EXHIBIT 3.1.2
                                                                (Stamp)
                                                                 FILED
                                                            MAY 11, 2000
                                                           State Treasurer
                                                           Roland Machold

                            CERTIFICATE OF AMENDMENT
                                       TO
                          CERTIFICATE OF INCORPORATION
                                       OF
                        DIAMOND ENTERTAINMENT CORPORATION

         Pursuant to the provisions of Section 14A:7-2,  Corporations,  General,
of the New Jersey Statutes,  the undersigned executes the following  Certificate
of Amendment to its Certificate of Incorporation:

         1. The name of the  corporation  is Diamond  Entertainment  Corporation
(the "Corporation").

         2.  Set  forth  below  is a copy of the  resolutions  of the  Board  of
Directors of the  Corporation  as required by Section  14A:7-2 of the New Jersey
Business  Corporation  Act which was duly  adopted by the Board of  Directors on
April 14, 2000, which amends the Certificate of Incorporation  (i) authorizing a
series of the Corporation's  authorized preferred stock, no par value per share,
and  (ii)   providing   for  the   designations,   preferences   and   relative,
participating, optional or other rights, and the qualifications,  limitations or
restrictions  thereof,  of 50 shares of Series A Convertible  Preferred Stock of
the Corporation, as follows:

         RESOLVED,  that  pursuant  to the  authority  expressly  granted to and
vested  in the Board of  Directors  of the  Corporation  by the  Certificate  of
Incorporation   of  the   Corporation,   as   amended   (the   "Certificate   of
Incorporation"),  there  hereby  is  created  out of  the  5,000,000  shares  of
Preferred  Stock,  no par value per  share,  of the  Corporation  authorized  by
Article 4 of the Certificate of Incorporation (the "Preferred  Stock"), a series
of Preferred  Stock of the Corporation  consisting of 50 shares,  which shall be
designated Series A Convertible  Preferred Stock, which shall have the following
powers, designations, preferences and relative, participating, optional or other
rights:

         1.  Designations,  Amount and Par Value.  The series of Preferred Stock
shall be designated as Series A Convertible Preferred Stock ("Series A Preferred
Shares")  and the  number of shares so  designated  shall be 50.  Each  Series A
Preferred  Share shall have no par value and a stated value of $10,000 per share
(the "Stated Value").

         2.  Dividends.  The  Series  A  Preferred  Shares  shall  not  bear any
dividends.

         3. Holder's Conversion of Series A Preferred Shares. A holder of Series
A Preferred Shares shall have the right, at such holder's option, to convert the
Series A Preferred Shares into shares of the Corporation's  common stock, no par
value per share (the "Common Stock"), on the following terms and conditions:

                                       1
<PAGE>

                  (a)  Conversion  Right.  Subject to the provisions of Sections
         3(g) and 4(a)  below,  at any time or times on or after the  earlier of
         (i) 90 days after the Issuance  Date (as defined  herein),  (ii) 5 days
         after  receiving a "no-review"  status from the Securities and Exchange
         Commission  (the "SEC") in  connection  with a  registration  statement
         ("Registration  Statement")  covering the resale of Common Stock issued
         upon  conversion  of the Series A Preferred  Shares and  required to be
         filed by the Corporation  pursuant to the Registration Rights Agreement
         between the  Corporation  and its initial holders of Series A Preferred
         Shares (the "Registration  Rights Agreement"),  (iii) the date that the
         Registration  Statement is declared  effective by the SEC any holder of
         Series A  Preferred  Shares  shall be  entitled to convert any Series A
         Preferred Shares into fully paid and  nonassessable  shares (rounded to
         the  nearest  whole share in  accordance  with  Section  3(h) below) of
         Common Stock,  at the  Conversion  Rate (as defined  below);  provided,
         however,  that in no  event  other  than  upon a  Mandatory  Conversion
         pursuant to Section 3(g) hereof, or upon a Triggering Event pursuant to
         Section 5(b) hereof,  shall any holder be entitled to convert  Series A
         Preferred  Shares in excess of that number of Series A Preferred Shares
         which, upon giving effect to such conversion, would cause the aggregate
         number of shares of Common Stock  beneficially  owned by the holder and
         its affiliates to exceed 4.9% of the then issued and outstanding shares
         of Common  Stock of the  Corporation  following  such  conversion.  For
         purposes of the foregoing  proviso,  the aggregate  number of shares of
         Common Stock  beneficially owned by the holder and its affiliates shall
         include the number of shares of Common Stock  issuable upon  conversion
         of  the  Series  A  Preferred   Shares   with   respect  to  which  the
         determination  of such  proviso is being  made,  but shall  exclude the
         number  of  shares  of  Common  Stock  which  would  be  issuable  upon
         conversion of the remaining,  non-converted  Series A Preferred  Shares
         beneficially  owned by the  holder  and its  affiliates.  Except as set
         forth  in the  preceding  sentence,  for  purposes  of this  paragraph,
         beneficial  ownership  shall be calculated  in accordance  with Section
         13(d) of the  Securities  Exchange Act of 1934,  as amended  ("Exchange
         Act"), and the rules thereunder;

