AMENDED AND RESTATED
       CERTIFICATE OF DESIGNATION OF RIGHTS, PRIVILEGES, PREFERENCES, AND
              RESTRICTIONS OF SERIES B CONVERTIBLE PREFERRED STOCK
                                       OF
                      HIGHLAND HOLDINGS INTERNATIONAL, INC.

     Highland Holdings International, Inc. (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
Board of Directors of the Company by the Certificate of Incorporation, as
amended, of the Company, and pursuant to the General Corporation Law of the
State of Delaware, the Board of Directors of the Company duly adopted
resolutions (i) authorizing a series of the Company's previously authorized
preferred stock, $0.001 par value per share, and (ii) providing for the
designation of rights, privileges, preferences and restrictions of One Million
(1,000,000) shares of Series B Preferred Stock of the Company, as follows:

     RESOLVED, that the Company is authorized to issue 1,000,000 shares of
Series B Preferred Stock (the "Preferred Shares"), $0.001 par value per share,
which shall have rights, privileges, preferences, and restrictions, as follows:

     (1) Dividends.

          (a) Dividends. Subject to a declaration thereof by the Company's Board
     of Directors, each holder (a "Holder" and, collectively, the "Holders") of
     the Preferred Shares shall be entitled to a dividend (individually, a
     "Dividend"; collectively, the "Dividends") at a rate determined by the
     Company's Board of Directors on a pari passu basis with the holders of
     Common Shares and other classes of preferred shares of the Company, exept
     for those holders of any class of preferred shares which have a preference
     with respect to the right to receive dividends.

          (b) General Payment Provisions. All Dividends, if, when, and as
     declared, by the Company with respect to any Preferred Share shall be made
     in lawful money of the United States of America by depositing with the
     United States Postal Service, within 15 days of the date of declaration by
     the Company's Board of directors of such Dividend a company check, made
     payable to the Holder, to such address as such Holder may from time to time
     designated by written notice to the Company in accordance with the
     provisions of this Amended and Restated Certificate of Designation of
     Rights, Privileges, Preferences and Restrictions (the "Certificate of
     Designation").

<PAGE>


     (2) Conversion of Preferred Shares. Preferred Shares shall be convertible
into shares of the Company's common stock, par value $ 0.001 per share (the
"Common Stock"), on the terms and conditions set forth in this Section 2.

          (a) Certain Defined Terms. For purposes of this Certificate of
     Designation, the following terms shall have the following meanings:

               (i) "Business Day" means any day in which the Principal Market is
          open for business.

               (ii) "Closing Asked Price" means, for any security as of any
          date, the last closing asked price for such security on the Principal
          Market as reported by Bloomberg Financial Markets ("Bloomberg"), or,
          if the Principal Market is not the principal securities exchange or
          trading market for such security, the last closing asked price of such
          security on the principal securities exchange or trading market where
          such security is listed or traded as reported by Bloomberg, or if the
          foregoing do not apply, the last closing asked price of such security
          on the OTC Bulletin Board for such security as reported by Bloomberg,
          or, if no closing asked price is reported for such security by
          Bloomberg, the last closing trade price of such security as reported
          by Bloomberg, or, if no last closing trade price is reported for such
          security by Bloomberg, the average of the asked prices of any market
          makers for such security as reported by Pink Sheets, LLC. If the
          Closing Asked Price cannot be calculated for such security on such
          date on any of the foregoing bases, the Closing Asked Price of such
          security on such date shall be the fair market value as mutually
          determined by the Company and the Holders of Preferred Shares. If the
          Company and the Holders of Preferred Shares are unable to agree upon
          the fair market value of the Common Stock, then such dispute shall be
          resolved pursuant to Section 2(e)(iii) below with the term "Closing
          Asked Price" being substituted for the term "Conversion Rate." (All
          such determinations to be appropriately adjusted for any stock
          dividend, stock split or other similar transaction during such
          period).

