder, such dividends shall
accrue to the next Dividend Payment Date or shall be accreted to the
outstanding Stated Value.  The Holders shall have the same rights and remedies
with respect to the delivery of any such shares as if such shares were being
issued pursuant to Section 5.  On the Closing Date the Corporation shall have
notified the Holders whether or not it may lawfully pay cash dividends.  The
Corporation shall promptly notify the Holders at any time the Corporation
shall become able or unable, as the case may be, to lawfully pay cash
dividends. If at any time the Corporation has the right to pay dividends in
cash or Common Stock, the Corporation must provide the Holder with at least 20
Trading Days' notice of its election to pay a regularly scheduled dividend in
Common Stock.  Dividends on the Preferred Stock shall be calculated on the
basis of a 360-day year, shall accrue daily commencing on the Original Issue
Date, and shall be deemed to accrue from such date whether or not earned or
declared and whether or not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends.  Except as
otherwise provided herein, if at any time the Corporation pays dividends
partially in cash and partially in shares, then such payment shall be
distributed ratably among the Holders based upon the number of shares of
Preferred Stock held by each Holder.  Any dividends, whether paid in cash or
shares, that are not paid within three Trading Days following a Dividend
Payment Date shall continue to accrue and shall entail a late fee, which must
be paid in cash, at the rate of 18% per annum or the lesser rate permitted by
applicable law (such fees to accrue daily, from the Dividend Payment Date
through and including the date of payment).

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

               (c) The Corporation acknowledges and agrees that the capital of
the Corporation (as such term is used in Section 16-10a-601 of the Utah
Revised Business Corporation Act in respect of the Preferred Stock and any
future issuances of the Corporation's capital stock shall be equal to the
aggregate par value of such Preferred Stock or capital stock, as the case may
be, and that, on or after the date of the Purchase Agreement, it shall not
increase the capital of the Corporation with respect to any shares of the
Corporation's capital stock issued and outstanding on such date.  The
Corporation also acknowledges and agrees that it shall not create any special
reserves under Section 16-10a-601 of the Utah Revised Business Corporation Act
without the prior written consent of each Holder.

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

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

          Section 5. Conversion.

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

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

                    (iii) Forced Conversion. Notwithstanding anything herein
to the contrary, if after the 90th day following the Effective Date the VWAP
for each of any 30 consecutive Trading Days ("Threshold Period"), which 30
consecutive Trading Day period shall have commenced only after the Effective
Date, exceeds 200% of the then effective Set Price (defined below), the
Corporation may, within 2 Trading Days after any such Threshold Period,
deliver a notice to all Holders (a "Forced Conversion Notice" and the date
such notice is received by the Holders, the "Forced Conversion Notice Date")
to cause the Holders to immediately convert all or part of the then
outstanding shares of Preferred Stock pursuant to Section 5 and the Holders
shall surrender (if all Preferred Stock is converted) their respective shares
of Preferred Stock to the Corporation for conversion within 5 Trading Days of
the Forced Conversion Notice Date.  The Corporation may only effect a Forced
Conversion Notice if all of the Equity Conditions have been met during the
Threshold Period through the Forced Conversion Notice Date.  Any Forced
Conversion Notices shall be applied ratably to all of the Holders in
proportion to each Holders initial purchases of Preferred Stock hereunder.

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

                    (ii) The Corporation's obligations to issue and deliver
the Conversion Shares upon conversion of Preferred Stock in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or
any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or
any other Person of any obligation to the Corporation or any violation or
alleged violation of law by the Holder or any other person, and irrespective
of any other circumstance which might otherwise limit such obligation of the
Corporation to the Holder in connection with the issuance of such Conversion
Shares.  If the Corporation fails to deliver to the Holder such certificate or
certificates pursuant to Section 5(b)(i) by the Share Delivery Date applicable
to such conversion, the Corporation shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, for each $5,000 of Stated Value of
Preferred Stock being converted, $50 per Trading Day (increasing to $100 per
Trading Day after 3 Trading Days and increasing to $200 per Trading Day 6
Trading Days after such damages begin to accrue) for each Trading Day after
the Share Delivery Date until such certificates are delivered. Nothing herein
shall limit a Holder's right to pursue actual damages for the Corporation's
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.

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

               (c)  (i) The conversion price for each share of Preferred Stock
shall equal $3.50 (the "Set Price"), subject to adjustment below.

                    (ii) if the Corporation, at any time while the Preferred
Stock is outstanding: (A) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock, (B)
subdivide outstanding shares of Common Stock into a larger number of shares,
(C) combine (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issue by reclassification
of shares of the Common Stock any shares of capital stock of the Corporation,
then the Set Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock Outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
Outstanding after such event.  Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.

