CERTIFICATE AND STATEMENT OF DETERMINATION OF
   RIGHTS AND PREFERENCES OF SERIES E 8% CUMULATIVE CONVERTIBLE
                  NON-VOTING PREFERRED STOCK OF
                      BIOMUNE SYSTEMS, INC.

     The undersigned, being the Chief Executive Officer and Secretary of Biomune
Systems, Inc., a Nevada corporation, do hereby certify and declare as follows:

               1. The name of the corporation is Biomune Systems, Inc.

               2. Attached hereto as Exhibit A and  incorporated  herein by this
          reference is a true and correct copy of the  Designation of Rights and
          Preferences of Series E 8% Cumulative Convertible Non-Voting
          Preferred Stock of Biomune Systems, Inc.

               3. The Designation of Rights and Preferences  described above was
          approved  unanimously  by the  members  of the Board of  Directors  of
          Biomune  Systems,  Inc.  by  consent in lieu of  meeting  pursuant  to
          Chapter 78.315 of the Nevada Revised Statutes.

     IN WITNESS  WHEREOF,  we have signed this Certificate this 7 day of January
1998.

                         BIOMUNE SYSTEMS, INC., a Nevada corporation


                         By: /s/ David G. Derrick
                             ---------------------------
                               David G. Derrick, Chief Executive Officer


                          By: /s/ Christopher D. Illick
                             ---------------------------
                        Christopher D. Illick, Secretary


Attested and Verified:

/s/ Christopher D. Illick
----------------------------

Christopher D. Illick, Secretary



<PAGE>


                    STATE OF UTAH       )
                         :ss
COUNTY OF Salt Lake )

     On the 7th day of January,  1998,  David G. Derrick,  who, being by me duly
sworn, did say that he is the Chief Executive Officer of Biomune Systems,  Inc.,
a Nevada corporation,  and that the foregoing instrument was signed on behalf of
such Corporation by authority of its Bylaws and such officer  acknowledged to me
that the Corporation executed the same.


/s/ Carol S. MacKay
------------------------------------------
NOTARY PUBLIC

My Commission Expires: 10/16/99



                         STATE OF New York        )
                    :ss
                    COUNTY OF New York  )

     On the _ day of December,  1997,  Christopher  D. Illick,  who, being by me
duly sworn, did say that he is the Secretary of Biomune Systems,  Inc., a Nevada
corporation,  and that the  foregoing  instrument  was  signed on behalf of such
Corporation by authority of its Bylaws and such officer  acknowledged to me that
the Corporation executed the same.


/s/ Myrna Karger
------------------------------------------
NOTARY PUBLIC

My Commission Expires: Jan. 31, 1999




<PAGE>


                           EXHIBIT A

                     BIOMUNE SYSTEMS, INC.

             DESIGNATION OF RIGHTS AND PREFERENCES
                               OF
 SERIES E 8% CUMULATIVE CONVERTIBLE NON-VOTING PREFERRED STOCK

Pursuant to the authority  vested in the Board of Directors of BIOMUNE  SYSTEMS,
INC., a Nevada corporation (the ACompany@), in its Articles of Incorporation and
as permitted by Section 602 of the Nevada Private  Corporations  Act, as amended
(the ANevada Act@),  the Company=s  Board of Directors  does hereby  establish a
series of the  Company=s  Preferred  Stock  designated as Series E 8% Cumulative
Convertible  Non-Voting  Preferred  Stock (ASeries E Preferred  Stock@) and does
hereby designate the rights, preferences, privileges and other attributes of the
shares of Series E Preferred Stock, as follows:

     1.  Designation and Number of Shares.  A series of the Company=s  Preferred
Stock  is  hereby  established,  to be  designated  and  known as  ASeries  E 8%
Cumulative  Convertible  Non-Voting Preferred Stock@ (hereinafter referred to as
the ASeries E Preferred  Stock@),  consisting of thirty thousand (30,000) shares
of the authorized and unissued shares of the Company=s Preferred Stock,  $0.0001
par value per share. The Company shall from time to time, in accordance with the
laws of the State of Nevada,  increase the number of shares of its Common Stock,
$0.0001  par  value  per  share,  if at any time the  number  of  shares  of the
Company=s  Common Stock remaining  unissued and available for issuance shall not
be sufficient  to permit  conversion  of the Series E Preferred  Stock  provided
herein.


