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Exhibit 10.1        
                                                                                       
 
CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND PREFERENCES
OF THE
SERIES A CONVERTIBLE PREFERRED STOCK
OF
SP HOLDING CORPORATION
 
The undersigned, the Chief Financial Officer and acting Chief Executive Officer
of SP Holding Corporation, a Delaware corporation (the "Company"), in accordance
with the provisions of the Delaware General Corporation Law, does hereby certify
that, pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Company, the following resolution
creating a series of Series A Convertible Preferred Stock, was duly adopted on
January 27, 2006:

RESOLVED, that pursuant to the authority expressly granted to and vested in the
Board of Directors of the Company by provisions of the Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation"), there hereby
is created out of the shares of Preferred Stock, par value $.001 per share, of
the Company authorized in Article IV of the Certificate of Incorporation (the
"Preferred Stock"), a series of Preferred Stock of the Company, to be named
"Series A Convertible Preferred Stock," consisting of Sixty (60) shares, which
series shall have the following designations, powers, preferences and relative
and other special rights and the following qualifications, limitations and
restrictions:

1.  Designation and Rank. The designation of such series of the Preferred Stock
shall be the Series A Convertible Preferred Stock, par value $.001 per share
(the "Series A Preferred Stock"). The maximum number of shares of Series A
Preferred Stock shall be Sixty (60) shares. The Series A Preferred Stock shall
rank senior to the Company’s common stock, par value $.001 per share (the
"Common Stock"), and to all other classes and series of equity securities of the
Company which by their terms do not rank senior to the Series A Preferred Stock
("Junior Stock"). The Series A Preferred Stock shall be subordinate to and rank
junior to all indebtedness of the Company now or hereafter outstanding.

2.   Dividends.

(a)  Payment of Dividends. Commencing six (6) months following the date of the
initial issuance (the “Issuance Date”) of the Series A Preferred Stock and
subject to Sections 5(c) and (d) hereof, the holders of record of shares of
Series A Preferred Stock shall be entitled to receive, out of any assets at the
time legally available therefor and as declared by the Board of Directors,
dividends at the rate of eight percent (8%) of the stated Liquidation Preference
Amount (as defined in Section 4 hereof) per share per annum (the "Dividend
Payment"), and no more, payable quarterly on the last business day of each
quarter, at the option of the Company in cash or in restricted shares of Common
Stock. If the Company elects to pay any dividend in restricted shares of Common
Stock, the number of shares of Common Stock to be issued to the holder shall be
an amount equal to the quotient of (i) the Dividend Payment divided by (ii) the
Conversion Price (as defined in Section 5(e) hereof). If the Company elects to
pay any dividend
 
 

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in restricted shares of Common Stock, the Company will give the holders of
record of shares of the Series A Preferred Stock ten (10) trading days notice
prior to the date of the applicable Dividend Payment. In the case of shares of
Series A Preferred Stock outstanding for less than a full year, dividends shall
be pro rated based on the portion of each year during which such shares are
outstanding. Dividends on the Series A Preferred Stock shall be cumulative,
shall accrue and be payable quarterly. Dividends on the Series A Preferred Stock
are prior and in preference to any declaration or payment of any distribution
(as defined below) on any outstanding shares of Junior Stock. Such dividends
shall accrue on each share of Series A Preferred Stock from day to day whether
or not earned or declared so that if such dividends with respect to any previous
dividend period at the rate provided for herein have not been paid on, or
declared and set apart for, all shares of Series A Preferred Stock at the time
outstanding, the deficiency shall be fully paid on, or declared and set apart
for, such shares on a pro rata basis with all other equity securities of the
Company ranking on a parity with the Series A Preferred Stock as to the payment
of dividends before any distribution shall be paid on, or declared and set apart
for Junior Stock.

(b)  So long as any shares of Series A Preferred Stock are outstanding, the
Company shall not declare, pay or set apart for payment any dividend or make any
distribution on any Junior Stock (other than dividends or distributions payable
in additional shares of Junior Stock), unless at the time of such dividend or
distribution the Company shall have paid all accrued and unpaid dividends on the
outstanding shares of Series A Preferred Stock.

(c)  In the event of a dissolution, liquidation or winding up of the Company
pursuant to Section 4, all accrued and unpaid dividends on the Series A
Preferred Stock shall be payable on the date of payment of the preferential
amount to the holders of Series A Preferred Stock. In the event of (i) a
mandatory redemption pursuant to Section 9, (ii) a redemption upon the
occurrence of a Triggering Event (as defined in Section 8(d)), or (iii) a
Mandatory Conversion (as defined in Section 5(c)(ii)), all accrued and unpaid
dividends on the Series A Preferred Stock shall be payable on the date of such
redemption. In the event of a voluntary conversion pursuant to Section 5(a), all
accrued and unpaid dividends on the Series A Preferred Stock being converted
shall be payable on the Voluntary Conversion Date (as defined in Section
5(b)(i)).

(d)  For purposes hereof, unless the context otherwise requires, "distribution"
shall mean the transfer of cash or property without consideration, whether by
way of dividend or otherwise, payable other than in shares of Common Stock or
other equity securities of the Company, or the purchase or redemption of shares
of the Company (other than redemptions set forth in Section 8 below or
repurchases of Common Stock held by employees or consultants of the Company upon
termination of their employment or services pursuant to agreements providing for
such repurchase or upon the cashless exercise of options held by employees or
consultants) for cash or property.
 
 
 
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3.   Voting Rights.

(a)  Class Voting Rights. The Series A Preferred Stock shall have the following
class voting rights (in addition to the voting rights set forth in Section 3(b)
hereof). So long as any shares of the Series A Preferred Stock remain
outstanding, the Company shall not, without the affirmative vote or consent of
the holders of at least seventy-five percent (75%) of the shares of the Series A
Preferred Stock outstanding at the time, given in person or by proxy, either in
writing or at a meeting, in which the holders of the Series A Preferred Stock
vote separately as a class: (i) authorize, create, issue or increase the
authorized or issued amount of any class or series of stock, including but not
limited to the issuance of any more shares of Preferred Stock, ranking pari
passu or senior to the Series A Preferred Stock, with respect to the
distribution of assets on liquidation, dissolution or winding up; (ii) amend,
alter or repeal the provisions of the Series A Preferred Stock, whether by
merger, consolidation or otherwise, so as to adversely affect any right,
preference, privilege or voting power of the Series A Preferred Stock; provided,
however, that any creation and issuance of another series of Junior Stock shall
not be deemed to adversely affect such rights, preferences, privileges or voting
powers; (iii) repurchase, redeem or pay dividends on, shares of Common Stock or
any other shares of the Company's Junior Stock (other than de minimus
repurchases from employees of the Company in certain circumstances); (iv) amend
the Certificate of Incorporation or By-Laws of the Company so as to affect
materially and adversely any right, preference, privilege or voting power of the
Series A Preferred Stock; provided, however, that any creation and issuance of
another series of Junior Stock shall not be deemed to adversely affect such
rights, preferences, privileges or voting powers; (v) effect any distribution
with respect to Junior Stock; (vi) reclassify the Company's outstanding
securities; (vii) voluntarily file for bankruptcy, liquidate the Company’s
assets or make an assignment for the benefit of the Company’s creditors; or
(viii) change the nature of the Company’s business.

