EXHIBIT 10.6

CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS OF

SERIES E CONVERTIBLE PREFERRED STOCK

OF

CARE CONCEPTS I, INC.

a Delaware corporation

The undersigned, Gary Spaniak, Jr. and Charles Pearlman, do hereby certify that:

1.

They are the President and an Assistant Secretary, respectively, of CARE
CONCEPTS I, INC., a corporation organized and existing under the Delaware
General Corporation Law (“DGCL”) of the State of Delaware (the “Corporation”).

2.

Pursuant to authority conferred upon the Board of Directors by the Certificate
of Incorporation of the Corporation, and pursuant to the provisions of Section
151 of the DGCL, the Board of Directors of the Corporation, pursuant to a
meeting held September 20, 2004, adopted a resolution establishing the rights,
preferences, privileges and restrictions of, and the number of shares
comprising, the Corporation’s Series E Convertible Preferred Stock, which
resolution is as follows:

RESOLVED, that a series of Preferred Stock in the Corporation, having the
rights, preferences, privileges and restrictions, and the number of shares
constituting such series and the designation of such series, set forth below be,
and it hereby is, authorized by the Board of Directors of the Corporation
pursuant to authority given by the Corporation’s Articles of Incorporation.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
determines the Determinations of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, a new series of
Preferred Stock as follows:

1.

Definitions.  For the purposes of this Certificate of Designation and in
addition to other terms defined herein, the following definitions shall apply:

“10% Notes” shall mean the maximum of $15.0 million of the Corporation’s 10%
convertible secured notes due September 15, 2009 to be issued pursuant to the
transactions contemplated by the Subscription Agreement.

 

“Affiliate means, as to any Person, any other Person which, directly or
indirectly, alone or together with other Persons, controls or is controlled by
or is under common control with such Person. “Control” “controlled by” and
“under common control with”, as and with respect to any Person, means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person.

“Adjustment Shares”  shall have the meaning defined in Section 7(b) of this
Certificate of Designation and as “Additional Shares” in the Subscription
Agreement.

“AMEX” shall mean the American Stock Exchange, Inc.

“Applicable Law” means any domestic or foreign law, statute, regulation, rule,
policy, guideline or ordinance applicable to the businesses of the Corporation.

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“Business Day” means any day, Monday through Friday, on which U.S. federally
chartered banks are open for business in New York, New York, and Fort
Lauderdale, Florida.

“Commission” shall mean the United States Securities and Exchange Commission.

“Common Stock” shall mean the authorized common stock, $.001 par value per
share, of the Corporation.

“Common Stock Equivalent” shall mean any issued and outstanding notes,
debentures or Preferred Stock that is convertible into shares of Common Stock,
any options, warrants or securities exercisable for shares of Common Stock, or
other rights entitling the holder to purchase Common Stock or exchange property
or other assets for Common Stock.

 “Conversion Price” shall mean a price equal to fifty (50%) percent of the
Market Price as at the Conversion Notice Date; provided, that in no event shall
the Conversion Price be lower than the Floor Price.

“Conversion Notice” shall have the meaning defined in Section 7(b) of this
Series E Certificate of Designations.

 “Conversion Notice Date” shall mean the date on which a Holder of Series E
Preferred Stock shall deliver a Conversion Notice to the Corporation.

“DGCL” shall mean the Delaware General Corporation Law, as amended,

“Floor Price” shall mean $3.00 per share of Common Stock.

“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as
amended, or any successor law.

 “Fully-Diluted Common Stock” means, at any applicable point in time, the issued
and outstanding shares of Common Stock of the Corporation, on a fully-diluted
basis, after giving effect to (i) all issued and outstanding shares of Common
Stock, (ii) the conversion into Common Stock of all issued and outstanding
shares of Preferred Stock, (iii) all shares of Common Stock issuable upon
exercise of any outstanding options, warrants or other rights to purchase Common
Stock, and/or (iv) all shares of Common Stock issuable upon conversion of any
outstanding notes, debentures, preferred stock, or other securities convertible
into or exchangeable for shares of Common Stock.