     2.  Dividends.  The holders of shares of Series E Preferred  Stock shall be
entitled  to  receive  an annual  dividend  out of any of the  Company=s  assets
legally  available  therefor,  prior and in  preference  to any  declaration  or
payment of any dividend on the Common Stock of the Company, at the rate of eight
percent (8%) per annum on the stated  value of the Series E Preferred  Stock (or
$80.00 per share of Series E Preferred Stock).  Dividends will be paid either in
cash or in additional  shares of Series E Preferred  stock at the  discretion of
the Board of  Directors  to  holders  of record of shares of Series E  Preferred
Stock as they  appear on the books and  records of the  Company  on such  record
dates not less than ten (10) days nor more than  sixty (60) days  preceding  the
payment dates thereof, as may be fixed by the Board of Directors of the Company.
Dividends  shall be fully  cumulative and shall accrue from the date of original
issuance of the Series E Preferred Stock.  Once dividends are paid on the Series
E  Preferred  Stock,  holders  of shares of Series E  Preferred  Stock  will not
participate  in dividends  paid to holders of Common Stock.  Except as described
below,  no dividends  shall be paid or declared and set apart for payment on any
class or  series  of  shares of the  Company  that are  junior  to the  Series E
Preferred Stock for any period unless full  cumulative  dividends have been paid
ro  contemporaneously  are  declared  and paid or set apart for  payment  on the
Series E Preferred  Stock.  A dividend  payable in shares of Common  Stock or in
shares of another  class of shares  junior to the Series E Preferred  Stock may,
however,  be made.  Dividends on the Series E Preferred Stock may, at the option
of the  Company=s  Board of  Directors,  be paid in either cash or in additional
shares of Series E Preferred Stock; provided, however, that if accrued dividends
on the  Series E  Preferred  Stock  are paid in  additional  shares  of Series E
Preferred Stock,  accrued dividends paid subsequent thereto shall not be paid on
shares of Series E Preferred Stock that were previously paid as stock dividends.
Holders of Series E Preferred  Stock shall not  participate in excess  dividends
remaining following payment of all accrued and unpaid dividends owing to holders
of Series E Preferred Stock.

          3.   Liquidation Preference.

(a) In the event of any voluntary or  involuntary  liquidation,  dissolution  or
winding up of the  Company,  the  holders of Series E  Preferred  Stock shall be
entitled to receive out of the assets of the Company  available for distribution
to shareholders  before any distribution or payment is made to holders of shares
of Common Stock, or to holders of any other shares of the Company ranking junior
upon liquidation to the Series E Preferred Stock,  liquidation  distributions in
the amount of One Thousand  Dollars  ($1,000.00)  per share plus all accrued and
unpaid  regular or special  dividends,  if any,  multiplied by 133%,  before any
payment is made to holders of shares of the Company=s equity securities that are
junior to the Series E Preferred  Stock.  If upon any  voluntary or  involuntary
liquidation, dissolution or winding up of the Company, the assets of the Company
shall be  insufficient  to make the full payment on the Series E Preferred Stock
as described in the immediately preceding sentence,  and similar payments on any
other class of shares ranking on a parity with the Series E Preferred Stock upon
liquidation,  then the holders of the Series E Preferred Stock and of such other
class of shares  will share  ratably in any such  distribution  of assets of the
Company in proportion to the full respective distributable amounts to which they
are entitled.

(b) After payment to the holders of the Series E Preferred  Stock of the amounts
set forth in  subparagraph  3(a) above,  the holders of Series E Preferred Stock
will not be entitled to any further participation in any distribution or payment
by the Company, and the entire remaining assets and funds of the Company legally
available for  distribution,  if any, shall be distributed  among the holders of
shares of Common Stock in  proportion to the shares of Common Stock then held by
them.

(c) 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  that does not  involve a  distribution  by the Company of cash or other
property  to the  holders  of shares of  Common  Stock,  shall be deemed to be a
liquidation, dissolution or winding up of the Company within the meaning of this
Section 3, but rather shall be subject to the provisions of Section 6 below.