(b)  General Voting Rights. Except with respect to transactions upon which the
Series A Preferred Stock shall be entitled to vote separately as a class
pursuant to Section 3(a) above and except as otherwise required by Delaware law,
the Series A Preferred Stock shall have no voting rights. The Common Stock into
which the Series A Preferred Stock is convertible shall, upon issuance, have all
of the same voting rights as other issued and outstanding Common Stock of the
Company.
 
4.   Liquidation Preference.

(a)  In the event of the liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, the holders of shares of the
Series A Preferred Stock then outstanding shall be entitled to receive, out of
the assets of the Company available for distribution to its stockholders, an
amount equal to $9,000 per share (the "Liquidation Preference Amount") of the
Series A Preferred Stock plus any accrued and unpaid dividends before any
payment shall be made or any assets distributed to the holders of the Common
Stock or any other Junior Stock. If the assets of the Company are not sufficient
to pay in full the Liquidation Preference Amount plus any accrued and unpaid
dividends payable to the holders of outstanding
 
 
 
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shares of the Series A Preferred Stock and any series of preferred stock or any
other class of stock on a parity, as to rights on liquidation, dissolution or
winding up, with the Series A Preferred Stock, then all of said assets will be
distributed among the holders of the Series A Preferred Stock and the other
classes of stock on a parity with the Series A Preferred Stock, if any, ratably
in accordance with the respective amounts that would be payable on such shares
if all amounts payable thereon were paid in full. The liquidation payment with
respect to each outstanding fractional share of Series A Preferred Stock shall
be equal to a ratably proportionate amount of the liquidation payment with
respect to each outstanding share of Series A Preferred Stock. All payments for
which this Section 4(a) provides shall be in cash, property (valued at its fair
market value as determined by an independent appraiser reasonably acceptable to
the holders of a majority of the Series A Preferred Stock) or a combination
thereof; provided, however, that no cash shall be paid to holders of Junior
Stock unless each holder of the outstanding shares of Series A Preferred Stock
has been paid in cash the full Liquidation Preference Amount plus any accrued
and unpaid dividends to which such holder is entitled as provided herein. After
payment of the full Liquidation Preference Amount plus any accrued and unpaid
dividends to which each holder is entitled, such holders of shares of Series A
Preferred Stock will not be entitled to any further participation as such in any
distribution of the assets of the Company.

(b)  A consolidation or merger of the Company with or into any other corporation
or corporations, or a sale of all or substantially all of the assets of the
Company, or the effectuation by the Company of a transaction or series of
related transactions in which more than 50% of the voting shares of the Company
is disposed of or conveyed, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this Section 4. In the event of
the merger or consolidation of the Company with or into another corporation, the
Series A Preferred Stock shall maintain its relative powers, designations and
preferences provided for herein and no merger shall result inconsistent
therewith.

(c)  Written notice of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, stating a payment date and the place
where the distributable amounts shall be payable, shall be given by mail,
postage prepaid, no less than forty-five (45) days prior to the payment date
stated therein, to the holders of record of the Series A Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.

5.  Conversion. The holder of Series A Preferred Stock shall have the following
conversion rights (the "Conversion Rights"):

(a)  Right to Convert. At any time on or after the Issuance Date, the holder of
any such shares of Series A Preferred Stock may, at such holder's option, elect
to convert (a "Voluntary Conversion") all or any portion of the shares of Series
A Preferred Stock held by such person into a number of fully paid and
nonassessable shares of Common Stock equal to the quotient of (i) the
Liquidation Preference Amount of the shares of Series A Preferred Stock being
converted divided by (ii) the Conversion Price (as defined in Section 5(e)
below) then in effect as of the date of the delivery by such holder of its
notice of election to convert. In the event of a notice of redemption of any
shares of Series A Preferred Stock pursuant to Section 8
 
 
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hereof, the Conversion Rights of the shares designated for redemption shall
terminate at the close of business on the last full day preceding the date fixed
for redemption, unless the redemption price is not paid on such redemption date,
in which case the Conversion Rights for such shares shall continue until such
price is paid in full. In the event of a liquidation, dissolution or winding up
of the Company, the Conversion Rights shall terminate at the close of business
on the last full day preceding the date fixed for the payment of any such
amounts distributable on such event to the holders of Series A Preferred Stock.
In the event of such a redemption or liquidation, dissolution or winding up, the
Company shall provide to each holder of shares of Series A Preferred Stock
notice of such redemption or liquidation, dissolution or winding up, which
notice shall (i) be sent at least fifteen (15) days prior to the termination of
the Conversion Rights and (ii) state the amount per share of Series A Preferred
Stock that will be paid or distributed on such redemption or liquidation,
dissolution or winding up, as the case may be.

(b)   Mechanics of Voluntary Conversion. The Voluntary Conversion of Series A
Preferred Stock shall be conducted in the following manner:

(i)  Holder's Delivery Requirements. To convert Series A Preferred Stock into
full shares of Common Stock on any date (the "Voluntary Conversion Date"), the
holder thereof shall (A) transmit by facsimile (or otherwise deliver), for
receipt on or prior to 5:00 p.m., New York time on such date, a copy of a fully
executed notice of conversion in the form attached hereto as Exhibit I (the
"Conversion Notice"), to the Company, and (B) surrender to a common carrier for
delivery to the Company as soon as practicable following such Voluntary
Conversion Date but in no event later than three (3) business days after such
date the original certificates representing the shares of Series A Preferred
Stock being converted (or an indemnification undertaking with respect to such
shares in the case of their loss, theft or destruction) (the "Preferred Stock
Certificates") and the originally executed Conversion Notice.