                  (b)  Conversion  Rate.  The  number of shares of Common  Stock
         issuable  upon  conversion  of each of the  Series A  Preferred  Shares
         pursuant  to  Section  (3)(a)  shall  be  determined  according  to the
         following formula (the "Conversion Rate"):

                      (.06)(N/365)(10,000) + 10,000
                      -----------------------------
                              Conversion Price

                  For  purposes  of  this  Certificate  of   Designations,   the
         following terms shall have the following meanings:

                                       2
<PAGE>

                           (i)  "Conversion  Price" means as, of any  Conversion
                  Date (as  defined  below),  the lower of the Fixed  Conversion
                  Price and the Floating  Conversion Price, each in effect as of
                  such  date,  if  applicable,  and  subject  to  adjustment  as
                  provided herein;

                           (ii)  "Fixed  Conversion  Price"  means  120%  of the
                  Closing Bid Price on the day immediately  preceding the day of
                  the closing of the sale and issuance of the Series A Preferred
                  Shares  ("Closing  Date") subject to  adjustment,  as provided
                  herein;

                           (iii)  "Floating  Conversion  Price" means, as of any
                  date of determination,  the amount obtained by multiplying the
                  Conversion Percentage in effect as of such date by the Average
                  Market  Price for the  Common  Stock for any five (5)  trading
                  days  of  the  previous  ten  (10)  trading  days  immediately
                  preceding the date of conversion;

                           (iv)    "Conversion Percentage" means 80% as adjusted
                  as described herein;

                           (v) "Average Market Price" means, with respect to any
                  security for any period, that price which shall be computed as
                  the  arithmetic  average of the Closing Bid Prices (as defined
                  below) for such security for each trading day in such period;

                           (vi) "Closing Bid Price"  means,  for any security as
                  of any date,  the last  closing bid price on The Nasdaq  Stock
                  Market,  Inc.'s  SmallCap Market (the  "Nasdaq-Small  Cap") as
                  reported by Bloomberg Financial Markets ("Bloomberg"),  or, if
                  the  Nasdaq-SmallCap  is not the principal  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 in The Nasdaq Stock Market, Inc.'s OTC Bulletin Board
                  or, if not so quoted,  in the "pink  sheets" 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.  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  reasonably  determined  in  good  faith  by the  Board  of
                  Directors of the Corporation  (all as  appropriately  adjusted
                  for  any  stock   dividend,   stock  split  or  other  similar
                  transaction during such period); and

                                       3
<PAGE>

                           (vii)  "N"  means  the  number  of  days  from,   but
                  excluding,   the  Issuance  Date  through  and  including  the
                  Conversion  Date for the Series A  Preferred  Shares for which
                  conversion is being elected; and

                           (viii)  "Issuance Date" means the date of issuance of
                  the Series A Preferred Shares.

                  (c)  Penalty -  Registration  Statement.  If the  Registration
         Statement  is not  declared  effective  by the SEC on or before the one
         hundred and  fiftieth  (150th) day  following  the  Issuance  Date (the
         "Scheduled Effective Date"), or if after the Registration Statement has
         been  declared  effective by the SEC,  sales cannot be made pursuant to
         the  Registration  Statement  (whether because of a failure to keep the
         Registration  Statement  effective,  to disclose such information as is
         necessary for sales to be made pursuant to the Registration  Statement,
         to register  sufficient shares of Common Stock or otherwise),  then, as
         partial  relief  for the  damages  to any  holder by reason of any such
         delay in or reduction of its ability to sell the  underlying  shares of
         Common Stock (which remedy shall not be exclusive of any other remedies
         at law or in equity), then:

                           (i) the  Corporation  will pay as liquidated  damages
                  (the "Liquidated Damages") in penalties to the Buyer(s) a cash
                  amount  within three (3) business days of the end of the month
                  immediately  following  the Scheduled  Effective  Date and for
                  each month  thereafter  in an amount equal to one and one half
                  percent (1 1/2 %) of the Liquidation  Value. (For example,  if
                  the  Registration  Statement  becomes  effective one (l) month
                  after the Scheduled  Effective Date, the Corporation  will pay
                  in cash to the Buyer(s) an aggregate  of Seven  Thousand  Five
                  dollars  ($7,500) in Liquidated  Damages (1 1/2% of $500,000);
                  if, as a further  example,  thereafter sales could not be made
                  pursuant to the Registration Statement for a period of one and
                  one half (1 1/2) months,  the Corporation  will pay in cash to
                  the Buyer(s) an  aggregate of Eleven  Thousand Two Hundred and
                  Fifty dollars ($11,250) in Liquidated  Damages ($7,500 for the
                  first month plus $3,750 for the half of second month); and if,
                  as a  further  example,  thereafter  sales  could  not be made
                  pursuant to the Registration Statement for a period of two (2)
                  months after the Scheduled  Effective  Date,  the  Corporation
                  will  pay in cash to the  Buyer(s)  an  aggregate  of  Fifteen
                  Thousand dollars  ($15,000) in Liquidated  Damages ($7,500 for
                  the first month plus $7,500 for the second month).