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

                    (iv) if the Corporation or any subsidiary thereof at any
time while any of the Preferred Stock is outstanding, shall offer, sell, grant
any option or warrant to purchase or offer, sell or grant any right to reprice
its securities, or otherwise dispose of or issue any Common Stock or any
equity or equity equivalent securities (including any equity, debt or other
instrument that is at any time over the life thereof convertible into or
exchangeable for Common Stock) (collectively, "Common Stock Equivalents")
entitling any Person to acquire shares of Common Stock, at an effective price
per share less than the Set Price (a "Dilutive Issuance"), as adjusted
hereunder (if the holder of the Common Stock or Common Stock Equivalent so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which are issued in
connection with such issuance, be entitled to receive shares of Common Stock
at a price per share which is less than the Set Price, such issuance shall be
deemed to have occurred for less than the Set Price), then the Set Price shall
be reduced to equal the effective conversion, exchange or purchase price for
such Common Stock or Common Stock Equivalents (including any reset provisions
thereof) at issue.  Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued.  The Corporation shall notify the
Holder in writing, no later than the Business Day following the issuance of
any Common Stock or Common Stock Equivalent subject to this section,
indicating therein the applicable issuance price, or of applicable reset
price, exchange price, conversion price and other pricing terms. For purposes
of this subsection, a Dilutive Issuance shall be deemed to have occurred when
binding agreements have been executed by the Corporation and any purchaser
therein.

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

                    (vi) All calculations under this Section 5(c) shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may
be. The number of shares of Common Stock outstanding at any given time shall
not include shares owned or held by or for the account of the Corporation, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock. For purposes of this Section 5(c), the number of shares of
Common Stock deemed to be outstanding (the "Common Stock Outstanding") as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

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

                    (viii) Whenever the Set Price is adjusted pursuant to this
Section the Corporation shall promptly mail to each Holder, a notice setting
forth the Set Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.

          Section 6. Three Year Conversion/Redemption.  On the third
anniversary of the Original Issue Date ("Third Year Date"), each Holder shall
have the right, in its sole discretion, to convert all outstanding Preferred
Stock held by it for a conversion price per share equal to the lesser of (a)
the Set Price and (b) 90% of the average of the 20 VWAPs immediately prior to
the Third Year Date ("Third Year Conversion") provided that the Holder shall
give the Corporation irrevocable notice of its election to convert its
Preferred Stock hereunder on or before the 40th calendar day prior to the
Third Year Date ("Third Year Notice").  Third Year Conversions shall occur
automatically on the Third Year Date without any further action required by
the Holder.  Third Year Conversions shall otherwise occur pursuant to Section
5 except that for purposes thereof, the Conversion Date shall be the Third
Year Date.  Notwithstanding anything herein to the contrary, within 10
calendar days after receiving a Third Year Notice and by irrevocable written
notice to an electing Holder hereunder, the Corporation may elect to redeem in
cash any Preferred Stock of any such Holder for a redemption price equal to
(a) the Stated Value of the Preferred Stock then outstanding and held by such
Holder, (b) accrued but unpaid dividends on such Preferred Stock and (c) all
liquidated damages and other amounts due in respect of such Preferred Stock.
Cash redemption shall be applied ratably to all Holders that elect a Third
Year Conversion, noting herein shall prohibit any electing Holder from
converting its Preferred Stock at the Set Price prior to the Third Year Date
and an election of any Holder shall be independent, several and not joint with
any other Holder's right to elect a Third Year Conversion hereunder.

          Section 7. Redemption Upon Triggering Events.

               (a) Upon the occurrence of a Triggering Event, each Holder
shall (in addition to all other rights it may have hereunder or under
applicable law) have the right, exercisable at the sole option of such Holder,
to require the Corporation to, (i) with respect to the Triggering Events set
forth in Sections 7(b)(iii), (vii), (ix)(only as to Changes of Control
pursuant to which the Corporation is a party), (x)(only as to voluntary
filings) and (xii)), redeem all of the Preferred Stock then held by such
Holder for a redemption price, in cash, equal to the Triggering Redemption
Amount; or, (ii) at the option of the Holder and with respect to the
Triggering Events set forth in Sections 7(b)(i), (ii), (iv), (vi), (viii),
(ix) )(only as to Changes of Control pursuant to which the Corporation is not
a party), (x)(only as to involuntary filings) and (xi), either (A) redeem all
of the Preferred Stock then held by such Holder for a redemption price, in
shares of Common Stock, equal to a number of shares of Common Stock equal to
the Triggering Redemption Amount divided by the lesser of (A) the Set Price
and (B) 75% of the average of the 10 VWAPs immediately prior to the date of
election hereunder or (B) increase the dividend on all of the outstanding
Preferred Stock held by such Holder to equal 15% per annum thereafter.  The
Triggering Redemption Amount, in cash or in shares, if the Corporation elects
clauses (i) or (ii)(A) above, shall be due and payable or issuable, as the
case may be, within 5 Trading Days of the date on which the notice for the
payment therefor is provided by a Holder (the "Triggering Redemption Payment
Date").  If the Corporation fails to pay the Triggering Redemption Amount
hereunder in full pursuant to this Section on the date such amount is due in
accordance with this Section (whether in cash or shares of Common Stock), the
Corporation will pay interest thereon at a rate of 18% per annum (or such
lesser amount permitted by applicable law), accruing daily from such date
until the Triggering Redemption Amount, plus all such interest thereon, is
paid in full.  For purposes of this Section, a share of Preferred Stock is
outstanding until such date as the Holder shall have received Conversion
Shares upon a conversion (or attempted conversion) thereof that meets the
requirements hereof or has been paid the Triggering Redemption Amount plus all
accrued but unpaid dividends and all accrued but unpaid liquidated damages in
cash.