(ii)  Company's Response. Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder. Upon receipt
by the Company of a copy of the fully executed Conversion Notice, the Company or
its designated transfer agent (the "Transfer Agent"), as applicable, shall,
within three (3) business days following the date of receipt by the Company of
the fully executed Conversion Notice (so long as the applicable Preferred Stock
Certificates and original Conversion Notice are received by the Company on or
before such third business day), issue and deliver to the Depository Trust
Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent
Commission System (“DWAC”) as specified in the Conversion Notice, registered in
the name of the holder or its designee, for the number of shares of Common Stock
to which the holder shall be entitled. Notwithstanding the foregoing to the
contrary, the Company or its Transfer Agent shall only be obligated to issue and
deliver the shares to the DTC on a holder’s behalf via DWAC if such conversion
is in connection with a sale and such holder has complied with the applicable
prospectus delivery requirements. If the number of shares of Preferred Stock
represented by the Preferred Stock Certificate(s) submitted for conversion is
greater than the number of shares of Series A Preferred Stock being converted,
then the Company shall, as soon as practicable and in no event later than three
(3) business days after receipt of the Preferred Stock Certificate(s) and
 
 
 
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at the Company's expense, issue and deliver to the holder a new Preferred Stock
Certificate representing the number of shares of Series A Preferred Stock not
converted.

(iii)  Dispute Resolution. In the case of a dispute as to the arithmetic
calculation of the number of shares of Common Stock to be issued upon
conversion, the Company shall cause its Transfer Agent to promptly issue to the
holder the number of shares of Common Stock that is not disputed and shall
submit the arithmetic calculations to the holder via facsimile as soon as
possible, but in no event later than two (2) business days after receipt of such
holder's Conversion Notice. If such holder and the Company are unable to agree
upon the arithmetic calculation of the number of shares of Common Stock to be
issued upon such conversion within one (1) business day of such disputed
arithmetic calculation being submitted to the holder, then the Company shall
within one (1) business day submit via facsimile the disputed arithmetic
calculation of the number of shares of Common Stock to be issued upon such
conversion to the Company’s independent, outside accountant. The Company shall
cause the accountant to perform the calculations and notify the Company and the
holder of the results no later than seventy-two (72) hours from the time it
receives the disputed calculations. Such accountant's calculation shall be
binding upon all parties absent manifest error. The reasonable expenses of such
accountant in making such determination shall be paid by the Company, in the
event the holder's calculation was correct, or by the holder, in the event the
Company's calculation was correct, or equally by the Company and the holder in
the event that neither the Company's or the holder's calculation was correct.
The period of time in which the Company is required to effect conversions or
redemptions under this Certificate of Designation shall be tolled with respect
to the subject conversion or redemption pending resolution of any dispute by the
Company made in good faith and in accordance with this Section 5(b)(iii).

(iv)  Record Holder. The person or persons entitled to receive the shares of
Common Stock issuable upon a conversion of the Series A Preferred Stock shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.

(v)  Company's Failure to Timely Convert. If within three (3) business days of
the Company's receipt of an executed copy of the Conversion Notice (so long as
the applicable Preferred Stock Certificates and original Conversion Notice are
received by the Company on or before such third business day) (the "Share
Delivery Period") the Transfer Agent shall fail to issue and deliver to a holder
the number of shares of Common Stock to which such holder is entitled upon such
holder's conversion of the Series A Preferred Stock or to issue a new Preferred
Stock Certificate representing the number of shares of Series A Preferred Stock
to which such holder is entitled pursuant to Section 5(b)(ii) (a "Conversion
Failure"), the Company shall pay damages to such holder on each business day
after such third (3rd) business day that such conversion is not timely effected
in an amount equal 0.5% of the product of (A) the sum of the number of shares of
Common Stock not issued to the holder on a timely basis pursuant to Section
5(b)(ii) and to which such holder is entitled and, in the event the Company has
failed to deliver a Preferred Stock Certificate to the holder on a timely basis
pursuant to Section 5(b)(ii), the number of shares of Common Stock issuable upon
conversion of the shares of Series A Preferred Stock represented by such
Preferred Stock Certificate, as of the last possible date
 
 
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which the Company could have issued such Preferred Stock Certificate to such
holder without violating Section 5(b)(ii) and (B) the Closing Bid Price (as
defined in Section 5(c)(iii) below) of the Common Stock on the last possible
date which the Company could have issued such Common Stock and such Preferred
Stock Certificate, as the case may be, to such holder without violating Section
5(b)(ii). If the Company fails to pay the additional damages set forth in this
Section 5(b)(v) within five (5) business days of the date incurred, then such
payment shall bear interest at the rate of 2.0% per month (pro rated for partial
months) until such payments are made.

(c)   Mandatory Conversion.

(i)  The number of outstanding shares of Series A Preferred Stock plus any
accrued but unpaid dividends referred to below in Section 5(c)(ii) on the
Mandatory Conversion Date (as defined below) shall, automatically and without
any action on the part of the holder thereof, convert into a number of fully
paid and nonassessable shares of Common Stock equal to the quotient of (i) the
Liquidation Preference Amount of the number of shares of Series A Preferred
Stock being converted on the Mandatory Conversion Date divided by (ii) the
Conversion Price in effect on the Mandatory Conversion Date.

(ii)  As used herein, "Mandatory Conversion Date" shall mean the date that is
twenty-four (24) months following the Issuance Date; provided, that, on the
Mandatory Conversion Date, (i) the shares of Common Stock into which the Series
A Preferred Stock can be converted may be offered for sale to the public
pursuant to Rule 144(k) ("Rule 144(k)") under the Securities Act of 1933, as
amended, (ii) trading in the Common Stock shall not have been suspended by the
Securities and Exchange Commission or the OTC Bulletin Board (or other exchange
or market on which the Common Stock is trading), and (iii) the Company is in
material compliance with the terms and conditions of this Certificate of
Designation. Notwithstanding the foregoing, the Mandatory Conversion Date shall
be extended for as long as (A) a Triggering Event (as defined in Section 8(d)
hereof) shall have occurred and be continuing, or (B) any event shall have
occurred and be continuing which with the passage of time and the failure to
cure would result in a Triggering Event. The Mandatory Conversion Date and the
Voluntary Conversion Date collectively are referred to in this Certificate of
Designation as the "Conversion Date."

(iii)  The term "Closing Bid Price" shall mean, for any security as of any date,
the last closing bid price of such security on the OTC Bulletin Board or other
principal exchange on which such security is traded as reported by Bloomberg,
or, if no closing bid price is reported for such security by Bloomberg, the last
closing trade price of such security as reported by Bloomberg, or, if no last
closing trade price is reported for such security by Bloomberg, the average of
the bid prices of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot
be calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price of such security on such date shall be the fair market value
as mutually determined by the Company and the holders of a majority of the
outstanding shares of Series A Preferred Stock.
 