          4.   Voting Rights.

(a) Except as otherwise  expressly provided herein or as required by Nevada law,
the holders of Series E Preferred  Stock shall not be entitled to voting rights,
except  that  without the  approval of holders of a majority of the  outstanding
shares of Series E Preferred Stock,  the Company will not (i) authorize,  create
or issue  any  shares  of any class or  series  ranking  senior to the  Series E
Preferred  Stock as to liquidation  rights;  (ii) amend,  alter or repeal by any
means the Company=s  Articles of  Incorporation  if the powers,  preferences  or
special  rights of the Series E Preferred  Stock would be  materially  adversely
affected;  or (iii) become subject to any  restriction on the Series E Preferred
Stock other than  restrictions  arising  solely under the Nevada Act or existing
under the Company=s Articles of Incorporation as in effect on December 20, 1997.
Upon  conversion of shares of Series E Preferred  Stock by holders  thereof into
Common Stock of the Company, holders (to the extent of their Common Stock) shall
be entitled to voting rights  pertaining to the Common Stock  received upon such
conversion.

5.  Conversion  of Series E Preferred  Stock.  The holders of shares of Series E
Preferred Stock shall have the following conversion rights.

(a) Right to Convert.  Subject to the Conversion Limitation set forth in Section
5(b) below,  each share of Series E Preferred Stock may be converted as provided
below into the number of shares of the  Company=s  Common  Stock  determined  by
dividing  $1,000.00 plus any accrued and unpaid  dividends by an amount equal to
the Market Price (as defined below) less 42%. The applicable  denominator in the
formula set forth in the foregoing  sentence  shall be referred to herein as the
AConversion  Factor.@ AMarket Price@ shall mean the average closing bid price of
the Company=s Common Stock for the five (5) trading days  immediately  preceding
the applicable  Conversion Date (as defined below),  as reported by the National
Association  of  Securities  Dealers  Automated  Quotation  System or such other
inter-dealer  system as may list the  Company=s  Common  Stock.  Subject  to the
Conversion  Limitation set forth in Section 5(c) below, each conversion shall be
effected by the holder  surrendering the certificate(s) for the shares of Series
E Preferred  Stock to be converted to the Company with a Conversion  Certificate
executed by the holder for not less than $50,000.00  aggregate conversion amount
including any accrued and unpaid regular and special  dividends and accompanied,
as required by the Company, by proper assignment.  The date of execution of such
Conversion Certificate and delivery by facsimile to the Company at (801)466-3741
shall be defined as the AConversion Date.@ Upon conversion the Company shall use
its  reasonable  best efforts to deliver to the holder  certificates  evidencing
shares of the  Company=s  Common  Stock  within  five (5)  business  days of the
Conversion Date. The Company shall use reasonable best efforts to deliver to the
holder  certificates  evidencing shares of Series E Preferred Stock that are not
converted  within three (3) business days of the Conversion date. In the event a
merger,  consolidation or sale of all or substantially  all of the assets of the
Company or a similar  business  combination  involving  the Company,  all of the
shares  of  Series E  Preferred  Stock,  at the  option  of the  holder,  may be
converted  into the  number of shares of Common  Stock  into which the shares of
Series E  Preferred  Stock are  convertible  at the time of the  closing of such
transaction;  subject,  however,  to the  redemption  rights of the  Company  as
provided below.

(b) Conversion Limitations.  Notwithstanding the conversion rights regarding the
Series E Preferred Stock set forth in Section 5(a) above,  any single holder (or
affiliated  holders)  may not at any time hold  shares of the  Company=s  Common
Stock  exceeding  4.9% of the total number of issued and  outstanding  shares of
Common  Stock.  Thus,  any holder or group of  affiliated  holders  will only be
allowed  to convert  shares of Series E  Preferred  Stock into  shares of Common
Stock in an amount such that such  holder=s  ownership of shares of Common Stock
does not exceed  4.9% of the total  number of issued and  outstanding  shares of
Common Stock.

(c) Mechanics of Conversion. Before any holder of Series E Preferred Stock shall
be entitled to convert the same into shares of Common  Stock,  such holder shall
surrender the certificate or certificates  thereof, duly endorsed, at the office
of the  Company  or of any  transfer  agent  for  such  stock  with  the form of
conversion  certificate  executed by the holder thereof,  or a specified portion
thereof  (as  provided  in the  Conversion  Certificate  and for not  less  than
$50,000.00  aggregate conversion amount including accrued and unpaid regular and
special  dividends,  if any) and  accompanied,  if required by the  Company,  by
proper assignment in blank, and shall give written notice to the Company at such
office that such holder  elects to convert the same and shall state  therein the
name or names into which such holder wishes the certificate or certificates  for
shares of Common Stock to be issued.  The Company 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 such holder shall
be entitled as aforesaid.  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) Adjustments  for  Combinations or Subdivisions of Common Stock. In the event
the  Company at any time or from time to time after the date on which a share of
Series E Preferred  Stock was first issued shall  declare or pay any dividend on
the Common  Stock  payable in shares of Common  Stock or in any right to acquire
shares of Common Stock, or shall effect a subdivision of the outstanding  shares
of Common Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise), or in the event the outstanding shares of Common
Stock shall be combined or consolidated,  by reclassification or otherwise, into
a lesser  number of shares of Common  Stock,  then the Series E Preferred  Stock
conversion  formula set forth in Section 5(a) above in effect  immediately prior
to such event  shall,  concurrently  with the  effectiveness  of such event,  be
proportionately increased or decreased, as appropriate.