“GAAP” means generally accepted United States accounting principles in effect
from time to time.

“Governmental Authority” shall mean any court, tribunal, authority, agency,
commission, bureau, department, official or other instrumentality of the United
States, or any other country or any provincial, state, local, county, city or
other political subdivision.

“Holder(s)” shall mean the individual or collective reference to Monarch Pointe
Fund, Ltd. and any other holder(s) of the Series E Preferred Stock.

 “Law” shall mean any United States, state or local (including common law)
statute, code, directive, ordinance, rule, regulation or other requirement.

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“Market Price” shall mean the average of the lowest three (3) intra-day trading
prices of the Common Stock of the Corporation, as traded on the AMEX or any
other National Securities Exchange, for the ten (10) trading days immediately
preceding the date of determination of such Market Price.

“National Securities Exchange” shall mean the individual and collective
reference to the New York Stock Exchange, the AMEX, the Nasdaq Stock Market,
and/or the NASD OTC-Bulletin Board.

“Person” shall mean any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental body or Governmental Authority.

“Preferred Stock” shall mean the authorized preferred stock, $.001 par value per
share, of the Corporation.

“Proceeding” shall mean any claim, action, investigation, arbitration,
litigation or other judicial, administrative or regulatory proceeding.

“Representatives” shall mean officers, directors, employees, agents, attorneys,
accountants, advisors and representatives.

 “Securities Act” shall mean the United States Securities Act of 1933, as
amended, or any successor law.

“Series A Preferred Stock” shall mean the 1,000 authorized shares of Series A
Preferred Stock of the Corporation.

“Series B Preferred Stock” shall mean the 10,000 authorized shares of Series B
Preferred Stock of the Corporation.

“Series C Preferred Stock” shall mean the 45,000 authorized shares of Series C
Preferred Stock of the Corporation.

“Series D Preferred Stock” shall mean the 330,000 shares of Series D Preferred
Stock of the Corporation issued to Penthouse pursuant to the Series D Preferred
Stock Certificate of Designations and the Series D Preferred Stock Certificate
of Designation Amendment.

“Series E Preferred Stock” shall mean the 35,000 shares of Series E Preferred
Stock of the Corporation authorized to be issued pursuant to this Series E
Preferred Stock Certificate of Designations.

“Series E Stated Value” shall mean the $100.00 per share stated value payable in
respect of each of the authorized and issued series of the Series E Preferred
Stock of the Corporation, as applicable, in connection with any Liquidation
Event (as hereinafter defined in Section 7(a)) redemption or other sale or
disposition of such Series E Preferred Stock.

“Series F Preferred Stock” shall mean the maximum of 54,500 shares of 10% Series
F Convertible Redeemable Secured Preferred Stock of the Corporation to be issued
pursuant to the transactions contemplated by the Subscription Agreement.

 

“Series G Preferred Stock” shall mean the 45,000 shares of Series G Convertible
Preferred Stock of the Corporation to be issued pursuant to the transactions
contemplated by the Subscription Agreement.

 

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“Subsidiary” shall mean with respect to any Person, any corporation, joint
venture, limited liability company, partnership, association or other business
entity of which 50% or more of the total voting power of stock or other equity
entitled to vote generally in the election of directors or managers or
equivalent Persons thereof is owned or controlled, directly or indirectly, by
such Person.

“Subscription Agreement” shall mean the subscription agreement, dated September
20, 2004, between the Holder(s) of Series E Preferred Stock, Mercator Advisory
Group, LLC and the Corporation.

“Transfer of Control” shall mean the occurrence of any one of the following
events: (a) the sale, conveyance, exchange or disposition (collectively,
“Transfer”) of all or substantially all of the assets of the Corporation, (b)
the Transfer of all or substantially all of the assets of all or substantially
all of the Subsidiaries of the Corporation, or (c) the consummation of a
transaction or series of related transactions (whether by tender offer, merger,
consolidation or like combination) in which either (i) more than fifty percent
(50%) of the voting power of the Corporation is disposed of, or (ii) the power
to elect a majority of the Board of Directors of the Corporation is invested in
one or more Person(s) who are not currently stockholders of the Corporation or
of Penthouse or Affiliates of such Persons.