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

                    (i) the failure of a Conversion Shares Registration
Statement to be declared effective by the Commission on or prior to the 180th
day after the Original Issue Date;

                    (ii) if, during the Effectiveness Period, the
effectiveness of the Conversion Shares Registration Statement lapses for any
reason for more than an aggregate of 90 calendar days (which need not be
consecutive days) during any 12 month period, or the Holder shall not be
permitted to resell Registrable Securities under the Conversion Shares
Registration Statement for more than an aggregate of 90 calendar days (which
need not be consecutive days) during any 12 month period;

                    (iii) the Corporation shall fail to deliver certificates
representing Conversion Shares issuable upon a conversion hereunder that
comply with the provisions hereof prior to the 10th Trading Day after such
shares are required to be delivered hereunder, or the Corporation shall
provide written notice to any Holder, including by way of public announcement,
at any time, of its intention not to comply with requests for conversion of
any shares of Preferred Stock in accordance with the terms hereof;

                    (iv) one of the Events (as defined in the Registration
Rights Agreement) described in subsections (i), (ii) or (iii) of Section 2(c)
of the Registration Rights Agreement shall not have been cured to the
satisfaction of the Holders prior to the expiration of 30 days from the Event
Date (as defined in the Registration Rights Agreement) relating thereto (other
than an Event resulting from a failure of a Conversion Shares Registration
Statement to be declared effective by the Commission on or prior to the 180th
day after the Original Issue Date, which shall be covered by Section 7(b)(i));

                    (v) [INTENTIONALLY OMMITED];

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

                    (vii) the Corporation shall materially fail to observe or
perform any other material covenant, agreement or warranty contained in, or
otherwise commit any breach of the Transaction Documents, and such failure or
breach shall not, if subject to the possibility of a cure by the Corporation,
have been remedied within 45 calendar days after the date on which written
notice of such failure or breach shall have been given;

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

                    (ix) the Corporation shall be a party to any Change of
Control Transaction or the Corporation shall redeem more than a de minimis
number of  Junior Securities;

                    (x) there shall have occurred a Bankruptcy Event;
                    (xi) the Common Stock shall fail to be listed or quoted
for trading on a Trading Market for more than 5 consecutive Trading Days; or

                    (xii) the failure of the Corporation to submit an
application to list the Common Stock on an alternative Trading Market within
10 Trading Days of the occurrence of a Triggering Event pursuant to clause
(xi) of this Section 7(b) or the failure of the Corporation to use its best
efforts to obtain such listing after the application is filed with an
alternative Trading Market.

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

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

               "Change of Control Transaction" means the occurrence after the
date hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether through
legal or beneficial ownership of capital stock of the Corporation, by contract
or otherwise) of in excess of 40% of the voting securities of the Corporation,
or (b) a replacement at one time or within a one year period of more than
one-half of the members of the Corporation's board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as
members of the board of directors on any date whose nomination to the board of
directors was approved by a majority of the members of the board of directors
who are members on the date hereof), or (c) the execution by the Corporation
of an agreement to which the Corporation  is a party or by which it is bound,
providing for any of the events set forth above in (a) or (b).

               "Closing" means closing of the purchase and sale of the
Preferred Stock.

               "Commission" means the Securities and Exchange Commission.

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

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

               "Conversion Amount" means the sum of the Stated Value at issue.

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

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

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

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

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

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

               "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

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

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

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

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

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

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

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

               "Securities Act" means the Securities Act of 1933, as amended.

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

               "Trading Day" shall mean any day during which the Trading
Market shall be open for business.

