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                                                                  EXHIBIT 10.40B


                                   EXHIBIT B
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                          CERTIFICATE OF DESIGNATION
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                         CERTIFICATE OF DESIGNATIONS OF
                      SERIES A CONVERTIBLE PREFERRED STOCK
                                       OF
                       ANCHOR PACIFIC UNDERWRITERS, INC.,
                             A DELAWARE CORPORATION
                       (Pursuant to Section 151(g) of the
                       Delaware General Corporation Law)


     The undersigned, James R. Dunathan and Earl Wiklund hereby certify that:

     I.   They are the duly elected and acting President and Secretary,
respectively, of Anchor Pacific Underwriters, Inc., a Delaware corporation (the
"Corporation").

     II.  The Certificate of Incorporation of the Company authorizes 2,000,000
shares of preferred stock, par value $0.02 per share ("Preferred Stock"), of
which none are outstanding.

     III. The following is a true and correct copy of resolutions duly adopted
by the Board of Directors at a meeting duly held on March 9, 2000, which
constituted all requisite action on the part of the Corporation for adoption of
such resolutions.

                                  RESOLUTIONS

     WHEREAS, the Board of Directors of the Corporation (the "Board of
Directors") is authorized to provide for the issuance of shares of Preferred
Stock in series, and by filing a certificate pursuant to the applicable law of
the State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designations, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof; and

     WHEREAS, the Board of Directors desires, pursuant to its authority as
aforesaid, to designate a new series of Preferred Stock, set the number of
shares constituting such series and fix the rights, preferences, privileges and
restrictions of such series;

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

     1.   Designation, Amount, Par Value, and Dividends. The series of Preferred
Stock shall be designated as the Series A Convertible Preferred Stock (the
"Series A Preferred Stock"), and the number of shares so designated shall be
1,853,300. The par value of each share of Series A Preferred Stock shall be
$0.02. The holders of shares of Series A Preferred Stock, in preference to the
holders of shares of Common Stock and any other Junior Stock, shall be entitled
to receive, when, as and if declared by the Board of Directors, out of the
Available Assets, cumulative cash dividends at an annual rate per share equal to
8%, compounded annually, of the Series A Liquidation Value from and after the
Series A Issue Date, as adjusted for any stock splits, combinations or dividends
with respect to such share of Series A Preferred Stock, and provided that no
dividends shall be paid on or declared and set apart on the Common Stock or
Junior Stock until all accumulated and unpaid dividends with respect to the
shares of Series A Preferred Stock shall have been paid or declared and set
aside. Dividends payable pursuant to this Section shall begin to accrue and be
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cumulative from the Series A Issue Date, whether or not earned or declared.  The
amount of dividends so payable shall be determined on the basis of twelve 30-day
months and a 360-day year.  Dividends paid on the shares of Series A Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.

     2.   Liquidation Preference.

          (a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, or in the event of its
insolvency, the holders of the Series A Preferred Stock shall be entitled to be
paid out of the Available Assets, prior and in preference to any distribution to
the holders of Common Stock or any other Junior Stock, and subject to the
liquidation rights and preferences of any class or series of preferred stock
designated in the future to be senior to, or on a parity with, the Series A
Preferred Stock with respect to liquidation preferences, an amount equal to the
greater of (i) the Series A Liquidation Value for each outstanding share of
Series A Preferred Stock, or (ii) an amount per share equal to the amount such
holders would have received had the Series A Preferred Stock been converted to
Common Stock immediately prior to such liquidation, dissolution or winding up.
If, upon liquidation, dissolution or winding up of the Corporation, the
Available Assets shall be insufficient to pay the holders of Series A Preferred
Stock the full amount to which they otherwise would be entitled to receive, the
holders of Series A Preferred Stock shall share ratably in any distribution of
Available Assets pro rata in proportion to the respective liquidation preference
amounts to which they would otherwise be entitled to receive upon liquidation if
all liquidation preference dollar amounts owing to the holders of Series A
Preferred Stock were paid in full.

