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                                                                     Exhibit 3.1

                       CERTIFICATE OF DESIGNATION, POWERS,
                      PREFERENCES AND RIGHTS OF THE SERIES
                                       OF
                                 PREFERRED STOCK
                                       OF
                             FINANTRA CAPITAL, INC.
                                TO BE DESIGNATED
               6% SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK

         Pursuant to Section 151 (g) of the Delaware General Corporation Law,
we, the undersigned, Robert Press and Maynard Hellman, being respectively the
Vice President and Chairman of the Board of Directors and the Assistant
Secretary of Finantra Capital, Inc. (the "Company"), a Delaware corporation, DO
HEREBY CERTIFY that the following resolution was duly adopted by the Board of
Directors of the Company by unanimous written consent, and that said resolution
has not been rescinded or amended and is in full force and effect at the date
hereof:

         RESOLVED, that, pursuant to authority expressly granted to and vested
in the Board of Directors by the provisions of the Certificate of Incorporation,
as amended to date. the Board of Directors hereby creates a series of Preferred
Stock of the Company, par value $.01 per share and having a stated value of
$1,000 per share, to be designated "6% Series C Cumulative Convertible Preferred
Stock" and to consist of Three Thousand Eight Hundred (3,800) shares, and hereby
fixes the powers, designations, preferences and relative, participating,
optional and other rights of the shares of such series, and the qualifications,
limitations, or restrictions thereof (in addition to those provisions set forth
in the Certificate of Incorporation, as amended, which are applicable to the 6%
Series C Cumulative Convertible Preferred Stock), as follows:

         Section 1. Designation. Amount. Par Value, Stated Value and Rank. The
series of Preferred stock shall be designated as 6% Series C Cumulative
Convertible Preferred Stock (the "Series C Preferred Stock"), and the number of
shares so designated shall be 3,800 (which shall not be subject to increase
without the consent of the holders of the Series C Preferred Stock ("Holders")).
Each share of Series C Preferred Stock shall have a par value $.01 per share and
a stated value of $1,000 per share (the "Stated Value").

         The Series C Preferred Stock shall rank senior to the Junior Securities
(as defined below) and pari passu to the Series A 10% Redeemable Convertible
Preferred Stock of the Company, (except to the extent certain holders thereof
have not consented to and waived the issuance of the Series C Preferred Stock
ranking pari passu to Stock Preferred Stock) and the Series B Convertible
Preferred Stock of the Company issued and outstanding on the Original Issue Date
as to distributions and upon liquidation. dissolution or winding up.

         Section 2. Dividends.

                  (a) Amount of Dividends. The holders of Series C Preferred
Stock shall be entitled to receive, in preference to the holders of Common Stock
or any other Junior Securities, cumulative annual dividends at the annual rate
of 6% of the Stated Value in cash for each share of Series C Preferred Stock
held. Such dividends shall be payable as and when declared by the Board of
Directors out of the assets of the Company legally available for payment
thereof. Dividends shall be paid in cash. Dividends payable to holders of Series
C Preferred Stock. as aforesaid, whether or not declared by the Board of
Directors, shall accumulate from and after the date of original issuance of the
Series C Preferred Stock and shall be paid quarterly in arrears on the first
business day of January, April, July and October in each year (each, a "Dividend
Date"), commencing on January 1, 2000. Dividends will be payable to holders of
record as they appear on the stock books of the Company on the record date,
which will be the December 15, March 15, June 15 or September 15, as the case
may be' before the related Dividend Date.


<PAGE>

         (b) Payment of Dividends on Common Stock and Junior Securities. No cash
dividends may be paid, or funds set apart for payment, on shares of any class of
Junior Securities until all accumulated dividends on the Series C Preferred
Stock have been paid in full or declared and funds set apart for payment thereof
in full. Additionally, the Company shall not declare or make any dividend or
distribution with respect to Common Stock, other than regular cash dividends or
dividends payable solely in shares of Common Stock, unless each holder of Series
C Preferred Stock concurrently receives dividends or distributions equal in
amount and in the same kind of property (whether cash, securities or other
property) as such holder would be entitled to receive if all of the outstanding
Series C Preferred Stock were converted into Common Stock as of the record date
of such dividend or distribution with respect to Common Stock. As used herein,
the term "regular cash dividends" shall mean any cash dividend publicly
characterized by the Board of Directors at the time of its declaration as a
regular dividend? whether payable on a quarterly, semi-annual or annual basis.