(e) Other Distributions. In the event the Company shall at any time or from time
to time 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 Company or any of its subsidiaries,  if any, then in each such
event a  provision  shall be made so that the  holders  of  shares  of  Series E
Preferred Stock shall receive,  upon the conversion  thereof,  the securities of
the Company that they would have  received  had their  Series E Preferred  Stock
been converted into shares of Common Stock on the date of such event.

(f) No  Impairment.  The  Company  will not,  by  amendment  to its  Articles 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 of 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 Series E Preferred Stock against
impairment.   No  amendment   shall  be  made  to  the  Company=s   Articles  of
Incorporation  that would alter or change the powers,  preferences or privileges
of the shares of Series E Preferred Stock so as to affect them adversely without
the vote or approval  of the  holders of at least a majority of the  outstanding
shares of Series E Preferred Stock.

(g)  Certificates as to  Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Series E Preferred Stock conversion formula pursuant to this
Section 5, the Company at its expense shall promptly  compute such adjustment or
readjustment in accordance with the terms hereof and cause an independent public
accountant  selected  by  the  Company=s  Board  of  Directors  to  verify  such
computation and prepare and furnish to each holder of Series E 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  Company
shall,  upon the written request at any time of any holder of Series E Preferred
Stock,  furnish  or  cause to be  furnished  to such  holder a like  certificate
setting  forth  (i)  such  adjustments  and  readjustments;  (ii)  the  Series E
Preferred Stock conversion  formula at the time in effect;  and (iii) the number
of shares of Common Stock that at the time would be received upon the conversion
of shares of Series E Preferred Stock.

(h)  Notices  of Record  Date.  In the event of any  taking by the  Company 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,  any security or right  convertible  into or entitling  the holder
thereof to receive  additional shares of Common Stock, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property or to receive any other right,  the Company shall mail to
each holder of Series E Preferred Stock at least ten (10) days prior to the date
specified  therein,  a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution,  security or right, and
the amount and character of such dividend, distribution, security or right.

(i) Issue  Taxes.  The Company  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
upon conversion of shares of Series E Preferred Stock pursuant hereto; provided,
however,  that the Company  shall not be  obligated  to pay any  transfer  taxes
resulting  from any  transfer  requested  by any  holder  of  shares of Series E
Preferred Stock in connection with any such conversion.

(j)  Reservation  of Stock  Issuable Upon  Conversion.  The Company 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 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 of the shares of
issued and outstanding  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 of the shares of issued and  outstanding  Series E
Preferred  Stock,  the Company  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  shareholder  approval of any  necessary  amendment  to the  Company=s
Articles of Incorporation.

(k)  Fractional  Shares.  No  fractional  share of  Common  Stock or  securities
representing  fractional  shares  of  Common  Stock  shall  be  issued  upon the
conversion  of any share or shares of Series E  Preferred  Stock.  All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one (1)  share  of  Series  E  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 Company  shall,  in lieu of issuing any  fractional  share,  pay the
holder  otherwise  entitled to such  fraction a sum in cash equal to the current
market value of such fraction on the date of conversion.

(l) Notices. Any notice required by the provisions of this Section 5 to be given
to the  holders of shares of Series E Preferred  Stock shall be deemed  given if
deposited in the United  States mail,  postage  prepaid,  and  addressed to each
holder of record at such holder=s address  appearing on the books and records of
the Company.