2.

Determination.  The series of Preferred Stock is hereby designated Series E
Convertible Preferred Stock (the “Series E Preferred Stock”).

3.

Authorized Shares.  The number of authorized shares constituting the Series E
Preferred Stock shall be thirty five thousand (35,000) shares of such series.

4.

Dividends.  Until such date (the “Effective Date”) as a registration statement
covering the Common Stock issuable upon conversion of the Series E Preferred
Stock, certain additional shares of Common Stock purchased on the Issue Date
from an affiliate of the Corporation, and other shares of Common Stock issuable
upon exercise of certain warrants issued on the Issue date to the Holder of the
Series E Preferred Stock (collectively, the “Registrable Securities”), on Form
S-1 or other applicable form for registering securities under the Securities Act
of 1933, as amended (the “Registration Statement”) shall have been declared
effective by the Securities and Exchange Commission, each Share of Series E
Preferred Stock shall pay a mandatory monthly dividend, at an annual rate equal
to the product of multiplying (i) the $100.00 per share Series E Purchase Price,
by (ii) six percent (6.0%).  Such dividend shall be payable monthly in arrears
in cash.  From and after the Effective Date of the Registration Statement, no
further mandatory dividends shall be payable on the Series E Preferred Stock.
 Subject to the prior rights of holders of all classes of stock at the time
outstanding having prior rights as to dividends, the holder of the Series E
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of any assets of the Corporation legally available
therefor, such dividends as may be declared from time to time by the Board of
Directors.

5.

Liquidation Preference.

(a)

Liquidation, Dissolution or Winding Up.  If (A) the Corporation shall commence a
voluntary case under the Federal bankruptcy laws or any other applicable Federal
or state bankruptcy, insolvency or similar law, or consent to the entry of an
order for relief In an involuntary case under any law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or make an assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or if a decree or order
for relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the Federal bankruptcy
laws or any other

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applicable Federal or state bankruptcy, insolvency or similar law resulting in
the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of 30 consecutive days and, on account of any such event (“Insolvency
Proceeding”), or (B) the Corporation shall otherwise liquidate, dissolve or wind
up, a “Liquidation Event” shall be deemed to have occurred for purposes of this
Certificate of Designation. If a Liquidation Event shall occur, the available
funds and assets of the Corporation and its Subsidiaries shall be distributed in
the following manner:

(i)

Liquidation Preference. Upon the occurrence of any Liquidation Event, the
holder(s) of the issued and outstanding shares of Series E Preferred Stock shall
be entitled to be paid a liquidation preference at the Series E Stated Value per
share, out of the Available Funds and Assets (A) junior to and subordinated to
all payments as shall be made to the holders of the Series F Preferred Stock,
(B) pari passu and at the same time as payment shall be made to the holders of
the Series D Preferred Stock, and (C) senior, prior to, and before any payment
or distribution (or any setting apart of any payment or distribution) of any
available funds and assets of the Corporation or any Subsidiary on any shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series G Preferred Stock or Common Stock of the Corporation. If, upon a
Liquidation Event, after payment in full of all payments as shall be made to the
holders of the Series F Preferred Stock, the available funds and assets of the
Corporation and its Subsidiaries to be distributed to the holders of the Series
D and Series E Preferred Stock shall be insufficient to permit the payment to
such shareholders of their full preferential amount described in this
subsection, then all of such available funds and assets shall be distributed
among the holders of then outstanding series of such Series D Preferred Stock
and Series E Preferred Stock pro rata, according to the number of outstanding
shares of such Series D Preferred Stock and Series E Preferred Stock held by
each holder thereof. Except for the Series F Preferred Stock, the Corporation
shall not create, designate or authorize any series of Preferred Stock with
liquidation preferences or rights senior to the liquidation preferences and
rights held by the holders of the Series E Preferred Stock.