         Section 3. Junior Securities. So long as any Series C Preferred Stock
shall remain outstanding, neither the Company nor any subsidiary thereof shall
redeem. purchase or otherwise acquire otherwise than upon conversion or exchange
directly or indirectly any Junior Securities, nor shall the Company directly or
indirectly pay or declare any dividend or make any distribution (other than a
dividend or distribution described in Section 6) upon, nor shall any
distribution be made in respect of, any Junior Securities, nor shall any monies
be set aside for or applied to the purchase or redemption (through a sinking
fund or otherwise) of any Junior Securities.

         Section 4. Voting Rights. The holders of Series C Preferred Stock shall
have no right to vote, except as otherwise required by Delaware law. However, so
long as any shares of Series C Preferred Stock are outstanding, the Company
shall not and shall cause its subsidiaries not to, without the written consent
of the holders of 66 2/3% of the shares of the Series C Preferred Stock then
outstanding, (a) amend, alter or change the preferences or rights of any series
or class of capital stock of the Company (including the Series C Preferred
Stock) or the qualifications, limitations or restrictions thereof if such
amendment, alteration or change adversely affects the powers, preferences or
rights given to the Series C Preferred Stock, (b) alter or amend this
Certificate of Designation, (c) authorize or create any class or series of any
class of capital stock ranking as to distribution of assets upon a Liquidation
(as defined in Section 5) or otherwise senior to the Series C Preferred Stock,
(d) amend its Certificate of Incorporation, bylaws or other organizational
documents so as to affect adversely any rights of any Holders, (e) increase the
authorized number of shares of Series C Preferred Stock, and (f) enter into any
agreement with respect to the foregoing.

         Section 5. Liquidation. Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a "Liquidation"), the Holders
shall be entitled to receive out of the assets of the Company, whether such
assets are capital or surplus, for each share of Series C Preferred Stock an
amount equal to the Stated Value before any distribution or payment shall be
made to the holders of any Junior Securities, and if the assets of the Company
shall be insufficient to pay in full such amounts, then the entire assets to be
distributed to the holders of Series C Preferred Stock shall be distributed
among the holders of Series C Preferred Stock and the holders of all securities
ranking pari passu to the Series C Preferred Stock ratably in accordance with
the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full. A sale, conveyance or disposition of all or
substantially all of the assets of the Company or the effectuation by the
Company of a transaction or series of related transactions in which more than
50% of the voting power of the Company is disposed of, or a consolidation or
merger of the Company with or into any other company or companies shall not be
treated as a Liquidation' but instead shall be subject to the provisions of
Section 6(c)(vii). The Company shall mail written notice of any such
Liquidation, not less than 45 days prior to the payment date stated therein, to
each record holder of Series C Preferred Stock.

         Section 6. Conversion.

                  (a) (i) Each share of Series C Preferred Stock shall be
convertible into



                                      -2-

<PAGE>

shares of Common Stock (subject to Section 6(a)(ii) and Section 6(a)(iii)) at
the Conversion Ratio (as defined in Section 9) at the option of the Holder in
whole or in part at any time after the Original Issue Date. The Holders shall
effect conversions by surrendering the certificate or certificates representing
the shares of Series C Preferred Stock to be converted to the Company, together
with the form of conversion notice attached hereto as Exhibit A (the "Conversion
Notice"). Each Conversion Notice shall specify the number of shares of Series C
Preferred Stock to be converted. The date on which such conversion is to be
effected shall be the date the Holder delivers such Conversion Notice by
facsimile (the "Conversion Date"). Subject to Sections 6(a)(ii) and 6(b) hereof,
each Conversion Notice, once given, shall be irrevocable. If the Holder is
converting less than all shares of Series C Preferred Stock represented by the
certificate or certificates tendered by the Holder with the Conversion Notice,
or if a conversion hereunder cannot be effected in full for any reason, the
Company shall promptly deliver to such Holder (in the manner and within the time
set forth in Section 6(b)) a certificate for such number of shares as have not
been connverted.