(m)  Adjustments.  In case of any reorganization or any
reclassification  of the capital  stock of the  Company,  any  consolidation  or
merger of the Company with or into another  corporation or corporations,  or the
conveyance of all or  substantially  all of the assets of the Company to another
corporation,  each  share of  Series  E  Preferred  Stock  shall  thereafter  be
convertible  into the number of shares of stock or other  securities or property
(including  cash) to which a holder of the  number  of  shares  of Common  Stock
deliverable  upon  conversion  of such shares of Series E Preferred  Stock would
have been entitled upon the record date (or date of, if no record date is fixed)
such reorganization, reclassification, consolidation, merger or conveyance; any,
in any case,  appropriate  adjustment (as  determined by the Company=s  Board of
Directors)  shall be made in the application of the provisions  herein set forth
with  respect to the  rights and  interests  thereafter  of the  holders of such
Series E Preferred  Stock, to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as equivalent as is practicable, in relation
to any shares of stock or the securities or property (including cash) thereafter
deliverable upon the conversion of the shares of such Series E Preferred Stock.

          6.   Merger or Consolidation.

(a)  At any time, in the event of:

     (i) any transaction or series of related transactions  (including,  without
     limitation,  any reorganization,  merger or consolidation) that will result
     in the Company=s  shareholders  immediately  prior to such  transaction not
     holding (by virtue of such shares or securities  issued solely with respect
     thereto) at least fifty  percent (50%) of the voting power of the surviving
     or continuing entity; or

     (ii) a sale  of all or  substantially  all of the  assets  of the  Company,
     unless the Company=s shareholders immediately prior to such sale will, as a
     result of such sale, hold (by virtue of securities  issued as consideration
     for the Company=s sale) at least fifty percent (50%) of the voting power of
     the purchasing entity;

(the  foregoing  events  are  individually   referred  to  herein  as  a  ASales
Transaction@), then, holders of the Series E Preferred Stock of record as of the
date of  consummation  of the Sales  Transaction  shall be  entitled to receive,
prior and in preference to any payment of consideration to the holders of Common
Stock, in cash or in securities received from the acquiring corporation, or in a
combination  thereof,  at the  closing  of any such  Sales  Transaction,  at the
holder=s  discretion,  an  amount  per  share  equal  to  One  Thousand  Dollars
($1,000.00) per share (as adjusted for any combinations,  consolidations,  stock
distributions or stock dividends with respect to such shares), plus all declared
or accumulated but unpaid  dividends on such shares as of the date of closing of
such Sales  Transaction.  In the event the proceeds of the Sales Transaction are
not sufficient to make full payment of the aforementioned  preferential  amounts
to the holders of the Series E Preferred Stock in accordance herewith,  then the
entire  amount  payable in respect of the proposed  Sales  Transaction  shall be
distributed  ratably  among  the  holders  of the  Series E  Preferred  Stock in
proportion to the product of the  liquidation  preference of each such share and
the number of such shares  owned by each such  holder.  Upon  completion  of the
payment to the  holders  of Series E  Preferred  Stock as  provided  above,  the
remaining  proceeds of such Sales  Transaction  shall be  distributed  among the
holders of record (as of the date of the consummation of the Sales  Transaction)
of shares of Common Stock in  proportion to the number of shares of Common Stock
then held.  Unless  otherwise  consented  to by the holders of a majority of the
outstanding shares of Series E Preferred Stock, such payments shall be made with
respect  to the  Series E  Preferred  Stock and to  holders  of Common  Stock by
purchase  of such  shares of Series E  Preferred  Stock and Common  Stock by the
surviving corporation,  entity or person, or by redemption of such shares by the
Company, in the discretion of the Company.

(b) Any  securities  to be delivered to the holders of Series E Preferred  Stock
pursuant to Section 6(a) above shall be valued as follows:

     (i)  Securities   not  subject  to  investment   letter  or  other  similar
     restrictions  on free  marketability  as provided  for in  subsection  (ii)
     below:

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

          (B) If actively traded over-the-counter,  the value shall be deemed to
          be the  average  of the  closing  bid or  sale  prices  (whichever  is
          applicable)  over the  thirty  (30) day period  ending  three (3) days
          prior to the closing; and

          (C) If there is no active public  market,  the value shall be the fair
          market value thereof, as mutually determined by the Company=s Board of
          Directors and the holders of a majority of the  outstanding  shares of
          Series E Preferred Stock.

     (iii) The method of valuation of securities subject to investment letter or
     other restrictions on free marketability  (other than restrictions  arising
     solely by  virtue  of a  shareholder=s  status  as an  affiliate  or former
     affiliate of the Company) shall be to make an appropriate discount from the
     market value determined in Section 6(b)(i)(A),  (B) or (C) above to reflect
     the approximate  fair market value thereof,  as mutually  determined by the
     Company and the holders of a majority of the outstanding shares of Series E
     Preferred Stock.