 
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(iv)  On the Mandatory Conversion Date, the outstanding shares of Series A
Preferred Stock shall be converted automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company or its Transfer Agent; provided, however,
that the Company shall not be obligated to issue the shares of Common Stock
issuable upon conversion of any shares of Series A Preferred Stock unless
certificates evidencing such shares of Series A Preferred Stock are either
delivered to the Company or the holder notifies the Company that such
certificates have been lost, stolen, or destroyed, and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection therewith. Upon the occurrence of a Mandatory Conversion of the
Series A Preferred Stock pursuant to this Section 5, the holders of the Series A
Preferred Stock shall surrender the certificates representing the Series A
Preferred Stock for which the Mandatory Conversion Date has occurred to the
Company and the Company shall cause its Transfer Agent to deliver the shares of
Common Stock issuable upon such conversion (in the same manner set forth in
Section 5(b)(ii)) to the holder within three (3) business days of the holder's
delivery of the applicable Preferred Stock Certificates.

(d)   Automatic Conversion Upon Change of Control Transaction.

(i)  Upon the consummation of a Change of Control Transaction (as defined
below), the aggregate number of shares of Series A Preferred Stock issued on the
Issuance Date plus any accrued but unpaid dividends shall, automatically and
without any action on the part of the holder thereof, convert into a number of
fully paid and nonassessable shares of Common Stock equal to sixty-one percent
(61%) of the number of shares of Common Stock issued and outstanding on a fully
diluted basis as of the date of, but immediately prior to, the consummation of
the Change of Control Transaction.

(ii)  As used herein, “Change of Control Transaction” shall mean (A) the
consolidation, merger or other business combination of the Company or any of its
subsidiaries, (B) the sale or transfer of more than 50% of the assets of the
Company or any of its subsidiaries, (C) the closing of a purchase, tender or
exchange offer made to the holders of more than fifty percent (50%) of the
outstanding shares of Common Stock in which more than fifty percent (50%) of the
outstanding shares of Common Stock were tendered and accepted or (D) any other
type of change of control transaction.

(iii)  Upon the consummation of a Change of Control Transaction, the outstanding
shares of Series A Preferred Stock shall be converted automatically without any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its Transfer Agent;
provided, however, that the Company shall not be obligated to issue the shares
of Common Stock issuable upon conversion of any shares of Series A Preferred
Stock unless certificates evidencing such shares of Series A Preferred Stock are
either delivered to the Company or the holder notifies the Company that such
certificates have been lost, stolen, or destroyed, and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection therewith. Upon the occurrence of an automatic conversion of
the Series A Preferred Stock upon the
 
 
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consummation of a Change of Control Transaction pursuant to this Section 5(d),
the holders of the Series A Preferred Stock shall surrender the certificates
representing the Series A Preferred Stock to the Company and the Company shall
cause its Transfer Agent to deliver the shares of Common Stock issuable upon
such conversion (in the same manner set forth in Section 5(b)(ii)) to the holder
within three (3) business days of the holder's delivery of the applicable
Preferred Stock Certificates.

(e)   Conversion Price.

(i)  Subject to Section 5(d) above, the term "Conversion Price" shall mean $3.00
per share, subject to adjustment under Section 5(f) hereof. Notwithstanding any
adjustment hereunder, at no time shall the Conversion Price be greater than
$3.00 per share except if it is adjusted pursuant to Section 5(f)(i).

(ii)  Notwithstanding the foregoing to the contrary, if during any period (a
"Black-out Period"), a holder of Series A Preferred Stock is unable to trade any
Common Stock issued or issuable upon conversion of the Series A Preferred Stock
immediately due to the postponement of filing or delay or suspension of
effectiveness of a registration statement or because the Company has otherwise
informed such holder of Series A Preferred Stock that an existing prospectus
cannot be used at that time in the sale or transfer of such Common Stock
(provided that such postponement, delay, suspension or fact that the prospectus
cannot be used is not due to factors solely within the control of the holder of
Series A Preferred Stock), such holder of Series A Preferred Stock shall have
the option but not the obligation on any Conversion Date within ten (10) trading
days following the expiration of the Black-out Period of using the Conversion
Price applicable on such Conversion Date or any Conversion Price selected by
such holder of Series A Preferred Stock that would have been applicable had such
Conversion Date been at any earlier time during the Black-out Period or within
the ten (10) trading days thereafter.

(f)   Adjustments of Conversion Price.

(i)  Adjustments for Stock Splits and Combinations. If the Company shall at any
time or from time to time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the Conversion Price shall be proportionately
decreased. If the Company shall at any time or from time to time after the
Issuance Date, combine the outstanding shares of Common Stock, the Conversion
Price shall be proportionately increased. Any adjustments under this Section
5(f)(i) shall be effective at the close of business on the date the stock split
or combination becomes effective.

(ii)  Adjustments for Certain Dividends and Distributions. If the Company shall
at any time or from time to time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the Conversion Price shall be decreased as of the time of such
issuance or, in the event such record date shall
 
 
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have been fixed, as of the close of business on such record date, by multiplying
the Conversion Price then in effect by a fraction:

(1)  the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date; and

(2)  the denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution.

(iii)  Adjustment for Other Dividends and Distributions. If the Company shall at
any time or from time to time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in securities of the Company other than
shares of Common Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the holders of Series
A Preferred Stock shall receive upon conversions thereof, in addition to the
number of shares of Common Stock receivable thereon, the number of securities of
the Company which they would have received had their Series A Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the Conversion
Date, retained such securities (together with any distributions payable thereon
during such period), giving application to all adjustments called for during
such period under this Section 5(f)(iii) with respect to the rights of the
holders of the Series A Preferred Stock; provided, however, that if such record
date shall have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
shall be adjusted pursuant to this paragraph as of the time of actual payment of
such dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of Series A Preferred Stock
simultaneously receive (i) a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Series A Preferred Stock had been
converted into Common Stock on the date of such event or (ii) a dividend or
other distribution of shares of Series A Preferred Stock which are convertible,
as of the date of such event, into such number of shares of Common Stock as is
equal to the number of additional shares of Common Stock being issued with
respect to each share of Common Stock in such dividend or distribution.

(iv)  Adjustments for Reclassification, Exchange or Substitution. If the Common
Stock issuable upon conversion of the Series A Preferred Stock at any time or
from time to time after the Issuance Date shall be changed to the same or
different number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or otherwise (other than by way of a
stock split or combination of shares or stock dividends provided for in Sections
5(f)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale of
assets provided for in Section 5(f)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall be made and provisions shall be made (by
adjustments of the Conversion
 
 
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Price or otherwise) so that the holder of each share of Series A Preferred Stock
shall have the right thereafter to convert such share of Series A Preferred
Stock into the kind and amount of shares of stock and other securities
receivable upon reclassification, exchange, substitution or other change, by
holders of the number of shares of Common Stock into which such share of Series
A Preferred Stock might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.