          (b) After payment to the holders of the Series A Preferred Stock of
the amount set forth in subsection 2(a), the then remaining assets and funds of
the Corporation legally available for distribution, if any, shall be distributed
to the holders of the Common Stock.

          (c) The amounts set forth above and throughout this Section shall be
subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, reverse stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving a change in the capital
structure of the Series A Preferred Stock.

          (d) For purposes of this Section, a liquidation, dissolution or
winding up of the Corporation shall be deemed to be occasioned by, or to include
(i) the acquisition of the Corporation by another entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the Corporation), or
(ii) a sale of all or substantially all of the assets of the Corporation; or
(iii) a sale of authorized and unissued shares of the Corporation, unless in any
of the cases described in clauses (i), (ii) or (iii), the Corporation's
shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration for the Corporation's acquisition or sale or otherwise)
hold at least 50% of the voting power of the surviving or acquiring entity.
Each holder of Series A Preferred Stock, upon the occurrence of an event
described in the immediately preceding sentence, shall have the option of
electing treatment of his shares of Series A Preferred Stock under either this
Section 2 or under Section 5(g) hereof by giving the Corporation written notice
of such election at least ten days prior to the close of such transaction,
unless such holders received notice of the transaction less than 20 days prior
to the close of such transaction, and

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then the notice of election shall be given within 10 days after such notice of
the transaction. In any of such events, if the consideration received by the
Corporation is other than cash, its value will be deemed to be such
consideration's fair market value, as determined reasonably by the Board of
Directors.

     3.   Redemption.  The Series A Preferred Stock shall not be redeemable.

     4.   Voting Rights; Directors.

          (a) Except as expressly provided herein, including Section 7, or by
the Certificate of Incorporation, by the bylaws of the Corporation or as
required by law, the holder of each share of the Series A Preferred Stock shall
be entitled to the number of votes equal to the number of full shares of Common
Stock into which such shares of Series A Preferred Stock could be converted and
(except as expressly provided herein or required by law, voting together with
the Common Stock as a single class) shall have voting rights and powers equal to
the voting rights and powers of the Common Stock and shall be entitled to notice
of any shareholders' meeting, which shall be given in accordance with the bylaws
of the Corporation.  Fractional votes shall not, however, be permitted and any
fractional voting rights available on an as-converted basis (after aggregating
all shares into which shares of Series A Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number (with one-half
being rounded downward).

          (b) In addition to those persons entitled to call a special meeting of
the Corporation's shareholders pursuant to the Delaware Corporation Laws,
special meetings of the Corporation's shareholders may be called by vote of not
less than a majority of the outstanding shares of Series A Preferred Stock.

          (c) The Board of Directors of the Corporation shall consist of between
seven (7) and thirteen (13) members, with the exact number to be fixed from time
to time by the affirmative vote of a majority of the Board of Directors.  At
each meeting or pursuant to each consent of the Corporation's shareholders for
the election of directors, the holders of the Series A Preferred Stock, voting
together as a separate class, shall be entitled to elect five (5) directors to
the Board of Directors.  In the case of any vacancy (other than a vacancy caused
by removal) in the office of a director occurring among the directors elected by
the holders of the Series A Preferred Stock pursuant to this Section, the
remaining directors so elected by the Series A Preferred Stock may by
affirmative vote of a majority thereof (or the remaining director so elected if
there be but one, or if there are no such directors remaining, by the
affirmative vote of the Series A Preferred Stock), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant.  Any director who shall have been elected
by the holders of the Series A Preferred Stock or any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of the Series A Preferred Stock, given either at
a special meeting of such shareholders duly called for that purpose or pursuant
to a written consent of shareholders, and any vacancy thereby created may be
filled by the holders of the Series A Preferred Stock represented at the meeting
or pursuant to unanimous written consent.