                  (ii) If on the Conversion Date applicable ~o any conversion,
(A) the Common Stock is then listed or quoted for trading on the Nasdaq National
Market, the New York Stock Exchange, the American Stock Exchance or The Nasdaq
Small Cap Market, (B) the Conversion Price then in effect is such that the
aggregate number of shares of Common Stock that would then be issuable upon
conversion of all outstanding shares of Series C Preferred Stock, together with
any shares of Common Stock previously issued upon conversion of Series C
Preferred Stock, would equal or exceed 20% of the number of shares of Common
Stock outstanding on the Original Issue Date (the "Issuable Maximum"), and (C)
the Company has not previously obtained, if so required (or attempted pursuant
to clause (1) of this subsection to obtain) Shareholder Approval (as defined
below), then the Company shall issue to any Holder so requesting conversion of
Series C Preferred Stock its pro rata portion of the Issuable Maximum in the
same ratio that the number of shares of Series C Preferred Stock held by any
such Holder bears to all shares of Series C Preferred Stock then outstanding
and, with respect to any shares of Common Stock that otherwise would have been
issuable to such Holder in respect of the Conversion Notice at issue in excess
of the Issuable Maximum (the "Remaining Shares"), the Company shall, if so
required, at the Holder's request, (x) as promptly as possible but in no event
later than 45 days after such Conversion Date, convene a meeting of the holders
of the Common Stock and use its best efforts to obtain the Shareholder Approval
or a waiver of such approval from The Nasdaq Stock Market or the appropriate
exchange, and (y)(l) as promptly as possible from time to time, after a written
request by the Holder, issue shares of Common Stock at a Conversion Price equal
to the Per Share Market Value on the Trading Day immediately preceding the date
of such request for all or a portion of the Remaining Shares (plus any and all
accumulated and unpaid dividends) held by such Holder (whether or not subject to
the Conversion Notice specified above) or (2) as promptly as possible, but in
any event within five Trading Days after a request by the Holder, redeem all or
a portion of the Remaining Shares (plus any and all accumulated and unpaid
dividends) to which such Conversion Notice applies. for an amount, paid in cash,
equal to the greater of (A) the Stated Value of such Remaining Shares, plus any
and all accumulated and unpaid dividends, multiplied by 120%, or (B) the
applicable Conversion Ratio as of the Conversion Date multiplied by the average
Per Share Market Value for the five Trading Days immediately preceding the
Conversion Date or the date of payment, whichever is greater. If the Holder has
requested that the Company redeem shares of Series C Preferred Stock pursuant to
this Section and the Company fails for any reason to pay the redemption price,
as calculated pursuant to the immediately preceding sentence, within seven days
after such notice is deemed delivered pursuant to the preceding sentence, the
Company will pay interest on the redemption price at a rate of 15% per annum, in
cash to such Holder, accruing from such seventh day until the redemption price
and any accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). "Shareholder Approval" means the
approval by a majority of the total votes cast on the proposal, in person or by
proxy, at a meeting of the shareholders of the Company held in accordance with
the Company's Certificate of Incorporation and bylaws, of the issuance by the
Company of shares of Common Stock exceeding the Issuable Maximum as a
consequence of the conversion of Series C Preferred Stock into Common Stock at a
price less than the greater of the book or market value on the



                                      -3-

<PAGE>

Original Issue Date as and to the extent required pursuant to the rules of the
appropriate exchange or market.

                  (iii) In no event shall a Holder be permitted to convert any
shares of Series C Preferred Stock in excess of the number of such shares upon
the conversion of which, (x) the number of shares of Common Stock owned by such
Holder (other than shares of Common Stock issuable upon conversion of shares of
Series C Preferred Stock or upon the exercise of Warrants (as defined in the
Purchase Agreement)) plus (y) the number of shares of Common Stock issuable upon
such conversion of such shares of Series C Preferred Stock, would be equal to or
exceed (z) 9.999% of the number of shares of Common Stock then issued and
outstanding, including shares issuable on conversion of the Series C Preferred
Stock held by such Holder after application of this Section 6(a)(iii). As used
herein, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations thereunder. To the
extent that the limitation contained in this Section 6(a)(iii) applies, the
determination of whether shares of Series C Preferred Stock are convertible (in
relation to other securities owned by a Holder) and of which shares of Series C
Preferred Stock are convertible shall be in the sole discretion of such Holder,
and the submission of shares of Series C Preferred Stock for conversion shall be
deemed to be such Holder's determination of whether such shares of Series C
Preferred Stock are convertible (in relation to other securities owned by a
Holder) and of which shares of Series C Preferred Stock are convertible, in each
case subject to such aggregate percentage limitation, and the Company shall have
no obligation to verify or confirm the accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a Holder to convert
such shares of Series C Preferred Stock at such time as such conversion will not
violate the provisions of this paragraph. The provisions of this Section
6(a)(iii) may be waived by a Holder of Series C Preferred Stock as to itself
(and solely as to itself) upon not less than 75 days prior notice to the
Company, and the provisions of this Section 6(a)(iii) shall continue to apply
until such 75th day (or later, if stated in the notice of waiver). No conversion
in violation of this paragraph but otherwise in accordance with this Certificate
of Designation shall affect the status of the securities issued upon such
conversion as validly issued, fully-paid and nonassessable.