                                       4
<PAGE>

                  (d)  Adjustment  to  Conversion  Price -  Dilution  and  Other
         Events.  In order to prevent  dilution of the rights granted under this
         Certificate of  Designations,  the Conversion  Price will be subject to
         adjustment from time to time as provided in this Section 2(d).

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

                           (ii) Reorganization, Reclassification, Consolidation,
                  Merger,   or  Sale.   Any   recapitalization,   reorganization
                  reclassification,   consolidation,  merger,  sale  of  all  or
                  substantially  all  of the  Corporation's  assets  to  another
                  Person (as defined below) or other similar  transaction  which
                  is  effected  in such a way that  holders of Common  Stock are
                  entitled  to  receive  (either  directly  or  upon  subsequent
                  liquidation) stock, securities or assets with respect to or in
                  exchange for Common Stock is referred to herein as an "Organic
                  Change." Prior to the consummation of any Organic Change,  the
                  Corporation  will  make  appropriate  provision  (in  form and
                  substance reasonably satisfactory to the Holders of a majority
                  of the Series A Preferred  Shares then  outstanding) to insure
                  that, upon the  consummation  of such Organic Change,  each of
                  the Holders of the Series A Preferred  Shares will  thereafter
                  have the right to acquire  and receive in lieu of the Series A
                  Preferred Shares,  such shares of stock,  securities or assets
                  as may be issued or payable with respect to or in exchange for
                  the number of shares of Common Stock  immediately  theretofore
                  acquirable and receivable upon the conversion of such holder's
                  Series A Preferred  Shares had such  Organic  Change not taken
                  place. In any such case, the Corporation will make appropriate
                  provision (in form and substance  reasonably  satisfactory  to
                  the  Holders of a majority  of the Series A  Preferred  Shares
                  then  outstanding)  with respect to such  holders'  rights and
                  interests to insure that the  provisions  of this Section 3(d)
                  and Section 3(e) below will  thereafter  be  applicable to the
                  Series A Preferred  Shares.  For  purposes of this  Agreement,
                  "Person"  shall  mean  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.

                                       5
<PAGE>

                           (iii) Notices.

                                    (A)  Immediately  upon any adjustment of the
                           Conversion  Price  pursuant to this Section 3(d), the
                           Corporation  will give written notice thereof to each
                           holder of Series A Preferred Shares, setting forth in
                           reasonable  detail and certifying the  calculation of
                           such adjustment.

                                    (B) The Corporation will give written notice
                           to each Holder of Series A Preferred  Shares at least
                           twenty  (20)  days  prior to the  date on  which  the
                           Corporation  closes  its books or takes a record  (I)
                           with respect to any dividend or distribution upon the
                           Common  Stock,  (II)  with  respect  to any pro  rata
                           subscription  offer to  holders  of  Common  Stock or
                           (III) for determining  rights to vote with respect to
                           any Organic Change, dissolution or liquidation.

                                    (C) The  Corporation  will also give written
                           notice to each Holder of Series A Preferred Shares at
                           least twenty (20) days prior to the date on which any
                           Organic Change, Major Transaction (as defined below),
                           dissolution or liquidation will take place.

                  (e) Purchase  Rights.  If at any time the Corporation  grants,
         issues  or sells  any  options,  convertible  securities  or  rights to
         purchase stock, warrants,  securities or other property pro rata to the
         record  holders of any class of Common Stock (the  "Purchase  Rights"),
         then the  holders of Series A  Preferred  Shares  will be  entitled  to
         acquire,  upon  the  terms  applicable  to such  Purchase  Rights,  the
         aggregate Purchase Rights which such holder could have acquired if such
         holder had held the number of shares of Common  Stock  acquirable  upon
         complete conversion of the Series A Preferred Shares immediately before
         the date an which a record is taken for the grant,  issuance or sale of
         such Purchase  Rights,  or, if no such record is taken,  the date as of
         which the record  holders of Common Stock are to be determined  for the
         grant, issue or sale of such Purchase Rights.