     5.   Conversion.  The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

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          (a) Right to Convert.  Each share of Series A Preferred Stock shall be
              ----------------
convertible, at the option of the holder thereof, at any time after the Series A
Issue Date, at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing the Series A Stated Value by the then applicable
Conversion Price, determined as hereinafter provided, in effect on the date the
certificate is surrendered for conversion (hereinafter sometimes the "Conversion
Rate").  The initial Conversion Price per share for Series A Preferred Stock (as
from time to time in effect, the "Conversion Price") shall be $.1079156.  Such
initial Conversion Price shall be adjusted as hereinafter provided.

          (b) Automatic Conversion.  Each share of Series A Preferred Stock
              --------------------
shall automatically be converted into shares of Common Stock at the then
effective Conversion Price as provided in Section 5(a) above, after adjustment
as provided elsewhere in this Section 5,

              (i) immediately prior to the closing of an underwritten public
offering of the Corporation's Common Stock (A) immediately following which
offering the Corporation's Common Stock trades on the New York Stock Exchange or
the Nasdaq National Market or any national securities exchange with recognition
by regulatory authorities not materially different from, and listing standards
not less stringent than those imposed by, the Nasdaq National Market and (B) at
a price per share of Common Stock (adjusted for any stock splits, stock
dividends and recapitalizations of or on the Common Stock) not less than Five
Dollars ($5.00) for each share of Common Stock into which the Series A Preferred
Stock would then convert, and which results in gross proceeds to the Corporation
of at least Ten Million Dollars ($10,000,000); or

              (ii) at the election of the holders of at least a majority of the
Series A Preferred Stock, voting as a separate class, to automatically convert
all of the outstanding shares of Series A Preferred Stock.

          (c) Mechanics of Conversion.  Before any holder of Series A Preferred
              -----------------------
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for such stock, and
shall give written notice to the Corporation at such office that it elects to
convert the same and shall state therein the name or names in which it wishes
the certificate or certificates for shares of Common Stock to be issued.  The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder a certificate or certificates for the number of shares of
Common Stock to which it shall be entitled as aforesaid.  Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of surrender of the shares of Series A Preferred Stock to be converted, 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 date.

          (d) Conversion Price Adjustments of Preferred Stock for Certain
Dilutive Issuances, Splits and Combinations.

              (i)  The Conversion Price of Series A Preferred Stock shall be
subject to adjustment from time to time as follows:

                    (A)  Upon each issuance by this Corporation of any
Additional Stock (as defined below) after the date the first share of Series A
Preferred Stock was originally

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issued, without consideration or for a consideration per share less than the
Conversion Price for such series in effect immediately prior to the issuance of
such Additional Stock, the Conversion Price for such series in effect
immediately prior to each issuance shall forthwith (except as otherwise provided
in this clause (i)) be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock that the aggregate consideration received by
the Corporation for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock.

                    (B) No adjustment of the Conversion Price for Series A
Preferred Stock shall be made in an amount less than one cent ($.01) per share,
provided that any adjustments that are not required to be made by reason of this
sentence shall be carried forward and shall be either taken into account in any
subsequent adjustment made prior to three (3) years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of three (3) years from the date of the event giving rise to the adjustment
being carried forward, and upon such adjustment the Conversion Price for such
Preferred Stock shall be rounded up or down to the nearest cent. Except to the
limited extent provided for in subsections 5(d)(i) (E)(3), or (E)(4) or
5(d)(iv), no adjustment of such Conversion Price pursuant to this subsection
5(d)(i) shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.

                    (C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by this Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.

                    (D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith by
the Board of Directors irrespective of any accounting treatment.

                    (E) In the case of the issuance of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible into
or exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 5(d)(i) and subsection 5(d)(ii):

                         (1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (whether or not then exercisable) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the sum of the consideration (determined in the manner
provided in subsections 5(d)(i)(C) and (d)(i)(D)), if any, received by the
Corporation upon the issuance of such options or rights, and the exercise price
provided for in such options or rights for the Common Stock covered thereby.