                  (b) (i) Not later than five (5) Trading Days after any
Conversion Date. the Company will deliver to the applicable Holder by express
courier (A) a certificate or certificates which shall be free of restrictive
legends and trading restrictions (other than those required by Section 3.1(b) of
the Purchase Agreement) representing the number of shares of Common Stock being
acquired upon the conversion of shares of Series C Preferred Stock (subject to
reduction pursuant to Section 6(a)(ii) and Section 6(a)(ii )), and (B) one or
more certificates representing the number of shares of Series C Preferred Stock
not converted. If in the case of any Conversion Notice such certificate or
certificates are not delivered to or as directed by the applicable Holder by the
fifth Trading Day after the Conversion Date (the "Delivery Date"), the holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the shares of Series C Preferred Stock tendered for conversion,
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the delivery of such notice of revocation, except
that any amounts described in Sections 6(b)(ii) and (iii) shall be payable
through the date notice of rescission is given to the Company.

                  (ii) The Company understands that a delay in the delivery of
the shares of Common Stock upon conversion of shares of Series C Preferred Stock
and failure to deliver certificates representing the unconverted shares of
Series C Preferred Stock beyond the Delivery Date could result in economic loss
to the Holder. If the Company fails to deliver to the Holder such certificate or
certificates pursuant to this Section hereunder by the Delivery Date, the
Company shall pay to such Holder, in cash, an amount per Trading Day for each
Trading Day until the earlier of the date such certificates are delivered or the
date the conversion is rescinded pursuant to Section 6(b)(i) above, together
with interest on such amount at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full, equal to (i) 1% of the
Stated Value of the shares of Series C Preferred



                                      -4-

<PAGE>

Stock requested to be converted for the first five Trading Days after the
Delivery Date and (ii) 2% of the Stated Value of the shares of Series C
Preferred Stock requested to be converted for each Trading Day thereafter (which
amounts shall be paid as liquidated damages and not as a penalty). Nothing
herein shall limit a Holder's right to pursue actual damages for the Company's
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein (including, without limitation,
damages relating to any purchase of shares of Common Stock by such Holder to
make delivery on a sale effected in anticipation of receiving certificates
representing shares of Common Stock upon conversion, as provided in Section
6(b)(iii) below), and such Holder shall have the right to pursue all remedies
available to it at law or in equity (including, without limitation, a decree of
specific performance and/or injunctive relief).

                  (iii) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such certificate or certificates
pursuant to Section 6(b)(i) by the Delivery Date and if after the Delivery Date
the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by such Holder of the
Underlying Shares which the Holder anticipated receiving upon such conversion (a
"Buy-In"), then the Company shall pay in cash to the Holder (in addition to any
remedies available to or elected by the Holder) the amount by which (A) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the aggregate Stated Value of
the shares of Series C Preferred Stock for which such conversion was not timely
honored, together with interest thereon at a rate of 15% per annum, accruing
until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty). For example, if the
Holder purchases shares of Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted conversion of $10,000 aggregate
Stated Value of the shares of Series C Preferred Stock, the Company shall be
required to pay the Holder $1,000, plus interest. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In..

                  (c) (i) Prior to the 180th day following the Original Issue
Date, the conversion price for each share of Series C Preferred Stock (the
"Conversion Price") in effect on any Conversion Date shall be an amount equal to
the average Per Share Market Value for the three consecutive Trading Days
immediately prior to the Original Issue Date (the "Initial Conversion Price").
On and after the l 80'h day following the Original Issue Date. the Conversion
Price for each share of Series C Preferred Stock in effect on any Conversion
Date shall be the lesser of (A) the Initial Conversion Price and (B) an amount
equal to 80% of the Per Share Market Value for the Trading Day prior to the
Conversion Date, except that if during any period (a "Black-out Period"), a
Holder is unable to trade any Common Stock issued or issuable upon conversion of
Series C Preferred Stock immediately due to the postponement of filing or delay
or suspension of effectiveness of a registration statement or because the
Company has otherwise informed such Holder that an existing prospectus cannot be
used at that time in the sale or transfer of such Common Stock, such Holder
shall have the option but not the obligation on any Conversion Date within ten
Trading Days following the expiration of the Black-out Period of using the
Conversion Price applicable on such Conversion Date or any Conversion Price
selected by such Holder that would have been applicable had such Conversion Date
been at any earlier time during the Black-out Period or within the ten Trading
Days thereafter.