(v)  Adjustments for Reorganization, Merger, Consolidation or Sales of Assets.
If at any time or from time to time after the Issuance Date there shall be a
capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section 5(f)(i), (ii) and (iii), or a reclassification, exchange or substitution
of shares provided for in Section 5(f)(iv)), or a merger or consolidation of the
Company with or into another corporation where the holders of outstanding voting
securities prior to such merger or consolidation do not own over 50% of the
outstanding voting securities of the merged or consolidated entity, immediately
after such merger or consolidation, or the sale of all or substantially all of
the Company's properties or assets to any other person (an "Organic Change"),
then as a part of such Organic Change an appropriate revision to the Conversion
Price shall be made if necessary and provision shall be made if necessary (by
adjustments of the Conversion Price or otherwise) so that the holder of each
share of Series A Preferred Stock shall have the right thereafter to convert
such share of Series A Preferred Stock into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
5(f)(v) with respect to the rights of the holders of the Series A Preferred
Stock after the Organic Change to the end that the provisions of this Section
5(f)(v) (including any adjustment in the Conversion Price then in effect and the
number of shares of stock or other securities deliverable upon conversion of the
Series A Preferred Stock) shall be applied after that event in as nearly an
equivalent manner as may be practicable.

(vi)  Adjustments for Issuance of Additional Shares of Common Stock. In the
event the Company, shall, at any time, from time to time, issue or sell any
additional shares of Common Stock (otherwise than as provided in the foregoing
subsections (i) through (v) of this Section 5(f) or pursuant to Common Stock
Equivalents (hereafter defined) granted or issued prior to the Issuance Date)
(“Additional Shares of Common Stock”), at a price per share less than the
Conversion Price then in effect or without consideration, then the Conversion
Price upon each such issuance shall be reduced to a price equal to the
consideration per share paid for such Additional Shares of Common Stock.

(vii)  Issuance of Common Stock Equivalents. The provisions of this Section
5(f)(vii) shall apply if (a) the Company, at any time after the Issuance Date,
shall issue any securities convertible into or exchangeable for, directly or
indirectly, Common Stock ("Convertible Securities"), other than the Series A
Preferred Stock, or (b) any rights or warrants or options to purchase any such
Common Stock or Convertible Securities (collectively, the "Common Stock
Equivalents") shall be issued or sold. If the price per share for which
Additional Shares of Common Stock may be issuable pursuant to any such Common
Stock
 
 
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Equivalent shall be less than the applicable Conversion Price then in effect, or
if, after any such issuance of Common Stock Equivalents, the price per share for
which Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted, and such price as so amended shall be less than the applicable
Conversion Price in effect at the time of such amendment or adjustment, then the
applicable Conversion Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (vi) of this Section
5(f). No adjustment shall be made to the Conversion Price upon the issuance of
Common Stock pursuant to the exercise, conversion or exchange of any Convertible
Security or Common Stock Equivalent where an adjustment to the Conversion Price
was made as a result of the issuance or purchase of any Convertible Security or
Common Stock Equivalent.

(viii)  Consideration for Stock. In case any shares of Common Stock or
Convertible Securities other than the Series A Preferred Stock, or any rights or
warrants or options to purchase any such Common Stock or Convertible Securities,
shall be issued or sold:

(1)  in connection with any merger or consolidation in which the Company is the
surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed to
or exchanged for the stock or other securities of another corporation), the
amount of consideration therefore shall be, deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or

(2)  in the event of any consolidation or merger of the Company in which the
Company is not the surviving corporation or in which the previously outstanding
shares of Common Stock of the Company shall be changed into or exchanged for the
stock or other securities of another corporation, or in the event of any sale of
all or substantially all of the assets of the Company for stock or other
securities of any corporation, the Company shall be deemed to have issued a
number of shares of its Common Stock for stock or securities or other property
of the other corporation computed on the basis of the actual exchange ratio on
which the transaction was predicated, and for a consideration equal to the fair
market value on the date of such transaction of all such stock or securities or
other property of the other corporation. If any such calculation results in
adjustment of the applicable Conversion Price, or the number of shares of Common
Stock issuable upon conversion of the Series A Preferred Stock, the
determination of the applicable Conversion Price or the number of shares of
Common Stock issuable upon conversion of the Series A Preferred Stock
immediately prior to such merger, consolidation or sale, shall be made after
giving effect to such adjustment of the number of shares of Common Stock
issuable upon conversion of the Series A Preferred Stock. In the event any
consideration received by the Company for any securities consists of property
other than cash, the fair market value thereof at the time of issuance or as
otherwise applicable shall be as determined in good faith by the Board of
Directors of the Company. In the event Common Stock is issued with other shares
or securities or other assets of the Company for consideration which covers
both, the consideration computed as provided in this Section (5)(f)(viii) shall
be allocated
 
 
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among such securities and assets as determined in good faith by the Board of
Directors of the Company.

(ix)  Record Date. In case the Company shall take record of the holders of its
Common Stock or any other Preferred Stock for the purpose of entitling them to
subscribe for or purchase Common Stock or Convertible Securities, then the date
of the issue or sale of the shares of Common Stock shall be deemed to be such
record date.

(x)  Certain Issues Excepted. Anything herein to the contrary notwithstanding,
the Company shall not be required to make any adjustment to the Conversion Price
upon (i) the Company's issuance of any Additional Shares of Common Stock and
warrants therefore in connection with a merger, acquisition or consolidation of
the Company, (ii) the Company’s issuance of Additional Shares of Common Stock
pursuant to a bona fide firm underwritten public offering of the Company’s
securities, (iii) securities issued pursuant to the conversion or exercise of
convertible or exercisable securities issued or outstanding on or prior to the
date hereof, (iv) any warrants issued to the placement agent and its designees
for the transactions contemplated hereby, and (v) the payment of any dividends
on the Series A Preferred Stock.

(g)  No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 5 and in
the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the holders of the Series A Preferred Stock
against impairment. In the event a holder shall elect to convert any shares of
Series A Preferred Stock as provided herein, the Company cannot refuse
conversion based on any claim that such holder or any one associated or
affiliated with such holder has been engaged in any violation of law, unless, an
injunction from a court, on notice, restraining and/or adjoining conversion of
all or of said shares of Series A Preferred Stock shall have been issued and the
Company posts a surety bond for the benefit of such holder in an amount equal to
130% of the Liquidation Preference Amount of the Series A Preferred Stock such
holder has elected to convert, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such holder in the event it obtains judgment.

(h)  Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Series A Preferred Stock pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such Series A Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the holder of
such affected Series A Preferred Stock, at any time, furnish or cause to be
furnished to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the
 
 
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time, and the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon the conversion
of a share of such Series A Preferred Stock. Notwithstanding the foregoing, the
Company shall not be obligated to deliver a certificate unless such certificate
would reflect an increase or decrease of at least one percent of such adjusted
amount.