               (iii) "Closing Bid Price" means, for any security as of any date,
          the last closing bid price for such security on the Principal Market
          as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the
          Principal Market is not the principal securities exchange or trading
          market for such security, the last closing bid price of such security
          on the principal securities exchange or trading market where such
          security is listed or traded as reported by Bloomberg, or if the
          foregoing do not apply, the last closing bid price of such security on
          the OTC Bulletin Board for such security as reported by Bloomberg, or,
          if no closing bid price is reported for such security by Bloomberg,
          the last closing trade price of such security as reported by
          Bloomberg, or, if no last closing trade price is reported for such
          security by Bloomberg, the average of the bid prices of any market
          makers for such security as reported by Pink Sheets, LLC. If the
          Closing Bid Price cannot be calculated for such security on such date
          on any of the foregoing bases, the Closing Bid Price of such security
          on such date shall be the fair market value as mutually determined by
          the Company and the Holders of Preferred Shares. If the Company and
          the Holders of Preferred Shares are unable to agree upon the fair
          market value of the Common Stock, then such dispute shall be resolved
          pursuant to Section 2(e)(iii) below with the term "Closing Bid Price"
          being substituted for the term "Conversion Rate." (All such
          determinations to be appropriately adjusted for any stock dividend,
          stock split or other similar transaction during such period).

                                       2
<PAGE>


               (iv) "Closing Date" has the same meaning as the term is defined
          in the Securities Purchase Agreement (the "Securities Purchase
          Agreement"), entered into by and between the Company and the initial
          Holders of the Preferred Shares, dated March 12, 2001.

               (v) "Conversion Percentage" shall be sixty-seven percent (67%).

               (vi) "Conversion Price" means, as of any Conversion Date (as
          defined below) or other date of determination, the amount determined
          by multiplying (i) the Market Price of the Company Common Stock by
          (ii) the Conversion Percentage in effect as of such date, subject to
          adjustment as provided herein.

               (vii) "Market Price" means, with respect to any security for any
          period, that price which shall be computed as the volume-weighted
          arithmetic average of the Closing Bid Prices and Closing Asked Prices
          for such security during the ninety (90) consecutive trading day
          period immediately preceding such date of determination. (All such
          determinations to be appropriately adjusted for any stock dividend,
          stock split or other similar transaction during such period).

               (viii) "Issuance Date" means, with respect to each Preferred
          Share, the date of issuance of the applicable Preferred Share.

               (ix) "Mandatory Conversion Date" means, with respect to any
          Preferred Share, the date which is two (2) years after the Issuance
          Date.

               (x) "Person" means an individual, a limited liability company, a
          partnership, a joint venture, a corporation, a trust, an
          unincorporated organization and a government or any department or
          agency thereof.

               (xi) "Principal Market" means the means the principal market on
          which the Common Stock is quoted or listed for trading as of the
          Conversion Date.

               (xii) "Transaction Value" means the sum of (A) $1.00 and (B)
          accrued and unpaid Dividends, if so included at the Company's sole
          discretion.

          (b) Holder's Conversion Right; Mandatory Conversion. Subject to the
     provisions of Section 2(d), below, at any time or times on or after the
     Issuance Date, any Holder of Preferred Shares shall be entitled to convert
     any whole number of Preferred Shares into fully paid and nonassessable
     shares of Common Stock in accordance with Section 2(e), at the Conversion
     Rate (as defined below). If any Preferred Shares remain outstanding on the
     Mandatory Conversion Date, then, subject to Section 2(d), below, such
     Preferred Shares shall be converted at the Conversion Rate as of such date

                                       3
<PAGE>


     in accordance with Section 2(e), below. The Company shall not issue any
     fraction of a share of Common Stock upon any conversion. All shares of
     Common Stock (including fractions thereof) issuable upon conversion of more
     than one Preferred Share by a Holder thereof shall be aggregated for
     purposes of determining whether the conversion would result in the issuance
     of a fraction of a share of Common Stock. If, after the aforementioned
     aggregation, the issuance would result in the issuance of a fraction of a
     share of Common Stock, the Company shall round such fraction of a share of
     Common Stock up to the nearest whole share.