                  (ii) If the Company, at any time while any shares of Series C
Preferred Stock are outstanding, (a) shall pay a stock dividend or otherwise
make a distribution or distributions on shares of its Common Stock or any other
equity security payable in shares of Common Stock. (b) subdivide outstanding
shares of Common Stock into a larger number of shares, (c) combine outstanding
shares of Common Stock into a smaller number of shares, or (d) issue by
reclassification of shares of Common Stock any shares of capital stock of the
Company, the Initial Conversion Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall
be the number of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this Section 6(c)(ii) shall



                                      -5-

<PAGE>

become effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

                  (iii) If the Company, at any time while any shares of Series C
Preferred Stock are outstanding, shall sell or issue additional shares of Common
Stock or rights or warrants to acquire shares of Common Stock at a price per
share less than the Per Share Market Value at the record date mentioned below,
excluding any rights of the holders of Series C Preferred Stock or the holders
of the Warrants issued pursuant to the Purchase Agreement to acquire Common
Stock and shares of Common Stock issuable pursuant to agreements filed by the
Company as exhibits to its reports filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, the Initial
Conversion Price shall be multiplied by a fraction, of which the denominator
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such shares, rights or warrants plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares. if any) outstanding on the date of issuance of
such shares, rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase at such
Per Share Market Value. Such adjustment shall be made whenever such shares,
rights or warrants are issued, and shall become effective immediately after the
issuance of such shares, rights or warrants or, if such rights or warrants are
issued to shareholders of the Company. the record date for the determination of
shareholders entitled to receive such rights or warrants. However, upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Initial Conversion Price pursuant to this
Section 6(c)(iii). if any such right or warrant shall expire and shall not have
been exercised, the Initial Conversion Price shall immediately upon such
expiration be re-computed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Initial Conversion Price made pursuant to the provisions of
this Section 6 after the issuance of such rights or warrants) had the adjustment
of the Initial Conversion Price made upon the issuance of such rights or
warrants been made on the basis of offering for subscription or purchase only
that number of shares of Common Stock actually purchased upon the exercise of
such rights or warrants actually exercised.

                  (iv) If the Company, at any time while shares of Series C
Preferred Stock are outstanding, shall distribute to all holders of Common Stock
(and not to holders of Series C Preferred Stock) evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase any security
(excluding those referred to in Sections 6(c)(ii) and (iii) above), then in each
such case the Initial Conversion Price shall be determined by multiplying the
Initial Conversion Price in effect immediately prior to the record date fixed
for determination of shareholders entitled to receive such distribution by a
fraction of which the denominator shall be the Per Share Market Value determined
as of the record date mentioned above, and of which the numerator shall be such
Per Share Market Value on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent of the net assets of the Company, such fair
market value shall be determined by an Independent Appraiser (as defined below)
selected in good faith by the holders of a majority in interest of the shares of
Series C Preferred Stock then outstanding; and provided, further, that the
Company, after receipt of the determination by such Independent Appraiser shall
have the right to select an additional Independent Appraiser, in good faith, in
which case the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

                  (v) All calculations under this Section 6 shall be made to the
nearest



                                      -6-

<PAGE>

cent or the nearest 1/100th of a share. as the case may be.

                  (vi) Whenever the Initial Conversion Price is adjusted
pursuant to Section 6(c)(ii),(iii) or (iv) (for purposes of this Section
6(c)(vi), each an "adjustment"), the Company shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth. in reasonable
detail, the event requiring the adjustment, the amount of the adjustment. the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder)? and the Initial
Conversion Price after giving effect to such adjustment, and shall cause copies
of such certificate to be delivered to each Holder promptly after each
adjustment. Any dispute between the Company and the Holders with respect to the
matters set forth in such certificate may at the option of the Holders be
submitted to one of the national accounting firms currently known as the "big
five" selected by the holders of a majority in interest of the shares of Series
C Preferred Stock then outstanding, provided that the Company shall have ten
days after receipt of notice from such Holders of their selection of such firm
to object thereto, in which case the holders of a majority in interest of the
shares of Series C Preferred Stock then outstanding shall select another such
firm and the Company shall have no such right of objection. The firm selected by
the holders of a majority in interest of the shares of Series C Preferred Stock
then outstanding as provided in the preceding sentence shall be instructed to
deliver a written opinion as to such matters to the Company and the Holders
within thirty days after submission to it of such dispute. Such opinion shall be
final and binding on the parties hereto. The fees and expenses of such
accounting firm shall be paid by the Company.