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

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

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

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

               "VWAP" means, for any date, the price determined by the first
of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the primary
Trading Market on which the Common Stock is then listed or quoted as reported
by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. EST to 4:02
p.m. Eastern Time) using the VAP function; (b) if the Common Stock is not then
listed or quoted on the Trading Market and if prices for the Common Stock are
then reported in the "Pink Sheets" published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock
so reported; or (c) in all other cases, the fair market value of a share of
Common Stock as determined by a nationally recognized-independent appraiser
selected in good faith by Purchasers holding a majority of the principal
amount of Shares then outstanding.

          Section 9.  Fundamental Transactions.  If a Fundamental Transaction
occurs, then upon any subsequent conversion of shares of Preferred Stock, the
Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion absent such Fundamental Transaction,
the same kind and amount of securities, cash or property as it would have been
entitled to receive upon the occurrence of such Fundamental Transaction if it
had been, immediately prior to such Fundamental Transaction, the holder of one
share of Common Stock (the "Alternate Consideration").  For purposes of any
such conversion, the determination of the Set Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in
such Fundamental Transaction, and the Corporation shall apportion the Set
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration.  If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any
conversion of shares of Preferred Stock following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing provisions,
any successor to the Corporation or surviving entity in such Fundamental
Transaction shall issue to the Holder new preferred stock consistent with the
foregoing provisions and evidencing the Holder's right to convert such
preferred stock into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this Section 9 and insuring that the Preferred Stock (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

          Section 10.  Miscellaneous.

               (a) If (i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock, (ii) the Corporation shall declare a
special nonrecurring cash dividend on or a redemption of the Common Stock,
(iii) the Corporation shall authorize the granting to all holders of Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (iv) the approval of any stockholders of
the Corporation shall be required in connection with any Fundamental
Transaction or Change of Control Transaction, or (v) the Corporation shall
authorize the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Corporation; then the Corporation shall file a press
release or Current Report on Form 8-K to disclose such occurrence and notify
the Holders at their last addresses as they shall appear upon the stock books
of the Corporation, at least 20 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which any such Fundamental Transaction or Change of Control
Transaction is expected to become effective or close, and the date as of which
it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities, cash or other property deliverable
upon any such Fundamental Transaction or Change of Control Transaction.
Holders are entitled to convert the Conversion Amount of Preferred Stock
during the 20-day period commencing the date of such notice to the effective
date of the event triggering such notice.

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

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

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

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

               (f) Any and all notices or other communications or deliveries
to be provided by the Holders of the Preferred Stock hereunder, including,
without limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to the attention of the Chief Financial Officer of the
Corporation addressed to Tom Bailey Fax Number: (801) 374-3314 or to such
other address or facsimile number as shall be specified in writing by the
Corporation for such purpose. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile or sent by a nationally recognized
overnight courier service, addressed to each Holder at the facsimile telephone
number or address of such Holder appearing on the books of the Corporation,
which address shall initially be the address of such Holder set forth on the
signature pages of the Purchase Agreement, or such other address as the
Corporation or a Holder may designate by ten days advance written notice to
the other parties hereto. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section prior to 6:30 p.m.
(New York City time) (with confirmation of transmission), (ii) the date after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section later
than 6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m.
(New York City time) on such date (with confirmation of transmission), (iii)
five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, (iv) one day after deposit with a
nationally recognized overnight courier service, specifying next day delivery,
with written verification of service, or (v) upon actual receipt by the party
to whom such notice is required to be given.

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

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

     IN WITNESS WHEREOF, the undersigned have executed this Certificate this
22 day of July 2004.

/s/ Kraig T. Higginson                    /s/ R. Thomas Bailey
Name: Kraig T. Higginson                  Name: R. Thomas Bailey
Title: CEO                                Title: Treasurer


<PAGE>

                                   ANNEX A

                             NOTICE OF CONVERSION

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

The undersigned hereby elects to convert the number of shares of Convertible
Preferred Stock indicated below, into shares of common stock, par value $0.01
per share (the "Common Stock"), of Raser Technologies, Inc., a Utah
corporation (the "Corporation"), according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Corporation in accordance therewith. No fee will
be charged to the Holder for any conversion, except for such transfer taxes,
if any.

Conversion calculations:

     Date to Effect Conversion

     -----------------------------------------

     Number of shares of Preferred Stock owned prior to Conversion

     -----------------------------------------
     Number of shares of Preferred Stock to be Converted

     -----------------------------------------

     Stated Value of shares of Preferred Stock to be Converted

     -----------------------------------------

     Number of shares of Common Stock to be Issued

     -----------------------------------------

     Applicable Set Price

     -----------------------------------------

     Number of shares of Preferred Stock subsequent to Conversion

     -----------------------------------------


                                          [HOLDER]

                                          By:
                                          Name:
                                          Title:



</TEXT>
</DOCUMENT>