                         (2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (whether or not then
convertible or exchangeable) for any such convertible or exchangeable securities
or upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent

                                      -5-
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conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the sum of the consideration, if any, received by the
Corporation for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), and the
additional consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities (other than the principal amount of
convertible securities to the extent the Corporation has received such
consideration as of the issuance thereof) or the exercise of any related options
or rights.

                         (3) In the event of any change in the number of shares
of Common Stock deliverable upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable securities,
including, but not limited to, a change resulting from the antidilution
provisions thereof, the Conversion Price of the Series A Preferred Stock, to the
extent in any way affected by or computed using such options, rights or
securities, shall be recomputed to reflect such change.

                         (4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities, shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
(and convertible or exchangeable securities that remain in effect) actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights
related to such securities.

               (ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 5(d)(i)(E)) by this
Corporation after the date the first share of Series A Preferred Stock was
originally issued other than:

                    (A) Common Stock issued pursuant to a transaction described
in subsection 5(d)(iii) hereof;

                    (B) Common Stock issuable or issued to employees or service
providers of this Corporation directly or pursuant to a stock option plan or
restricted stock plan at the then current fair market value, as approved and
determined by the Board of Directors of this Corporation; or

                    (C) Common Stock issued upon conversion of shares of Series
A Preferred Stock.

               (iii) In the event the Corporation should at any time or from
time to time after the date the first share of Series A Preferred Stock was
originally issued fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the

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Conversion Price of the Series A Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.

               (iv) If the number of shares of Common Stock outstanding at any
time after the date the first share of Series A Preferred Stock was originally
issued is decreased by a reverse-split or combination of the outstanding shares
of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.

          (e)  Other Distributions.  In the event this Corporation shall declare
               -------------------
a distribution payable in securities of other entities, evidences of
indebtedness issued by this Corporation or other entities, assets (excluding
cash dividends) or options or rights not referred to in subsection 5(d)(iii),
then, in each such case for other purposes of this subsection 5(e), the holders
of Series A Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Common Stock of the Corporation into which their shares of Series A Preferred
Stock are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.

          (f)  Recapitalizations.  If at any time or from time to time there
               -----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 5 or Section 2), provision shall be made so that the holders of
Series A Preferred Stock shall thereafter be entitled to receive upon conversion
of such Preferred Stock the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of such number of
shares of Common Stock deliverable upon conversion immediately prior to that
recapitalization would have been entitled on such recapitalization.  In any such
case, appropriate adjustment shall be made in the application of the provisions
of this Section 5 with respect to the rights of the holders of Series A
Preferred Stock after the recapitalization to the end that the provisions of
this Section 5 (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of Series A Preferred Stock)
shall be applicable after that event as nearly equivalent as may be practicable.

          (g)  Capital Reorganization, Merger or Sale 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 5) 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 A Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series A
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,
consolidation or sale, to which a holder of Common Stock issuable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation, or sale or an amount of cash receivable as if the Series A
Preferred Stock had converted into shares of Common Stock.  In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of the Series A
Preferred Stock after the reorganization, merger, consolidation or sale to the
end that the provisions of this Section 5 shall be applicable after that event
in as nearly equivalent a manner as

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may be practicable. Each holder of Series A Preferred Stock upon the occurrence
of an event set forth in this Section 5(g), shall, subject to automatic
conversion pursuant to subsection 5(b), have the option of electing treatment of
his shares of Series A Preferred Stock under either this Section 5(g) or Section
2 hereof, if applicable, by giving the Corporation written notice of such
election at least ten days prior to the close of such transaction unless such
holders received notice of the transaction less than 20 days prior to the close
of such transaction, then the notice of election shall be given within 10 days
after such notice.

          (h)  Certificates as to Adjustments.  Upon the occurrence of each
               ------------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause independent public
accountants selected by the Corporation to verify such computation and prepare
and furnish to each holder of Series A Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based.  The Corporation shall, upon the
written request at any time of any holder of Series A Preferred Stock furnish or
cause to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of Series A
Preferred Stock.