                  (vii) In case the Company after the Original Issue Date shall
do any of the following (each, a "Triggering Event") (a) consolidate with or
merge into any other person and the Company shall not be the continuing or
surviving person of such consolidation or merger. or (b) permit any other person
to consolidate with or merge into the Company and the Company shall be the
continuing or surviving person but, in connection with such consolidation or
merger. any capital stock of the Company shall be changed into or exchanged for
securities of any other person or cash or any other property, or (c) transfer
all or substantially all of its properties or assets to any other person, or (d)
effect a capital reorganization or reclassification of its capital stock, the
holders of the Series C Preferred Stock then outstanding shall have the right
thereafter to convert such shares only into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such Triggering Event, and the holders of the Series C
Preferred Stock shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Company
into which such shares of Series C Preferred Stock could have been converted
immediately prior to such Triggering Event would have been entitled; provided,
however. that each Holder shall have the option to require the Company to
redeem, from funds legally available therefor at the time of such redemption,
shares of Series C Preferred Stock at a price equal to the Stated Value of the
shares of Series C Preferred Stock to be redeemed, plus any and all accumulated
and unpaid dividends thereon. (i) multiplied by the average Per Share Market
Value for the five Trading Days immediately preceding (1) the effective date,
the date of the closing or the date of the announcement, as the case may be, of
the Triggering Event triggering such redemption right or (2) the date of payment
in full by the Company of the redemption price hereunder, whichever is greater,
and (ii) divided by the Conversion Price calculated on the date of the closing
or the effective date, as the case may be, of the Triggering Event triggering
such redemption right, as the case may be. The entire redemption price shall be
paid in cash If the Holder has requested that the Company redeem shares of
Series C Preferred Stock pursuant to this Section 6(c)(vii) and the Company
fails for any reason to pay the redemption price. as calculated pursuant to the
immediately preceding sentence, within five Trading Days after such notice is
deemed delivered pursuant to the preceding sentence, the Company will pay
interest on the redemption price at a rate of 15% per annum, in cash to such
Holder. accruing from such seventh day until the redemption price and any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty) The terms of any such Triggering Event
shall include such terms so as to continue to give to the holder of Series C
Preferred Stock the right to receive the securities, cash or property set forth
in this Section



                                      -7-

<PAGE>

6(c)(vii) upon any conversion following such Triggering Event. This provision
shall similarly apply to successive Triggering Events.

                  (viii) If:

                           A.  the Company shall declare a dividend (or any
                               other distribution) on its Common Stock; or

                           B.  the Company shall declare a special nonrecurring
                               cash dividend on or a redemption of its Common
                               Stock; or

                           C.  the Company shall authorize the granting to all
                               holders of the Common Stock rights or warrants to
                               subscribe for or purchase any shares of capital
                               stock of any class or of any rights; or

                           D.  the approval of any shareholders of the Company
                               shall be required in connection with any
                               Triggering Event; or

                           E.  the Company shall authorize the voluntary or
                               involuntary dissolution, liquidation or winding
                               up of the affairs of the Company;

then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Series C Preferred Stock, and shall cause to be
mailed to the Holders of Series C Preferred Stock at their last addresses as
they shall appear upon the stock books of the Company, at least 30 calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend. distribution, redemption, rights or warrants. or if a record is not to
be taken. the date as of which the holders of Common Stock of record to be
entitled to such dividend. distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification? consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, however, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert shares of Series C Preferred
Stock during the 30-day period commencing the date of such notice to the
effective date of the event triggering such notice.

                  (d) If at any time conditions shall arise by reason of action
taken by the Company which in the opinion of the Board of Directors are not
adequately covered by the other provisions hereof and which might materially and
adversely affect the rights of the holders of Series C Preferred Stock
(different than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock) or if at any time any such
conditions are expected to arise by reason of any action contemplated by the
Company, the Company shall mail a written notice briefly describing the action
contemplated and the material adverse effects of such action on the rights of
the holders of Series C Preferred Stock at least 10 calendar days prior to the
effective date of such action, and an Independent Appraiser selected bv the
holders of majority in interest of the Series C Preferred Stock shall give its
opinion as to the adjustment. if any (nor inconsistent with the standards
established in this Section 6), of the Conversion Price (including. if
necessary, any adjustment as to the securities into which shares of Series C
Preferred Stock may thereafter be convertible) and any distribution which is or
would be required to preserve without diluting the rights of the holders of
shares of Series C Preferred Stock. The Board of Directors shall make the
adjustment recommended forthwith upon the receipt of such opinion or opinions or
the taking of any such action contemplated, as the case may be; provided,
however, that no such adjustment of the Conversion Price shall be made which in
the opinion of the Independent Appraiser giving the




                                      -8-

<PAGE>

aforesaid opinion would result in an increase of the Conversion Price to more
than the Conversion Price then in effect.