          (c) Conversion Rate. The number of shares of Common Stock issuable
     upon conversion of each Preferred Share pursuant to Section 2(b) shall be
     determined according to the following formula (the "Conversion Rate"):

                                Transaction Value
                                -----------------
                                Conversion Price

          (d) Limitation on Beneficial Ownership. The Company shall not effect
     any conversion of any Preferred Share and no holder of any Preferred Share
     shall have the right to convert any Preferred Share pursuant to Section
     2(b) to the extent that after giving effect to such conversion such Person
     (together with such Person's affiliates) (A) would beneficially own in
     excess of 4.9% of the outstanding shares of the Common Stock following such
     conversion and (B) would have acquired, through conversion of any Preferred
     Share or otherwise (including without limitation, exercise of any warrant
     issued pursuant to the Securities Purchase Agreement), in excess of 4.9% of
     the outstanding shares of the Common Stock following such conversion during
     the 60-day period ending on and including such Conversion Date (defined
     below). For purposes of the foregoing sentence, the number of shares of
     Common Stock beneficially owned by a Person and its affiliates or acquired
     by a Person and its affiliates, as the case may be, shall include the
     number of shares of Common Stock issuable upon conversion of the Preferred
     Shares with respect to which the determination of such sentence is being
     made, but shall exclude the number of shares of Common Stock which would be
     issuable upon (i) conversion of the remaining, nonconverted Preferred
     Shares beneficially owned by such Person and its affiliates and (ii)
     exercise or conversion of the unexercised or unconverted portion of any
     other securities of the Company (including, without limitation, any
     warrants) subject to a limitation on conversion or exercise analogous to
     the limitation contained herein beneficially owned by such Person and its
     affiliates. Except as set forth in the preceding sentence, for purposes of
     this Section 2(d), beneficial ownership shall be calculated in accordance
     with Section 13(d) of the Securities Exchange Act of 1934, as amended.
     Notwithstanding anything to the contrary contained herein, each Conversion
     Notice (defined below) shall constitute a representation by the holder
     submitting such Conversion Notice that, after giving effect to such
     Conversion Notice, (A) the holder will not beneficially own (as determined
     in accordance with this Section 2(d)) and (B) during the 60-day period
     ending on and including such Conversion Date, the holder will not have

                                       4
<PAGE>


     acquired, through conversion of any Preferred Share or otherwise (including
     without limitation, exercise or any Warrant), a number of shares of Common
     Stock in excess of 4.9% of the outstanding shares of Common Stock as
     reflected in the Company's most recent Form 10-Q (or Form 10-QSB) or Form
     10-K (or Form 10-KSB), as the case may be, or more recent public press
     release or other public notice by the Company setting forth the number of
     shares of Common Stock outstanding, but after giving effect to conversions
     of any Preferred Share by such holder since the date as of which such
     number of outstanding shares of Common Stock was reported.

          (e) Mechanics of Conversion. The conversion of Preferred Shares shall
     be conducted in the following manner:

               (i) Holder's Delivery Requirements. To convert Preferred Shares
          into shares of Common Stock on any date (the "Conversion Date"), the
          Holder shall (A) transmit by facsimile (or otherwise deliver), for
          receipt on or prior to 11:59 p.m., Pacific Time on such date, a copy
          of a fully executed notice of conversion in the form attached hereto
          as Exhibit I (the "Conversion Notice") to the Company's designated
          transfer agent (the "Transfer Agent") with a copy thereof to the
          Company and (B) surrender to a nationally recognized overnight
          delivery service carrier for delivery to the Transfer Agent as soon as
          practicable following such date the original certificates representing
          the Preferred Shares being converted (or an indemnification
          undertaking with respect to such shares in the case of their loss,
          theft or destruction) (the "Preferred Stock Certificates").

               (ii) Company's Response. Upon receipt by the Company of a copy of
          a Conversion Notice, the Company shall immediately send, via
          facsimile, a confirmation of receipt of such Conversion Notice to such
          Holder and the Transfer Agent, which confirmation shall constitute an
          instruction to the Transfer Agent to process such Conversion Notice in
          accordance with the terms herein. Upon receipt by the Transfer Agent
          of the Preferred Stock Certificates to be converted pursuant to a
          Conversion Notice, the Transfer Agent shall, on the next Business Day
          following the date of receipt (or the second Business Day following
          the date of receipt if received after 11:00 a.m. local time of the
          Transfer Agent), (A) issue and surrender to a nationally recognized
          overnight delivery service for overnight delivery to the address as
          specified in the Conversion Notice, a certificate, registered in the
          name of the Holder or its designee, for the number of shares of Common
          Stock to which the Holder shall be entitled, or (B) provided the
          Transfer Agent is participating in The Depository Trust Company
          ("DTC") Fast Automated Securities Transfer Program, upon the request
          of the Holder, credit such aggregate number of shares of Common Stock
          to which the Holder shall be entitled to the Holder's or its
          designee's balance account with DTC through its Deposit Withdrawal
          Agent Commission system. If the number of Preferred Shares represented
          by the Preferred Stock Certificate(s) submitted for conversion is
          greater than the number of Preferred Shares being converted, then the
          Transfer Agent shall, as soon as practicable and in no event later
          than three (3) Business Days after receipt of the Preferred Stock
          Certificate(s) and at the Company's expense, issue and deliver to the
          Holder a new Preferred Stock Certificate representing the number of
          Preferred Shares not converted.