(i)  Issue Taxes. The Company shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of shares of
Series A Preferred Stock pursuant thereto; provided, however, that the Company
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such conversion.

(j)  Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or by facsimile or three (3)
business days following being mailed by certified or registered mail, postage
prepaid, return-receipt requested, addressed to the holder of record at its
address appearing on the books of the Company. The Company will give written
notice to each holder of Series A Preferred Stock at least twenty (20) days
prior to the date on which the Company closes its books or takes a record (I)
with respect to any dividend or distribution upon the Common Stock, (II) with
respect to any pro rata subscription offer to holders of Common Stock or (III)
for determining rights to vote with respect to any Organic Change, dissolution,
liquidation or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public. The Company
will also give written notice to each holder of Series A Preferred Stock at
least twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no event shall
such notice be provided to such holder prior to such information being made
known to the public.

(k)  Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Series A Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Company shall pay
cash equal to the product of such fraction multiplied by the average of the
Closing Bid Prices of the Common Stock for the five (5) consecutive trading
immediately preceding the Voluntary Conversion Date or the Mandatory Conversion
Date, as applicable.

(l)  Reservation of Common Stock. The Company shall, so long as any shares of
Series A Preferred Stock are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Series A Preferred Stock, such number of shares of Common
Stock equal to one hundred twenty percent (120%) of the number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all of the Series A Preferred Stock then outstanding. The initial number of
shares of Common Stock reserved for conversions of the Series A Preferred Stock
and any increase in the number of shares so reserved shall be allocated pro rata
among the holders of the Series A Preferred Stock based on the number of shares
of Series A Preferred Stock held by each holder of record at the time of
issuance of the Series A Preferred Stock or increase in the number
 
 
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of reserved shares, as the case may be. In the event a holder shall sell or
otherwise transfer any of such holder's shares of Series A Preferred Stock, each
transferee shall be allocated a pro rata portion of the number of reserved
shares of Common Stock reserved for such transferor. Any shares of Common Stock
reserved and which remain allocated to any person or entity which does not hold
any shares of Series A Preferred Stock shall be allocated to the remaining
holders of Series A Preferred Stock, pro rata based on the number of shares of
Series A Preferred Stock then held by such holder.

(m)  Retirement of Series A Preferred Stock. Conversion of Series A Preferred
Stock shall be deemed to have been effected on the Conversion Date. Upon
conversion of only a portion of the number of shares of Series A Preferred Stock
represented by a certificate surrendered for conversion, the Company shall issue
and deliver to such holder at the expense of the Company, a new certificate
covering the number of shares of Series A Preferred Stock representing the
unconverted portion of the certificate so surrendered as required by Section
5(b)(ii).

(n)  Regulatory Compliance. If any shares of Common Stock to be reserved for the
purpose of conversion of Series A Preferred Stock require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be.

6.  No Preemptive Rights. Except as provided in Section 5 hereof, no holder of
the Series A Preferred Stock shall be entitled to rights to subscribe for,
purchase or receive any part of any new or additional shares of any class,
whether now or hereinafter authorized, or of bonds or debentures, or other
evidences of indebtedness convertible into or exchangeable for shares of any
class, but all such new or additional shares of any class, or any bond,
debentures or other evidences of indebtedness convertible into or exchangeable
for shares, may be issued and disposed of by the Board of Directors on such
terms and for such consideration (to the extent permitted by law), and to such
person or persons as the Board of Directors in their absolute discretion may
deem advisable.

7.   Conversion Restrictions.

(a)  Notwithstanding anything to the contrary set forth in Section 5 of this
Certificate of Designation, at no time may a holder of shares of Series A
Preferred Stock convert shares of the Series A Preferred Stock if the number of
shares of Common Stock to be issued pursuant to such conversion would cause the
number of shares of Common Stock owned by such holder at such time to exceed,
when aggregated with all other shares of Common Stock owned by such holder at
such time, the number of shares of Common Stock which would result in such
holder beneficially owning (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules thereunder) in
excess of 4.9% of the then issued and outstanding shares of Common Stock
outstanding at such time; provided, however,
 
 
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that upon a holder of Series A Preferred Stock providing the Company with
sixty-one (61) days notice (pursuant to Section 5(i) hereof) (the "Waiver
Notice") that such holder would like to waive Section 7(a) of this Certificate
of Designation with regard to any or all shares of Common Stock issuable upon
conversion of Series A Preferred Stock, this Section 7(a) shall be of no force
or effect with regard to those shares of Series A Preferred Stock referenced in
the Waiver Notice.
 
(b)  Notwithstanding anything to the contrary set forth in Section 5 of this
Certificate of Designation, at no time may a holder of shares of Series A
Preferred Stock convert shares of the Series A Preferred Stock if the number of
shares of Common Stock to be issued pursuant to such conversion would cause the
number of shares of Common Stock owned by such holder at such time to exceed,
when aggregated with all other shares of Common Stock owned by such holder at
such time, the number of shares of Common Stock which would result in such
holder beneficially owning (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules thereunder) in
excess of 9.9% of the then issued and outstanding shares of Common Stock
outstanding at such time; provided, however, that upon a holder of Series A
Preferred Stock providing the Company with a Waiver Notice that such holder
would like to waive Section 7(b) of this Certificate of Designation with regard
to any or all shares of Common Stock issuable upon conversion of Series A
Preferred Stock, this Section 7(b) shall be of no force or effect with regard to
those shares of Series A Preferred Stock referenced in the Waiver Notice.

8.  Redemption.

(a)  Intentionally Omitted.

(b)  Redemption Option Upon Triggering Event. In addition to all other rights of
the holders of Series A Preferred Stock contained herein, after a Triggering
Event (as defined below), each holder of Series A Preferred Stock shall have the
right, at such holder's option, to require the Company to redeem all or a
portion of such holder's shares of Series A Preferred Stock at a price per share
of Series A Preferred Stock equal to one hundred twenty percent (120%) of the
Liquidation Preference Amount, plus any accrued but unpaid dividends and
liquidated damages (the "Triggering Event Redemption Price" or the "Redemption
Price"); provided that with respect to the Triggering Events described in
clauses (i), (ii), (iii) and (v) of Section 8(d), the Company shall have the
sole option to pay the Triggering Event Redemption Price in cash or shares of
Common Stock; and provided, further, that with respect to the Triggering Event
described in clause (iv) of Section 8(d), the Company shall pay the Triggering
Event Redemption Price in cash. If the Company elects to pay the Triggering
Event Redemption Price in shares of Common Stock in accordance with this Section
8(b), the price per share shall be based upon the Conversion Price then in
effect on the day preceding the date of delivery of the Notice of Redemption at
Option of Buyer Upon Triggering Event (as defined below) and the holder of such
shares of Common Stock shall have demand registration rights with respect to
such shares.