                  (e) The Company covenants that it will at all times reserve
and keep available out of its authorized and unissued Common Stock solely for
the purpose of issuance upon conversion of Series C Preferred Stock free from
preemptive rights or any other actual contingent purchase rights of persons
other than the holders of Series C Preferred Stock, not less than such number of
shares of Common Stock as shall (subject to any additional requirements of the
Company as to reservation of such shares set forth in the Purchase Agreement) be
issuable (taking into account the adjustments and restrictions of Section 6(c))
upon the conversion of all outstanding shares of Series C Preferred Stock. The
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid,
nonassessable and freely tradable.

                  (f) Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of Common
Stock, but may if otherwise permitted, make a cash payment in respect of any
final fraction of a share based on the Per Share Market Value at such time. If
the Company elects not, or is unable, to make such a cash payment, the holder of
a share of Series C Preferred Stock shall be entitled to receive, in lieu of the
final fraction of a share, one whole share of Common Stock.

                  (g) The issuance of certificates for shares of Common Stock on
conversion of Series C Preferred Stock shall be made without charge to the
holders thereof for any documentary stamp or similar taxes that may be payable
in respect of the issue or delivery of such certificate.

                  (h) Shares of Series C Preferred Stock converted into Common
Stock shall be canceled and shall have the status of authorized but unissued
shares of undesignated preferred stock.

                  (i) Any and all notices or other communications or deliveries
to be provided by the holders of the Series C Preferred Stock hereunder,
including, without limitation, any Conversion Notice, shall be in writing and
delivered personally, by facsimile or sent by a nationally recognized overnight
courier service, addressed to the attention of the President and to the
Secretary of the Company at the facsimile telephone number or address of the
principal place of business of the Company as set forth in the Purchase
Agreement. Any and all notices or other communications or deliveries to be
provided by the Company hereunder shall be in writing and delivered personally,
by facsimile or sent by a nationally recognized overnight courier service,
addressed to each Holder of Series C Preferred Stock at the facsimile telephone
number or address of such holder appearing on the books of the Company, or if no
such facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:00 p.m., New
York City time. (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:00 p.m., New York City time, on any date
and earlier than 11:59 p.m., New York City time, on such date, (iii) receipt, if
sent by a nationally recognized overnight courier service, or (iv) actual
receipt by the party to whom such notice is required to be given.

                  (j) In the event a Holder shall elect to convert any shares of
Series C Preferred Stock as provided herein, the Company cannot refuse
conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law or for any
other reason, unless an injunction from a court or regulatory body, on notice,
restraining and or adjoining conversion of all or of said shares of Series C
Preferred Stock shall have issued and the Company posts a surety bond for the
benefit of such Holder in the amount of the difference between the Conversion
Price and the Per Share Market Value on the Trading Day preceding the date of
the attempted conversion multiplied by the number of shares of Series C
Preferred Stock sought to be converted, which bond shall remain in effect



                                      -9-

<PAGE>

until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Holder in the event it obtains judgment. Any
Holder which becomes subject to an injunction of the type described in the
preceding sentence shall notify the Company of such within one day of becoming
aware of such injunction.

         Section 7. Optional Redemption.

                  (a) Redemption Right. Notwithstanding the foregoing, if upon
receipt by the Company of a Conversion Notice it is determined that the Per
Share Market Value on the Conversion Date is less than $3.00 (the "Floor
Price"), then the Company shall, if written notice pursuant to Section 7(b) had
been previously delivered to the Holder, in lieu of issuing shares of Common
Stock pursuant to Section 6, redeem all of the shares of Series C Preferred
Stock then held by such Holder by paying to the applicable Holder in cash a
redemption price equal to 120% of the Stated Value, together with any and all
accumulated and unpaid dividends thereon through the date of redemption (the
"Redemption Price"), of such Holder's shares of Series C Preferred Stock (the
"Redemption Election").

                  (b) Floor Price Notice. If at any time, the Conversion Price
is determined to be less than the Floor Price and the Company intends, if it
were to receive Conversion Notice from any Holder, to exercise its Redemption
Election pursuant to Section 7(a), the Company must provide all the Holder's one
(1) day's written notice (the "Floor Price Notice") prior to making such an
election. The Company will not be entitled to exercise its Redemption Election
unless the Floor Price Notice was delivered to all the Holders in a timely
manner.

         "Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company) that is regularly engaged in the business of
appraising the capital stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Company or any
Holder. The cost of any Independent Appraiser appointed hereunder shall be borne
by the Company.

         "Junior Securities" means the Common Stock and all other equity
securities of the Company which are junior in rights and liquidation preference
to the Series C Preferred Stock.