                                       5
<PAGE>


               (iii) Dispute Resolution. In the case of a dispute as to the
          determination of the arithmetic calculation of the Conversion Rate,
          the Company shall instruct the Transfer Agent to issue to the Holder
          the number of shares of Common Stock that is not disputed and shall
          submit the disputed determinations or arithmetic calculations to the
          Holder via facsimile within one (1) Business Day of receipt of such
          Holder's Conversion Notice. If such Holder and the Company are unable
          to agree upon the determination of the arithmetic calculation of the
          Conversion Rate within one (1) Business Day of such disputed
          determination or arithmetic calculation being submitted to the Holder,
          then the Company shall within one (1) Business Day submit via
          facsimile the disputed arithmetic calculation of the Conversion Rate
          to an independent, reputable investment bank or accountant selected by
          the affected Holders and approved by the Company. The Company shall
          cause the investment bank or the accountant, as the case may be, to
          perform the determinations or calculations and notify the Company and
          the Holder of the results no later than forty-eight (48) hours from
          the time it receives the disputed determinations or calculations. Such
          investment bank's or accountant's determination or calculation, as the
          case may be, shall be binding upon all parties absent manifest error
          and the Company shall be liable and responsible for paying such
          investment bank or accountant fees and expenses.

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

               (v) Pro Rata Conversion. In the event the Company receives a
          Conversion Notice from more than one Holder of Preferred Shares for
          the same Conversion Date and the Company can convert some, but not
          all, of such Preferred Shares, the Company shall convert from each
          Holder of Preferred Shares electing to have Preferred Shares converted
          at such time a pro rata amount of such Holder's Preferred Shares
          submitted for conversion based on the number of Preferred Shares
          submitted for conversion on such date by such Holder relative to the
          number of Preferred Shares submitted for conversion on such date.

               (vi) Mechanics of Mandatory Conversion. Subject to Section 2(d),
          above, on the Mandatory Conversion Date, all Holders of Preferred
          Shares shall surrender all Preferred Shares to the Transfer Agent and
          all Preferred Shares shall be converted as of such date as if the
          Holders of such Preferred Shares had given the Conversion Notice for
          all such Preferred Shares on the Mandatory Conversion Date.

          (f) Taxes. The Company shall pay any and all taxes that may be payable
     with respect to the issuance and delivery of Common Stock upon the
     conversion of Preferred Shares.

                                       6
<PAGE>


          (g) Adjustments to Conversion Price. The Conversion Price will be
     subject to adjustment from time to time as provided in this Section 2(g).

               (i) Adjustment of Conversion Price upon Subdivision or
          Combination of Common Stock. If the Company at any time subdivides (by
          any stock split, stock dividend, recapitalization or otherwise) one or
          more classes of its outstanding shares of Common Stock into a greater
          number of shares, the Conversion Price in effect immediately prior to
          such subdivision will be proportionately reduced. If the Company at
          any time combines (by combination, reverse stock split or otherwise)
          one or more classes of its outstanding shares of Common Stock into a
          smaller number of shares, the Conversion Price in effect immediately
          prior to such combination will be proportionately increased.

               (ii) Other Events. If any event occurs of the type contemplated
          by the provisions of this Section 2(g) but not expressly provided for
          by such provisions (including, without limitation, the granting of
          stock appreciation rights, phantom stock rights or other rights with
          equity features), then the Company's Board of Directors will make an
          appropriate adjustment in the Conversion Price so as to protect the
          rights of the Holders of the Preferred Shares; provided that no such
          adjustment will increase the Conversion Price as otherwise determined
          pursuant to this Section 2(g).