(ii)

Other Shares of Junior Preferred Stock. Subject to payment in full of the Stated
Value liquidation preference, first to the holders of the Series F Preferred
Stock, then to the Series D Preferred Stock and Series E Preferred Stock, as
provided above, the holder(s) of all other series of Preferred Stock of the
Corporation then outstanding (including the Series B Preferred Stock, Series C
Preferred Stock and Series G Preferred Stock) shall be entitled to be paid, out
of the remaining available funds and assets, if any, and prior and in preference
to any payment or distribution (or any setting apart of nay payment or
distribution) of any available finds and assets on any shares of Common Stock,
the amount of any liquidation preference or other payment required under the
terms of such Preferred Stock.

(iii)

Remaining Assets. If there are any available finds and assets remaining after
the payment or distribution (or the setting aside for payment or distribution)
to the holders of the Preferred Stock of their full preferential amounts
described in Sections here above, then all such remaining available finds and
assets shall be distributed among the holders of the then outstanding Common
Stock pro rata according to the number of shares of Common Stock held by each
holder thereof.

(b)

Merger or Sale of Assets.  At the option of the holders of the Series E
Preferred Stock, with such series voting as a separate series, upon the
consummation of a transaction or series of related transactions affecting the
Corporation that shall constitute a Transfer of Control, for all purposes of
this Certificate of Designation, a Liquidation Event shall be deemed to have
occurred. In such event the Corporation shall, at the sole option of the holders
of a majority of the outstanding Series E Preferred Stock, either (i)
distribute, upon consummation of and as a condition to, such Transfer of Control
an

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amount equal to the $100.00 per share Series E Stated Value liquidation
preference with respect to each outstanding share of Series E Preferred Stock,
(ii) issue to the holders of the Series E Preferred Stock that number of shares
of common stock of the successor or acquiring corporation or of the Corporation,
if it is the surviving corporation, and/or other property as is receivable upon
or as a result of such Transfer of Control, as though each Holder of Series E
Preferred Stock had converted his or its Series E Preferred Stock into shares of
Common Stock, at the applicable Conversion Percentage of Fully-Diluted Common
Stock, immediately prior to such Transfer of Control or (iii) require the
Corporation, or such successor, resulting, surviving or purchasing corporation,
as the case may be, and without benefit of any additional consideration
therefor, to execute and deliver to the Holder of Series E Preferred Stock
shares of its preferred stock with substantially identical rights, preferences,
privileges, powers, restrictions and other terms as the Series E Preferred Stock
equal to the number of shares of Series E Preferred Stock held by such Holder
divided by the Fully-Diluted Common Stock of the Corporation immediately prior
to such Transfer of Control multiplied by the Fully-Diluted Common Stock of the
Corporation or such successor, resulting or purchasing or surviving corporation,
as the case may be, immediately after the consummation of such Transfer of
Control; provided, that all Holders of Series E Preferred Stock shall be deemed
to elect the option set forth in clause (i) above if at least a majority in
interest of such Holders elect such option. For purposes of this Section 5(b),
“common stock of the successor or acquiring corporation” shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock..

(c)

Non-Cash Consideration. If any assets of the Corporation distributed to
shareholders in connection with any Liquidation Event are other than cash, then
the value of such assets shall be their fair market value as determined by the
Board of Directors in good faith, except that any securities to be distributed
to shareholders in connection with a Liquidation Event shall be valued as
follows:

(i)

The method of valuation of securities not subject to investment representation
letter or other similar restrictions on free marketability shall be as follows:

(A)

unless otherwise specified in a definitive agreement for the acquisition of the
Corporation, if the securities to be distributed are shares of Common Stock of
the Corporation or other securities that are traded on a National Securities
Exchange, the same shall be determined based on its then Market Value; and

(B)

if there is no public market as described in clause (A) above, then the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors,

(ii)

The method of valuation of securities subject to investment letter or other
restrictions on free marketability shall be to make a thirty percent (30%)
discount from the Market Value to reflect the approximate fair market value
thereof as determined in good faith by the Board of Directors.

6.

Voting Rights.  Except as otherwise required by law, the holder of shares of
Series E Preferred Stock shall not have the right to vote on matters that come
before the shareholders.  