(c)  Intentionally Omitted.
 
 
 
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(d)  "Triggering Event". A "Triggering Event" shall be deemed to have occurred
at such time as any of the following events:

(i)  Intentionally omitted.

(ii)  the suspension from listing, without subsequent listing on any one of, or
the failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, the Nasdaq SmallCap Market, the Nasdaq National Market, the New York
Stock Exchange, Inc. or the American Stock Exchange, Inc., for a period of five
(5) consecutive trading days;

(iii)  the Company's notice to any holder of Series A Preferred Stock, including
by way of public announcement, at any time, of its inability to comply
(including for any of the reasons described in Section 9) or its intention not
to comply with proper requests for conversion of any Series A Preferred Stock
into shares of Common Stock; or

(iv)  the Company's failure to comply with a Conversion Notice tendered in
accordance with the provisions of this Certificate of Designation within ten
(10) business days after the receipt by the Company of the Conversion Notice and
the Preferred Stock Certificates; or

(v)  the Company breaches any representation, warranty, covenant or other term
or condition of this Certificate of Designation or any other agreement,
document, certificate or other instrument delivered in connection with the
transactions contemplated hereby, except to the extent that such breach would
not have a material adverse effect on the business and operations of the
Company.

(e)  Intentionally Omitted.

(f)  Mechanics of Redemption at Option of Buyer Upon Triggering Event. Within
one (1) day after the occurrence of a Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier ("Notice of
Triggering Event") to each holder of Series A Preferred Stock. At any time after
the earlier of a holder's receipt of a Notice of Triggering Event and such
holder becoming aware of a Triggering Event, any holder of Series A Preferred
Stock then outstanding may require the Company to redeem all of the Series A
Preferred Stock by delivering written notice thereof via facsimile and overnight
courier ("Notice of Redemption at Option of Buyer Upon Triggering Event") to the
Company, which Notice of Redemption at Option of Buyer Upon Triggering Event
shall indicate (i) the number of shares of Series A Preferred Stock that such
holder is electing to redeem and (ii) the applicable Triggering Event Redemption
Price, as calculated pursuant to Section 8(b) above.

(g)  Payment of Redemption Price. Upon the Company's receipt of a Notice(s) of
Redemption at Option of Buyer Upon Triggering Event from any holder of Series A
Preferred Stock, the Company shall immediately notify each holder of Series A
Preferred Stock by facsimile of the Company's receipt of such Notice(s) of
Redemption at Option of Buyer Upon Triggering Event and each holder which has
sent such a notice shall promptly submit to the
 
 
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Company such holder's Preferred Stock Certificates which such holder has elected
to have redeemed. Other than with respect to the Triggering Event described in
clause (iv) of Section 8(d), the Company shall have the sole option to pay the
Redemption Price in cash or shares of Common Stock in accordance with Section
8(a) and Section 9 of this Certificate of Designation. If the Company is unable
to redeem all of the Series A Preferred Stock to be redeemed, the Company shall
redeem an amount from each holder of Series A Preferred Stock being redeemed
equal to such holder's pro-rata amount (based on the number of shares of Series
A Preferred Stock held by such holder relative to the number of shares of Series
A Preferred Stock outstanding) of all Series A Preferred Stock being redeemed.
If the Company shall fail to redeem all of the Series A Preferred Stock
submitted for redemption (other than pursuant to a dispute as to the arithmetic
calculation of the Redemption Price), in addition to any remedy such holder of
Series A Preferred Stock may have under this Certificate of Designation, the
applicable Redemption Price payable in respect of such unredeemed Series A
Preferred Stock shall bear interest at the rate of 1.0% per month (prorated for
partial months) until paid in full. Until the Company pays such unpaid
applicable Redemption Price in full to a holder of shares of Series A Preferred
Stock submitted for redemption, such holder shall have the option (the "Void
Optional Redemption Option") to, in lieu of redemption, require the Company to
promptly return to such holder(s) all of the shares of Series A Preferred Stock
that were submitted for redemption by such holder(s) under this Section 8 and
for which the applicable Redemption Price has not been paid, by sending written
notice thereof to the Company via facsimile (the "Void Optional Redemption
Notice"). Upon the Company's receipt of such Void Optional Redemption Notice(s)
and prior to payment of the full applicable Redemption Price to such holder, (i)
the Notice(s) of Redemption shall be null and void with respect to those shares
of Series A Preferred Stock submitted for redemption and for which the
applicable Redemption Price has not been paid and (ii) the Company shall
immediately return any Series A Preferred Stock submitted to the Company by each
holder for redemption under this Section 8 and for which the applicable
Redemption Price has not been paid and (iii) the Conversion Price of such
returned shares of Series A Preferred Stock shall be adjusted to the lesser of
(A) the Conversion Price and (B) the lowest Closing Bid Price during the period
beginning on the date on which the Notice(s) of Redemption of Option of Buyer
Upon Triggering Event is delivered to the Company and ending on the date on
which the Void Optional Redemption Notice(s) is delivered to the Company;
provided that no adjustment shall be made if such adjustment would result in an
increase of the Conversion Price then in effect. A holder's delivery of a Void
Optional Redemption Notice and exercise of its rights following such notice
shall not effect the Company's obligations to make any payments which have
accrued prior to the date of such notice.

(h)  Demand Registration Rights. If the Redemption Price upon the occurrence of
a Triggering Event is paid in shares of Common Stock and such shares have not
been previously registered on a registration statement under the Securities Act,
a holder of Series A Preferred Stock may make a written request for registration
under the Securities Act pursuant to this Section 8(i) of all of its shares of
Common Stock issued upon such Triggering Event. The Company shall use its
reasonable best efforts to cause to be filed and declared effective as soon as
reasonably practicable (but in no event later than the ninetieth (90th) day
after such holder’s request is made) a registration statement under the
Securities Act, providing for the resale of all of the shares of Common Stock
issued upon such Triggering Event by such holder. The
 
 
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Company agrees to use its reasonable best efforts to keep any such registration
statement continuously effective for resale of the Common Stock for so long as
such holder shall request, but in no event later than the date that the shares
of Common Stock issued upon such Triggering Event may be offered for resale to
the public pursuant to Rule 144(k).