               (iii) Notice. Immediately upon any adjustment of the Conversion
          Price, the Company will give written notice thereof to each Holder of
          Preferred Shares, setting forth in reasonable detail, and certifying,
          the calculation of such adjustment.

     (3) Reservation of Shares. The Company shall, at all times so long as any
of the Preferred Shares are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, such number of shares (the "Reserved
Amount") of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Preferred Shares then outstanding. The initial number
of shares of Common Stock reserved for conversions of the Preferred Shares and
each increase in the number of shares so reserved shall be allocated pro rata
among the Holders of the Preferred Shares based on the number of Preferred
Shares held by each Holder at the time of issuance of the Preferred Shares or
increase in the number of reserved shares, as the case may be. In the event a
Holder shall sell or otherwise transfer any of such Holder's Preferred Shares,
each transferee shall be allocated a pro rata portion of the number of reserved
shares of Common Stock reserved for such transferor. Any shares of Common Stock
reserved and allocated to any Person who ceases to hold any Preferred Shares
shall be allocated to the remaining Holders of Preferred Shares, pro rata based
on the number of Preferred Shares then held by such Holders.

     (4) Voting Rights. Holders of Preferred Shares shall have no voting rights,
except as required by law, including but not limited to the General Corporation
Law of the State of Delaware, and as expressly provided in this Certificate of
Designation.

                                       7
<PAGE>


     (5) Liquidation, Dissolution, Winding-Up. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the Holders
of the Preferred Shares shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings available for distribution
to its stockholders (the "Liquidation Funds"), before any amount shall be paid
to the holders of any of the capital stock of the Company of any class junior in
rank to the Preferred Shares in respect of the preferences as to the
distributions and payments on the liquidation, dissolution and winding up of the
Company, an amount per Preferred Share equal to $1.00 and any accrued but unpaid
Dividends (such sum being referred to as the "Liquidation Preference"); provided
that, if the Liquidation Funds are insufficient to pay the full amount due to
the Holders of Preferred Shares, then each Holder of Preferred Shares shall
receive a percentage of the Liquidation Funds equal to the full amount of
Liquidation Funds payable to such Holder as a liquidation preference. The
purchase or redemption by the Company of stock of any class, in any manner
permitted by law, shall not, for the purposes hereof, be regarded as a
liquidation, dissolution or winding up of the Company. Neither the consolidation
or merger of the Company with or into any other Person, nor the sale or transfer
by the Company of less than substantially all of its assets, shall, for the
purposes hereof, be deemed to be a liquidation, dissolution or winding up of the
Company. No Holder of Preferred Shares shall be entitled to receive any amounts
with respect thereto upon any liquidation, dissolution or winding up of the
Company other than the amounts provided for herein; provided that a Holder of
Preferred Shares shall be entitled to all amounts previously accrued with
respect to amounts owed hereunder.

     (6) Preferred Rank. All shares of Common Stock shall be of junior rank to
all Preferred Shares in respect to the preferences as to distributions and
payments upon the liquidation, dissolution and winding up of the Company. The
rights of the shares of Common Stock shall be subject to the preferences and
relative rights of the Preferred Shares. Without the prior express written
consent of the Holders of not less than three-fifths (3/5) of the then
outstanding Preferred Shares, the Company shall not hereafter authorize or issue
additional or other capital stock that is of senior or equal rank to the
Preferred Shares in respect of the preferences as to distributions and payments
upon the liquidation, dissolution and winding up of the Company. Without the
prior express written consent of the Holders of not less than three-fifths (3/5)
of the then outstanding Preferred Shares, the Company shall not hereafter
authorize or make any amendment to the Company's Certificate of Incorporation or
bylaws, or file any resolution of the board of directors of the Company with the
Delaware Secretary of State or enter into any agreement containing any
provisions that would adversely affect or otherwise impair the rights or
relative priority of the Holders of the Preferred Shares relative to the holders
of the Common Stock or the holders of any other class of capital stock. In the
event of the merger or consolidation of the Company with or into another
corporation, the Preferred Shares shall maintain their relative powers,
designations and preferences provided for herein and no merger shall result
inconsistent therewith.

                                       8
<PAGE>


     (7) Restriction on Cash Dividends. Until all of the Preferred Shares have
been converted as provided herein, the Company shall not, directly or
indirectly, redeem, or declare or pay any cash dividend or distribution on, its
Common Stock without the prior express written consent of the Holders of not
less than three-fifths (3/5) of the then outstanding Preferred Shares.