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7.

Conversion Rights.  The holders of Series E Preferred Stock will have the right
to convert their shares of Series E Preferred Stock into Common Stock upon the
following terms and conditions:

(a)

Right to Convert.  Upon the earlier to occur of (i) December 31, 2004, or (ii)
the Corporation’s obtaining “Stockholder Approval” (as that term is defined in
the Subscription Agreement), subject to and in compliance with the provisions of
this Section 7, any issued and outstanding shares of Series E Preferred Stock
may, at the option of the Holder, be converted at any time or from time to time
into fully paid and non-assessable shares of Common Stock at the Conversion
Price in effect at the time of conversion, determined as provided herein;
provided, that a holder of Series E Preferred Stock may at any given time
convert only up to that number of shares of Series E Preferred Stock so that,
upon conversion, the aggregate beneficial ownership of the Corporation’s Common
Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) of such holder and all persons affiliated with such holder is not
more than 9.99% of the Corporation’s Common Stock then outstanding.

(b)

Mechanics of Conversion.  Before any holder of Series E Preferred Stock shall be
entitled to convert the same into shares of Common Stock, he shall surrender and
deliver the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Common Stock, and shall give
written notice to the Corporation at such office that he elects to convert the
same and shall state therein the number of shares of Series E Preferred Stock
being converted (the “Conversion Notice”).  Such Conversion Notice shall be
delivered either simultaneous with, or not earlier than five (5) business days
prior to, deliver of the certificate or certificates for conversion, as
aforesaid.  Thereupon, the Corporation shall promptly issue and deliver at such
office to such holder of Series E Preferred Stock a certificate or certificates
for the number of shares of Common Stock to which he shall be entitled.  Each
conversion of Series E Preferred Stock into shares of Common Stock shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender and delivery of the shares of Series E Preferred Stock to be
converted (each, a “Conversion Date”), and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such Conversion Date.

Notwithstanding the $3.00 per share Floor Price, in the event that the
Conversion Price shall be less than the $3.00 Floor Price on the Conversion
Date, then and in such event the Holder(s) of Series E Preferred Stock shall be
entitled to receive from the “Escrowed Shares” defined in the Subscription
Agreement, that number of additional shares of Common Stock (the “Adjustment
Shares”) as shall represent, together with the number of Conversion Shares
issuable at the then Series E Preferred Conversion Price in effect, the
aggregate number of shares of Company Common Stock that would have been issuable
(i) based upon the Conversion Price then in effect, and (ii) assuming that the
Floor Price had been reduced to $0.50 per share (the “Assumed Floor Price”), up
to a maximum aggregate of 5,833,333 of such Adjustment Shares, if all 35,000
shares of Series E Stock are converted; provided, that in no event would such
Assumed Floor Price ever be less than $0.50 per share.

For the avoidance of doubt, if for example, the Holder sends a Conversion Notice
to convert $1,000,000 of his or its Series E Preferred Stock and the Conversion
Price then in effect shall be $1.00 per share, notwithstanding the $3.00 Floor
Price set forth above, in addition to 333,333 Conversion Shares, the Corporation
shall sell to such Holder an additional 666,667 shares of Common Stock for a
total of $666.67.  However, based upon the $0.50 Assumed Floor Price, in no
event will the Corporation be required to issue more than 1,666,667 Adjustment
Shares in such example, even if the Conversion Price then in effect is less than
$0.50.

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(c)

Conversion Price.  The number of shares of Common Stock into which one share of
Series E Preferred Stock shall be convertible shall be determined by dividing
the $100.00 per share Series E Purchase Price by the Conversion Price, as the
same shall be adjusted pursuant to Section 7(d) below.

(d)

Adjustments to Floor Price and Assumed Floor Price.  The Floor Price and Assumed
Floor Price shall be subject to adjustment as set forth below in this Section
7(d).   

(i)

Adjustment upon Occurrence of an Event of Default.  If an Event of Default
occurs, as defined in the Subscription Agreement for the Series E Preferred
Stock, the Floor Price and Assumed Floor Price shall be reduced to seventy five
percent (75%) of the Floor Price and Assumed Floor Price.