          (i)  Issue Taxes.  The Corporation shall pay any and all issue and
               -----------
other 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
hereto; provided, however, that the Corporation shall not be obligated to pay
any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.

          (j)  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 A 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 the Series A 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 the Series A 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,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate of
Incorporation.  For the purpose of increasing the number of shares of Common
Stock authorized to provide enough Common Stock to fully convert the Series A
Preferred Stock, the Series A Preferred Stock shall vote in favor of such
amendment to the Certificate of Incorporation.

          (k)  No Fractional Shares.  No fractional share shall be issued upon
               --------------------
the conversion of any share or shares of Series A Preferred Stock.  All shares
of Common Stock (including fractions thereof) issuable upon conversion of more
than one share of Series A Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share.  If, after the aforementioned aggregation,
the conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay the
holder otherwise entitled to such fraction a sum in cash equal to

                                      -8-
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the fair market value of such fraction on the date of conversion (as determined
in good faith by the Board of Directors of the Corporation).

     6.   Amendment.  Any term relating to the Series A Preferred Stock may be
amended and the observance of any term relating to the Series A Preferred Stock
may be waived (either generally or in a particular instance) only with the vote
or written consent of holders of a majority of the outstanding shares of the
Series A Preferred Stock.  Any amendment so effected shall be binding upon the
Corporation and any holder of the Series A Preferred Stock.

     7.   Protective Provisions.  1)  So long as any shares of Series A
Preferred Stock remain outstanding, the Corporation shall not, without the vote
or written consent by the holders of a majority of the outstanding shares of
Series A Preferred Stock, voting as a separate class, authorize:

               (i)    the declaration, setting aside or payment of any dividend
or distribution with respect to any shares of equity securities of the
Corporation;

               (ii)   any increase in the authorized number of shares of any
class or series of capital stock of the Corporation;

               (iii)  the redemption or repurchase of any shares of equity
securities, except for the repurchase of shares at cost or without cost pursuant
to rights granted to the Corporation under employee stock option or stock
repurchase agreements;

               (iv)   any amendment to, or waiver of, any provision of the
Certificate of Incorporation or bylaws of the Corporation or any corporate
action that would change any of the rights, preferences, privileges of the
Series A Preferred Stock or limitations provided for herein for the benefit of
the Series A Preferred Stock or which would materially adversely affect the
rights of the holders of the Series A Preferred Stock;

               (v)    the creation or issuance of, or the obligation to create
or issue, any shares of any class or series of capital stock of the Corporation,
or any other securities convertible into capital stock of the Corporation, other
than (i) capital stock issuable or issued to employees or service providers of
this Corporation directly or pursuant to a stock option or restricted stock plan
approved by the Board of Directors of this Corporation or (ii) capital stock
issuable upon the conversion or exchange of any convertible or exchangeable
securities outstanding as of the date hereof or the issuance of which was
approved pursuant to this subsection;

               (vi)   the sale, lease, exchange or transfer, in one transaction
or a series of related transactions, of assets of the Corporation having a fair
market value in excess of $100,000, unless the Corporation's stockholders
immediately prior to such sale, lease, exchange or transfer will, as a result of
such transaction hold (by virtue of securities issued as consideration in such
transaction) at least 50% of the voting power of the purchasing entity);

               (vii)  any liquidation, dissolution or winding up of the
Corporation;

               (viii) any reorganization, merger or consolidation in which the
Corporation is not the surviving entity, or which will result in the
Corporation's stockholders immediately prior to such transaction not holding at
least 50% of the voting power of the surviving or continuing entity;

                                      -9-
<PAGE>

               (ix)   any change in the primary business of the Corporation and
its subsidiaries from the business of providing insurance claims management,
administration and related services to third parties;