     (8) Limitation on Number of Conversion Shares. The Company shall not be
obligated to issue any shares of Common Stock upon conversion of the Preferred
Shares if the issuance of such shares of Common Stock would exceed that number
of shares of Common Stock that the Company may issue upon Conversion of the
Preferred Shares (the "Exchange Cap") without breaching the Company's
obligations under the rules or regulations of the Principal Market, or the
market or exchange where the Common Stock is then traded or quoted, except that
such limitation shall not apply in the event that the Company (a) obtains the
approval of its stockholders as required by the applicable rules of the
Principal Market, or the market or exchange where the Common Stock is then
traded or quoted, (or any successor rule or regulation) for issuances of Common
Stock in excess of such amount or (b) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall
be reasonably satisfactory to the Holders of a majority of the Preferred Shares
then outstanding. Until such approval or written opinion is obtained, no
purchaser of Preferred Shares pursuant to the Securities Purchase Agreement (the
"Purchasers") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap
amount multiplied by (ii) a fraction, the numerator of which is the number of
Preferred Shares issued to such Purchaser pursuant to the Securities Purchase
Agreement and the denominator of which is the aggregate amount of all the
Preferred Shares issued to the Purchasers pursuant to the Securities Purchase
Agreement (the "Cap Allocation Amount"). In the event that any Purchaser shall
sell or otherwise transfer any of such Purchaser's Preferred Shares, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any Holder of Preferred Shares shall
convert all of such Holder's Preferred Shares into a number of shares of Common
Stock which, in the aggregate, is less than such Holder's Cap Allocation Amount,
then the difference between such Holder's Cap Allocation Amount and the number
of shares of Common Stock actually issued to such Holder shall be allocated to
the respective Cap Allocation Amounts of the remaining Holders of Preferred
Shares on a pro rata basis in proportion to the number of Preferred Shares then
held by each such Holder.

     (9) Vote to Change the Terms of Preferred Shares. The affirmative vote at a
meeting duly called for such purpose or the written consent without a meeting,
of the Holders of not less than three-fifths (3/5) of the then-outstanding
Preferred Shares, shall be required for any change to this Certificate of
Designation or the Company's Certificate of Incorporation which would amend,
alter, change or repeal any of the powers, designations, preferences and rights
of the Preferred Shares.

                                       9
<PAGE>


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

     (11) Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designation
shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a Holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. The Company covenants to each Holder of Preferred Shares that there
shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).

     (12) Specific Shall Not Limit General; Construction. No specific provision
contained in this Certificate of Designation shall limit or modify any more
general provision contained herein. This Certificate of Designation shall be
deemed to be jointly drafted by the Company and all Holders and shall not be
construed against any person as the drafter hereof.

     (13) Failure or Indulgence Not Waiver. No failure or delay on the part of a
Holder of Preferred Shares in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

                            [Signature Page Follows]


                                       10
<PAGE>


     IN WITNESS WHEREOF, the Company has caused this Amended and Restated
Certificate of Designation to be signed be signed by John Demoleas, its
President, as of the 15th day of March, 2001.

HIGHLAND HOLDINGS INTERNATIONAL, INC.



By: /s/ John Demoleas
---------------------------------------
John Demoleas, President




                                       11
<PAGE>


                                    EXHIBIT I

                                CONVERSION NOTICE

     Reference is made to the Amended and Restated Certificate of Designation,
Preferences and Rights (the "Certificate of Designation") of Highland Holdings
International, Inc. (the "Company"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series B Preferred Stock, $0.001 par value per share (the
"Preferred Shares"), of the Company indicated below into shares of Common Stock,
par value $ 0.001 per share (the "Common Stock"), of the Company, by tendering
the stock certificate(s) representing the share(s) of Preferred Shares specified
below as of the date specified below.

     Date of Conversion:

     Number of Preferred Shares to be converted:

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

Please confirm the following information:

     Conversion Price:

     Number of shares of Common Stock to be issued:

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

     Issue to:


     Facsimile Number:

     Authorization:
                By:
                Title:

     Dated:

     Account Number:
       (if electronic book entry transfer):

     Transaction Code Number
       (if electronic book entry transfer):