(ii)

Adjustment for Stock Splits and Combinations.  If the Corporation shall at any
time, or from time to time after the date shares of the Series E Preferred Stock
are first issued (the "Original Issue Date"), effect a subdivision of the
outstanding Common Stock, the Floor Price and Assumed Floor Price in effect
immediately prior thereto shall be proportionately decreased, and conversely, if
the Corporation shall at any time or from time to time after the Original Issue
Date combine the outstanding shares of Common Stock, the Floor Price and Assumed
Floor Price then in effect immediately before the combination shall be
proportionately increased.  Any adjustment under this Section 7(d)(ii) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

(iii)

Adjustment for Certain Dividends and Distributions.  In the event the
Corporation at any time, or from time to time after the Original Issue Date,
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Floor Price
and Assumed Floor Price then in effect shall be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the
close of business on such record date, by multiplying the Floor Price and
Assumed Floor Price then in effect by a fraction:

(A)

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

(B)

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; provided, however, 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 Floor Price and
Assumed Floor Price shall be recomputed accordingly as of the close of business
on such record date and thereafter, the Floor Price and Assumed Floor Price
shall be adjusted pursuant to this Section 7(d)(iii) as of the time of actual
payment of such dividends or distributions.

(iv)

Adjustments for Other Dividends and Distributions.  In the event the Corporation
at any time or from time to time after the Original Issue Date shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of such Series E Preferred Stock
shall receive upon conversion thereof in addition to the number of shares of
Common Stock receivable thereupon, the amount of

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securities of the Corporation that they would have received had their Series E
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 receivable by them as aforesaid
during such period giving application to all adjustments called for during such
period under this paragraph (f) with respect to the rights of the holders of the
Series E Preferred Stock.

(v)

Adjustments to Floor Price and Assumed Floor Price for Certain Diluting Issues.

(A)

Special Definitions.  For purposes of this Section 7(d)(v), the following
definitions apply:

(1)

"Options" shall mean rights, options, or warrants to subscribe for, purchase or
otherwise acquire either Common Stock or Convertible Securities (defined below).

(2)

"Convertible Securities" shall mean any evidences of indebtedness, shares (other
than Common Stock and Series E Preferred Stock) or other securities convertible
into or exchangeable for Common Stock.

(3)

“Additional Shares of Common Stock" shall mean all shares of Common Stock issued
(or, pursuant to Section 7(d)(v)(C), deemed to be issued) by the Corporation
after the Original Issue Date; provided, that “Additional Shares of Common
Stock” shall not mean or include any shares of Common Stock issued or issuable:

(a)

upon conversion of shares of Series E Preferred Stock;

(b)

to officers, directors or employees of, or consultants to, the Corporation
pursuant to stock option or stock purchase plans or agreements on terms approved
by the Board of Directors, but not exceeding, at any one time, more than five
(5%) percent of the fully-diluted shares of Common Stock then issued and
outstanding (net of any repurchases of such shares), subject to adjustment for
all subdivisions and combinations;

(c)

in connection with any acquisition, joint venture or similar combination, as
full or partial consideration for the assets, securities or properties of any
other person, firm or corporation, whether by purchase, exchange, merger,
consolidation or like combination;

(d)

as a dividend or distribution on Series E Preferred Stock;

(e)

for which adjustment of the Floor Price and Assumed Floor Price is made pursuant
to Section 7(d); or

(f)

any shares of Common Stock issued or issuable as “Adjustment Shares” within the
meaning defined in the Subscription Agreement and in Section 7(b) above.  

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(B)

No Adjustment of Floor Price and Assumed Floor Price.  Any provision herein to
the contrary notwithstanding, no adjustment in the Floor Price and Assumed Floor
Price shall be made in respect of the issuance of Additional Shares of Common
Stock unless the consideration per share (determined pursuant to this Section
7(d) for an Additional Share of Common Stock issued or deemed to be issued by
the Corporation is less than the Floor Price and Assumed Floor Price in effect
on the date of, and immediately prior to such issue.