               (x)    any transaction which would result in the Corporation, or
any Subsidiary of the Corporation, incurring, assuming or suffering to exist,
any new bank indebtedness that exceeds existing bank indebtedness of the
Corporation on the Series A Issue Date by an amount in excess of one hundred
thousand dollars ($100,000);

               (xi)   the acquisition (including by merger or consolidation with
the Corporation or any of its Subsidiaries) by the Corporation or any of its
Subsidiaries of shares of capital stock of or any other ownership interest in,
or the acquisition (including by purchase, lease or exchange) of all or any
substantial portion of the assets of, any entity (other than the formation of
any new Subsidiary or joint venture in the ordinary course of the Corporation's
business which has been approved by a majority of the Board of Directors);

               (xii)  the creation or issuance of any stock options, warrants or
other Common Stock Equivalents, other than options issued to employees or
service providers of this Corporation directly or pursuant to a stock option
plan approved by the Board of Directors of this Corporation granted at the then
fair market value of such Common Stock as determined by the Board of Directors;
or

               (xiii) any transaction substantially similar to any of those
enumerated in this Section.:

          (b) In addition to any other rights provided by law or otherwise
provided herein, so long as shares of the Series A Preferred Stock remain
outstanding.

               (i)    the Board of Directors of the Corporation shall not exceed
nine members; and

               (ii)   the holders of the Series A Preferred shall elect a
majority of the Corporation's Board of Directors voting separately as a single
class.

     8.  No Reissuances of Series A Preferred Stock.  No share or shares of
Series A Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be returned to the status of undesignated shares of Preferred Stock.

     9.   Certain Covenants.  Any registered holder of Series A Preferred Stock
may proceed to protect and enforce its rights and the rights of such holders by
any available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision contained
herein or in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.

     10.  No Dilution or Impairment.  The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
capital stock or 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 of the Series A Preferred Stock set

                                      -10-
<PAGE>

forth herein, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of such Preferred
Stock against dilution or other impairment.

     11.  Notices.  In the event of:

          (a) Any taking by the Corporation of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of capital stock of any
class or any other securities or property, or to receive any other right, or

          (b) Any capital reorganization of the Corporation, 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, or
any other entity or person, or

          (c) Any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation,

     then and in each such event the Corporation shall mail or cause to be
mailed to each holder of Series A Preferred Stock a notice specifying (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right and a description of such dividend, distribution or right
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective.  Such notice shall be mailed by
first class mail, postage prepaid, at least 20 days prior to the date specified
in such notice on which such action is to be taken.

     12.  Certain Definitions.

     "Available Assets" shall mean, upon the liquidation, dissolution or winding
up of the Corporation, all assets of the Corporation available for distribution
to holders of all classes of the Corporation's capital stock, whether such
assets are capital, surplus or earnings.

     "Junior Stock" shall mean any capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock.

     "Series A Issue Date" shall mean, as to any share of Series A Preferred
Stock, the date of original issuance of such share of Series A Preferred Stock.

     "Series A Liquidation Value" as of any date shall mean an amount per share
equal to the Series A Stated Value, plus all accrued and unpaid dividends
thereon.

     "Series A Stated Value" shall mean $1.079156.

     "Subsidiary" of any Person means any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.

                                      -11-
<PAGE>

     RESOLVED FURTHER, that the President and Secretary of the Corporation be,
and they hereby are, authorized and directed to prepare, execute, verify, and
file in Delaware, a Certificate of Designation in accordance with these
resolutions and as required by law.

     IN WITNESS WHEREOF, the undersigned declare under penalty of perjury that
they have read the foregoing Certificate of Designations and know the contents
thereof, and that the statements therein are true and correct of their own
knowledge.



Executed at Concord, California, on March 9, 2000.


                                    By:/s/ James R. Dunathan
                                       -------------------------------
                                           James R. Dunathan, President


                                    By:/s/ Earl Wiklund
                                       -------------------------------
                                           Earl Wiklund, Secretary

                                      -12-