         "NASDAO" means the National Association of Securities Dealers Automated
Quotation System.

         "Original Issue Date" shall mean the date of the first issuance of any
shares of the Series C Preferred Stock regardless of the number of transfers of
any particular shares of Series C Preferred Stock and regardless of the number
of certificates which may be issued to evidence such Series C Preferred Stock.

         "Per Share Market Value" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on The Nasdaq Small Cap
Market, the Nasdaq National Market or other registered national stock exchange
on which the Common Stock is then listed or if there is no such price on such
date, then the closing bid price on such exchange or quotation system on the
date nearest preceding such date, or (b) if the Common Stock is not listed then
on The Nasdaq Small Cap Market, the Nasdaq National Market or any registered
national stock exchange, the closing bid price for a share of Common Stock in
the over-the-counter market. as reported by NASDAQ or the National Quotation
Bureau Incorporated or a similar organization or agency succeeding to its
functions of reporting prices) at the close of business on such date. or (c) if
the Common Stock is not then reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the holder, or (d) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Independent Appraiser selected in good faith by
the holders of a majority in interest of the shares of the Series C Preferred
Stock; provided, however, that the Company, after receipt of



                                      -10-

<PAGE>

the determination by such Independent Appraiser, shall have the right to select
an additional Independent Appraiser, in which case, the fair market value shall
be equal to the average of the determinations by each such Independent
Appraiser: and provided, further that all determinations of the Per Share Market
Value shall be appropriately adjusted for any stock dividends, stock splits or
other similar transactions during such period. The determination of fair market
value by an Independent Appraiser shall be based upon the fair market value of
the Issuer determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value, and shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or anv
limitations on, voting rights

         "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

         "Purchase Agreement" means the Securities Purchase Agreement, dated as
of the Original Issue Date, among the Company and the original holders of the
Series C Preferred Stock.

         "Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Original Issue Date, by and among the Company and the original
Holders.

         "Trading Day" means (a) a day on which the Common Stock is traded on
The Nasdaq Small Cap Market, the Nasdaq National Market or other registered
national stock exchange on which the Common Stock has been listed, or (b) if the
Common Stock is not listed on The Nasdaq Small Cap Market, the Nasdaq National
Market or any registered national stock exchange, a day or which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day
on which the Common Stock is quoted in the over-the-counter market as reported
by the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding its functions of reporting prices); provided, however, that in
the event that the Common Stock is not listed or quoted as set forth in (a), (b)
and (c) hereof then Trading Day shall mean any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other government
action to close.

         "Underlying Shares" means the number of shares of Common Stock into
-which the Shares are convertible in accordance with the terms hereof and the
Purchase Agreement.

         IN WITNESS WHEREOF, we have subscribed this document on the date
indicated below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.


Date: November 5, 1999

                                      ------------------------------------------
                                      Name:  Robert Press
                                      Title: Chairman of the Board of Directors
                                             and Vice President


                                      ------------------------------------------
                                      Name:  Maynard Hellman
                                      Title: Assistant Secretary



                                      -11-

<PAGE>




                                    EXHIBIT A

                             FINANTRA CAPITAL, INC.
                                CONVERSION NOTICE

Reference is made to the Certificate of Designation, Powers, Preferences and
Rights of the Series of Preferred Stock of Finantra Capital, Inc. to be
Designated 6% Series C Cumulative Convertible Preferred Stock (the "Certificate
of Designation"). In accordance with and pursuant to the Certificate of
Designation, the undersigned hereby elects to convert the number of shares of 6%
Series C Cumulative Convertible Preferred Stock, par value $.01 per share and
stated value $1,000 per share (the "Preferred Shares"), of Finantra Capital,
Inc., a Delaware corporation (the "Company"), indicated below into shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company, by
tendering the stock certificates(s) representing the share(s) of Preferred
Shares specified below as of the date specified below.

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

         The Common Stock have been sold pursuant to the Registration Statement
         (as defined in the Registration Rights Agreement): YES       NO
                                                               -----     -----

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:

Issued to:
          ---------------------------------------------------------------------

Facsimile Number:
                 --------------------------------------------------------------

Authorization:
              -----------------------------------------------------------------

By:
   ----------------------------------------------------------------------------

Title:
      -------------------------------------------------------------------------

Dated:
      -------------------------------------------------------------------------

Account Number:
               ----------------------------------------------------------------
                                             (if electronic book entry transfer)

Transaction Code Number:
                        -------------------------------------------------------
                                             (if electronic book entry transfer)


                                 PRICES ATTACHED



                                      -12-