(C)

Deemed Issue of Additional Shares of Common Stock.  In the event the Corporation
at any time or from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided further that in any such case in which
Additional Shares of Common Stock are deemed to be issued:

(i)

No further adjustments in the Floor Price and Assumed Floor Price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;

(ii)

If such Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any increase in the consideration payable to
the Corporation, or decrease in the number of shares of Common Stock issuable,
upon the exercise, conversion or exchange thereof, the Floor Price and Assumed
Floor Price computed upon the original issue thereof (or upon the occurrence of
a record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities (provided, however, that no such adjustment of the Floor Price and
Assumed Floor Price shall effect Common Stock previously issued upon conversion
of the Series E Preferred Stock);

(iii)

Upon the expiration of any such Options or rights, the termination of any such
rights to convert or exchange, or the expiration of any rights related to such
Convertible Securities, the Floor Price and Assumed Floor Price, to the extent
in any way affected by or computed using such Options or Convertible Securities
(unless such Options or Convertible Securities were merely deemed to be included
in the numerator and denominator for purposes of determining the number of
shares of Common Stock outstanding for purposes of this Section 7(d)) shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
(and Convertible Securities that remain in effect) actually issued upon the
exercise of such Options or rights related to such Convertible Securities.

(iv)

No readjustment pursuant to clause (ii) or (iii) above shall have the effect of
increasing the Floor Price and Assumed Floor Price to an amount which exceeds
the lower of (a) the Floor Price and Assumed Floor Price on the original
adjustment date, or (b) the Floor Price and Assumed Floor Price that would have
resulted from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date.

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(D)

Adjustment of Floor Price and Assumed Floor Price Upon Issuance of Additional
Shares of Common Stock.  In the event this Corporation, at any time after the
Original Issue Date shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
7(d)(v)(C)) without consideration or for a consideration per share less than the
Floor Price and Assumed Floor Price in effect on the date of and immediately
prior to such issue, then and in such event, the Floor Price and Assumed Floor
Price shall be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying the Floor Price and Assumed Floor
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the total number of additional shares of Common Stock so issued
would purchase at the Floor Price and Assumed Floor Price in effect immediately
prior to such issuance, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue plus the
number of such Additional Shares of Common Stock so issued.  For the purpose of
the above calculation, the number of shares of Common Stock outstanding
immediately prior to such issue shall be calculated on a fully diluted basis, as
if all shares of Series E Preferred Stock and all Convertible Securities had
been fully converted into shares of Common Stock and any outstanding warrants,
options or other rights for the purchase of shares of stock or convertible
securities had been fully exercised (and the resulting securities fully
converted into shares of Common Stock, if so convertible) as of such date.

(E)

Determination of Consideration.  For purposes of this Section 7(d)(v), the
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock shall be computed as follows:

(i)

Cash and Property:  Such consideration shall:

1.

insofar as it consists of cash, be computed at the aggregate amount of cash
received by the Corporation excluding amounts paid or payable for accrued
interest or accrued dividends;

2.

insofar as it consists of property other than cash, be computed at the fair
value thereof at the time of such issue, as determined in good faith by the
Board of Directors; and

3.

in the event Additional Shares of Common Stock are issued together with other
shares or securities or other assets of the Corporation for consideration which
covers both, be the proportion of such consideration so received, computed as
provided in clauses (1) and (2) above, as determined in good faith by the Board
of Directors.

(ii)

Options and Convertible Securities.  The consideration per share received by the
Corporation for Additional Shares of Common Stock deemed to have been issued
pursuant to Section 7(d)(v), relating to Options and Convertible Securities
shall be determined by dividing

1.

the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
designed to protect against

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dilution) payable to the Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by

2.

the maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein designed to
protect against the dilution) issuable upon the exercise of such Options or
conversion or exchange of such Convertible Securities.

(vi)

Adjustment for Reclassification Exchange or Substitution.  If the Common Stock
issuable upon the conversion of the Series E Preferred Stock shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this paragraph (f)), then and in each such event the holder of each share of
Series E Preferred Stock shall have the right thereafter to convert such share
into the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other change, by
holders of the number of shares of Common Stock into which such shares of Series
E Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.