(c) In the event the  requirements  of Section 6(a) above are not complied with,
the Company shall forthwith either:

     (i) cause such closing to be postponed until such time as the  requirements
     of this Section 6 have been complied with; or

     (ii) cancel such  transaction,  in which event the rights,  preferences and
     privileges  of the holders of Series E Preferred  Stock shall revert to and
     be the same as such rights, preferences and privileges existing immediately
     prior to the date of the first notice referred to in Section 6(d) below.

(d) The Company  shall give each  holder of record of Series E  Preferred  Stock
written notice of such impending  transaction not later than ten (10) days prior
to the  shareholders=  meeting  called to approve such  transaction.  The notice
shall describe the material  terms and  conditions of the impending  transaction
and the provisions of this Section 6, and the Company shall thereafter give such
holders prompt notice of any material changes to the impending transaction.  The
transaction  shall in no event take place soon than  twenty  (20) days after the
Company  has given the notice  provided  for herein or sooner than ten (10) days
after the Company has given the notice of any material  changes in the impending
transaction as provided for herein; provided,  however, that such periods may be
shortened  upon  the  written  consent  of  the  holders  of a  majority  of the
outstanding shares of Series E Preferred Stock.

7.  Restrictions  and  Limitations.  So long as any shares of Series E Preferred
Stock remain issued and  outstanding,  the Company shall not without the consent
of the  holders of a majority  of the  shares of Series E  Preferred  Stock then
outstanding:

(a)  Purchase,  redeem,  or  otherwise  acquire  (or pay into or set aside for a
sinking fund for such purpose) any of the Common Stock of the Company; provided,
however,  that this restriction  shall not apply to the repurchase of fractional
shares, odd lots or shares of Common Stock from directors, officers, consultants
or employees of the Company or any subsidiary, if any; or

(b) Effect any  reclassification,  recapitalization or other change with respect
to any  outstanding  shares of stock that  results in the  issuance of shares of
stock having any  preference  or priority as to  dividends,  redemption  rights,
liquidation preferences, conversion rights, voting rights or otherwise, that are
superior to any such preference or priority of the Series E Preferred Stock; or

(c) Increase or decrease  (other than by  redemption  or  conversion)  the total
number of authorized shares of the Company=s Preferred Stock or the total number
of shares of the  Company=s  Preferred  Stock  designated  as Series E Preferred
Stock; or

(d) Authorize or issue, or obligate  itself to issue,  any other equity security
senior to the  Series E  Preferred  Stock as to  dividends,  redemption  rights,
liquidation  preferences,  conversion  rights,  voting rights or  otherwise,  or
create any  obligation  or security  convertible  into or  exchangeable  for, or
having any option or rights to purchase, any such equity security that is senior
to, the Series E  Preferred  Stock.  The consent of the holders of a majority of
the shares of Series E Preferred Stock shall not be required if any other equity
security on parity with the Series E Preferred Stock as to dividends, redemption
rights, liquidation preferences,  conversion rights, voting rights, or otherwise
is to be issued.

8. No  Reissuance  of Series E Preferred  Stock.  No share or shares of Series E
Preferred  Stock  acquired  by the  Company 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 the Company=s Preferred Stock.

9.  Redemption.  The Company  shall have the right to call for  redemption  that
portion of the shares that are eligible for conversion at any time and from time
to time as provided in  Paragraph  2, above,  by giving  notice,  regardless  of
whether  any  holder  shall have also  given  notice of intent to  convert  such
shares. Notwithstanding what the Market Price or the Conversion Factor may be at
any time, the  redemption  price payable the Company shall be as follows 133% of
the Conversion Price per share at the time of the redemption.

After the date fixed for  redemption,  dividends on shares of Series E Preferred
Stock called for redemption  shall cease to accrue,  such shares shall no longer
be deemed to be issued and outstanding, and all rights of the holders thereof as
shareholders  of the  Company  shall cease  unless the  Company  defaults on the
payment of the redemption  price.  Redemption  shall be made on a pro rata basis
among all holders of the Series E Preferred  Stock.  The  redemption  price paid
shall be applied  first to the  redemption  of shares  that would  otherwise  be
subject to conversion in the year the redemption is made.

10. United States Dollars.  All references  herein to Dollars shall be deemed to
refer to United States Dollars.