9.  Inability to Fully Convert.

(a)  Holder's Option if Company Cannot Fully Convert. If, upon the Company's
receipt of a Conversion Notice or on the Mandatory Conversion Date or upon an
automatic conversion upon the consummation of a Change of Control Transaction,
the Company cannot issue shares of Common Stock for any reason, including,
without limitation, because the Company (w) does not have a sufficient number of
shares of Common Stock authorized and available, or (x) is otherwise prohibited
by applicable law or by the rules or regulations of any stock exchange,
interdealer quotation system or other self-regulatory organization with
jurisdiction over the Company or its securities from issuing all of the Common
Stock which is to be issued to a holder of Series A Preferred Stock pursuant to
a Conversion Notice, then the Company shall issue as many shares of Common Stock
as it is able to issue in accordance with such holder's Conversion Notice and
pursuant to Section 5(b)(ii) above and, with respect to the unconverted Series A
Preferred Stock, the holder, solely at such holder's option, can elect, within
five (5) business days after receipt of notice from the Company thereof to:

(i)  require the Company to redeem in cash from such holder those Series A
Preferred Stock for which the Company is unable to issue Common Stock in
accordance with such holder's Conversion Notice ("Mandatory Redemption") at a
price per share equal to the Triggering Event Redemption Price as of such
Conversion Date (the "Mandatory Redemption Price");

(ii)  void its Conversion Notice and retain or have returned, as the case may
be, the shares of Series A Preferred Stock that were to be converted pursuant to
such holder's Conversion Notice (provided that a holder's voiding its Conversion
Notice shall not effect the Company's obligations to make any payments which
have accrued prior to the date of such notice).

(b)  Mechanics of Fulfilling Holder's Election. The Company shall immediately
send via facsimile to a holder of Series A Preferred Stock, upon receipt of a
facsimile copy of a Conversion Notice from such holder which cannot be fully
satisfied as described in Section 9(a) above, a notice of the Company's
inability to fully satisfy such holder's Conversion Notice (the "Inability to
Fully Convert Notice"). Such Inability to Fully Convert Notice shall indicate
(i) the reason why the Company is unable to fully satisfy such holder's
Conversion Notice, (ii) the number of Series A Preferred Stock which cannot be
converted and (iii) the applicable Mandatory Redemption Price. Such holder shall
notify the Company of its election pursuant to Section 9(a) above by delivering
written notice via facsimile to the Company ("Notice in Response to Inability to
Convert").
 
 
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(c)  Payment of Redemption Price. If such holder shall elect to have its shares
redeemed pursuant to Section 9(a)(i) above, the Company shall pay the Mandatory
Redemption Price to such holder within thirty (30) days of the Company's receipt
of the holder's Notice in Response to Inability to Convert, provided that prior
to the Company's receipt of the holder's Notice in Response to Inability to
Convert the Company has not delivered a notice to such holder stating, to the
satisfaction of the holder, that the event or condition resulting in the
Mandatory Redemption has been cured and all Conversion Shares issuable to such
holder can and will be delivered to the holder in accordance with the terms of
Section 2(g). If the Company shall fail to pay the applicable Mandatory
Redemption Price to such holder on a timely basis as described in this Section
9(c) (other than pursuant to a dispute as to the determination of the arithmetic
calculation of the Redemption Price), in addition to any remedy such holder of
Series A Preferred Stock may have under this Certificate of Designation, such
unpaid amount shall bear interest at the rate of 2.0% per month (prorated for
partial months) until paid in full. Until the full Mandatory Redemption Price is
paid in full to such holder, such holder may (i) void the Mandatory Redemption
with respect to those Series A Preferred Stock for which the full Mandatory
Redemption Price has not been paid, (ii) receive back such Series A Preferred
Stock, and (iii) require that the Conversion Price of such returned Series A
Preferred Stock be adjusted to the lesser of (A) the Conversion Price and (B)
the lowest Closing Bid Price during the period beginning on the Conversion Date
and ending on the date the holder voided the Mandatory Redemption.

(d)  Pro-rata Conversion and Redemption. In the event the Company receives a
Conversion Notice from more than one holder of Series A Preferred Stock on the
same day and the Company can convert and redeem some, but not all, of the Series
A Preferred Stock pursuant to this Section 9, the Company shall convert and
redeem from each holder of Series A Preferred Stock electing to have Series A
Preferred Stock converted and redeemed at such time an amount equal to such
holder's pro-rata amount (based on the number shares of Series A Preferred Stock
held by such holder relative to the number shares of Series A Preferred Stock
outstanding) of all shares of Series A Preferred Stock being converted and
redeemed at such time.

10.  Vote to Change the Terms of or Issue Preferred Stock. The affirmative vote
at a meeting duly called for such purpose or the written consent without a
meeting, of the holders of not less than seventy-five percent (75%) of the then
outstanding shares of Series A Preferred Stock, shall be required (a) for any
change to this Certificate of Designation or the Company's Certificate of
Incorporation which would amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Series A Preferred Stock or (b) for
the issuance of shares of Series A Preferred Stock other than pursuant to this
Certificate of Designation.

11.  Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing the shares of Series A Preferred
Stock, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company
shall execute and deliver new preferred stock certificate(s) of like tenor and
date; provided, however, the Company shall not be obligated to re-issue
Preferred Stock Certificates if the
 
 
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holder contemporaneously requests the Company to convert such shares of Series A
Preferred Stock into Common Stock.

12.  Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designation
shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of the Series A Preferred
Stock and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holders of the Series A Preferred Stock shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.

13.  Specific Shall Not Limit General; Construction. No specific provision
contained in this Certificate of Designation shall limit or modify any more
general provision contained herein. This Certificate of Designation shall be
deemed to be jointly drafted by the Company and all initial purchasers of the
Series A Preferred Stock and shall not be construed against any person as the
drafter hereof.

14.  Failure or Indulgence Not Waiver. No failure or delay on the part of a
holder of Series A Preferred Stock in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

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IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate
and does affirm the foregoing as true this 1st day of February, 2006.

SP HOLDING CORPORATION

By: /s/ Mark Schaftlein
Name: Mark Schaftlein

 
Title:
Chief Financial Officer and acting

   
Chief Executive Officer

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EXHIBIT I

SP HOLDING CORPORATION
CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series A Preferred Stock of SP Holding Corporation (the
"Certificate of Designation"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series A Preferred Stock, par value $.001 per share (the "Preferred
Shares"), of SP Holding Corporation, a Delaware corporation (the "Company"),
indicated below into shares of Common Stock, par value $.001 per share (the
"Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Preferred Shares specified below as of the date
specified below.
 
      Date of Conversion: ______________________________

Number of Preferred Shares to be converted:______  

Stock certificate no(s). of Preferred Shares to be converted:______     

The Common Stock have been sold pursuant to an effective registration statement:
YES ____ NO____

Please confirm the following information:   

Conversion Price:                                                     
________________________________ 

Number of shares of Common Stock
to be issued:                       _______________________________ 

 
Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion: _________________________

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

Issue
to:                            ____________________________________                             

Facsimile
Number:                                                                 
_____________________________________                       

Authorization:                            _____________________________________                                         
  By:__________________________________
  Title:_________________________________

Dated:
 
 
 
 
 
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