(vii)

Reorganization, Mergers, Consolidations or Sales of Assets.  If at any time or
from time to time there shall be a capital reorganization of the Common Stock
(other than a subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 7(d)) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation’s properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holders of the Series E Preferred Stock
shall thereafter be entitled to receive upon conversion of such Series E
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation or sale.  In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section 7(d) with respect to the
rights of the holders of the Series E Preferred Stock after the reorganization,
merger, consolidation or sale to the end that the provisions of this Section
7(d) (including adjustment of the Conversion Price then in effect and the number
of shares purchasable upon conversion of the Series E Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.

(viii)

Certificate of Adjustment.  In each case of an adjustment or readjustment of the
Conversion Price or the securities issuable upon conversion of the Series E
Preferred Stock, the Corporation shall compute such adjustment or readjustment
in accordance herewith and the Corporation’s Chief Financial Officer shall
prepare and sign a certificate showing such adjustment or readjustment, and
shall mail such certificate by first class mail, postage prepaid, to each
registered holder of the Series E Preferred Stock at the holder’s address as
shown in the Corporation’s books. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based.

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(e)

Notices of Record Date.  In the event of (A) any taking by the Corporation of a
record of the holders of any class or series of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution or (B) any reclassification or recapitalization of the
capital stock of the Corporation, any merger or consolidation of the Corporation
or any transfer of all or substantially all of the assets of the Corporation to
any other corporation, entity or person, or any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the Corporation shall
mail to each holder of Series E Preferred Stock at least 10 days prior to the
record date specified therein, a notice specifying (1) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (2) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective and (3) the time, if
any is to be fixed, as to when the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares, of Common Stock (or
other securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.

(f)

Fractional Shares.  No fractional shares of Common Stock shall be issued upon
conversion of the Series E Preferred Stock. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation shall pay cash
equal to the product of such fraction multiplied by the fair market value of one
share of the Corporation’s Common Stock on the date of conversion, as determined
in good faith by the Board of Directors.

(g)

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

(h)

Notices. Any notice required by the provisions of this Section 7 to be given to
the holders of shares of Series E Preferred Stock shall be deemed given (A) if
deposited in the United States mail, postage prepaid, or (B) if given by any
other reliable or generally accepted means (including by facsimile or by a
nationally recognized overnight courier service), in each case addressed to each
holder of record at his address (or facsimile number) appearing on the books of
the Corporation.

(i)

Payment of Taxes.  The Corporation will pay all transfer taxes and other
governmental charges that may be imposed in respect of the issue or delivery of
shares of Common Stock upon conversion of shares of Series E Preferred Stock.

(j)

No Dilution or Impairment.  The Corporation shall not amend its Articles of
Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, for the purpose of avoiding or seeking to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, without the approval of a majority of the then outstanding Series E
Preferred Stock.  

8.

No Reissuance of Preferred Stock.  Any shares of Series E Preferred Stock
acquired by the Corporation by reason of purchase, conversion or otherwise shall
be canceled, retired and eliminated from the shares of Series E Preferred Stock
that the Corporation shall be authorized to issue.  All such shares

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shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth in the Articles of
Incorporation or in any certificate of Determination creating a series of
Preferred Stock or any similar stock or as otherwise required by law.

9.

Severability.  If any right, preference or limitation of the Series E Preferred
Stock set forth herein is invalid, unlawful or incapable of being enforced by
reason of any rule, law or public policy, all other rights, preferences and
limitations set forth herein that can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall nevertheless
remain in full force and effect, and no right, preference or limitation herein
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.

Each of the undersigned declares under penalty of perjury that the matters set
out in the foregoing Certificate are true of his own knowledge.  Executed in New
York, New York on this __ day of September, 2004.  

________________________________

Name:

Gary Spaniak, Jr.

Title:

President

_______________________________

Name:

 Charles Pearlman

Title:

Assistant Secretary

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