                  (f)  Mechanics  of  Conversion.  Subject to the  Corporation's
         inability to fully satisfy its  obligations  under a Conversion  Notice
         (as defined below) as provided for in Section 6 below:

                           (i)  Holder's  Delivery   Requirements.   Subject  to
                  Section  3(a), in order to convert  Series A Preferred  Shares
                  into full shares of Common Stock on any date (the  "Conversion
                  Date"),  the holder  thereof  shall (A) deliver or transmit by
                  facsimile,  for  receipt  on or prior to 11:59  p.m.,  Eastern


                                       6
<PAGE>

                  Standard 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  Corporation  or its  designated
                  transfer agent (the "Transfer Agent"),  and (B) surrender to a
                  common carrier for delivery to the Corporation or the Transfer
                  Agent as soon as practicable following such date, the original
                  certificates  representing the Series A 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")  and  the  originally
                  executed  Conversion  Notice.  Each  Conversion  Notice  shall
                  specify  the  number  of  Series  A  Preferred  Shares  to  be
                  converted  and the  date on  which  such  conversion  is to be
                  effected,  which  date may not be prior to the date the holder
                  delivers such Conversion Notice.

                           (ii)  Corporation's  Response.  Upon  receipt  by the
                  Corporation  of a facsimile copy of a Conversion  Notice,  the
                  Corporation   shall   immediately   send,  via  facsimile,   a
                  confirmation  of  receipt  of such  Conversion  Notice to such
                  holder.  Upon receipt by the Corporation or the Transfer Agent
                  of the Preferred Stock  Certificates to be converted  pursuant
                  to a Conversion Notice,  together with the originally executed
                  Conversion  Notice,  the Corporation or the Transfer Agent (as
                  applicable) shall, within ten (10) business days following the
                  date of receipt,  (A) issue and surrender to a common  carrier
                  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) credit the
                  aggregate number of shares of Common Stock to which the holder
                  shall be entitled to the  holder's or its  designee's  balance
                  account at The Depository Trust Corporation.

                           (iii) Dispute Resolution. In the case of a dispute as
                  to  the  determination  of the  Average  Market  Price  or the
                  arithmetic calculation of the Conversion Rate, the Corporation
                  shall  promptly  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 three (3) business days of receipt
                  of such  holder's  Conversion  Notice.  If such holder and the
                  Corporation are unable to agree upon the  determination of the
                  Average   Market  Price  or  arithmetic   calculation  of  the
                  Conversion  Rate within two (2) business days of such disputed
                  determination or arithmetic calculation being submitted to the
                  holder, then the Corporation shall within one (1) business day


                                       7
<PAGE>

                  submit via  facsimile  (A) the disputed  determination  of the
                  Average Market Price to an independent,  reputable  investment
                  bank  designated  by  the  Corporation,  or (B)  the  disputed
                  arithmetic   calculation  of  the   Conversion   Rate  to  its
                  independent,  outside accountant.  The Corporation shall cause
                  the investment bank or the accountant,  as the case may be, to
                  perform  the  determinations  or  calculations  and notify the
                  Corporation  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 ease may be,
                  shall be binding upon all parties absent manifest error.

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

                           (v) Corporation's  Failure to Timely Convert.  If the
                  Corporation  shall fail to issue to a holder  within seven (7)
                  business days following the date of receipt by the Corporation
                  or the Transfer Agent of the Preferred  Stock  Certificates to
                  be converted  pursuant to a Conversion  Notice,  a certificate
                  for the number of shares of Common  Stock to which such holder
                  is  entitled  upon  such  holder's   conversion  of  Series  A
                  Preferred Shares, in addition to all other available  remedies
                  which  such  holder  may  pursue   hereunder   and  under  the
                  securities  purchase agreement between the Corporation and the
                  initial  holders of the Series A Preferred  Shares pursuant to
                  which such  holders  purchased  the Series A Preferred  Shares
                  (the    "Securities    Purchase     Agreement")     (including
                  indemnification   pursuant   to   Section  8   thereof),   the
                  Corporation  shall pay  additional  damages to such  holder on
                  each day after the seven (7th) business day following the date
                  of receipt by the  Corporation  or the  Transfer  Agent of the
                  Preferred Stock  Certificates to be converted  pursuant to the
                  Conversion  Notice,  for which such  conversion  is not timely
                  effected,   an  amount   calculated  in  accordance  with  the
                  following schedule:

                                       8
<PAGE>


                                                    Late Payment for Each
                     Principal Amount Being       Series A Preferred Share
                     No. Business Days Late              Converted
                     ----------------------       ------------------------

                               1                            $100
                               2                            $200
                               3                            $300
                               4                            $400
                               5                            $500
                               6                            $600
                               7                            $700
                               8                            $800
                               9                            $900
                              10                          $1,000

                              11             $1,000 + $200   for
                                             each  Business Days
                                             Late Beyond 10 days


                  (g)  Mandatory  Conversion.  If any Series A Preferred  Shares
         remain  outstanding on April 14, 2002, then all such Series A Preferred
         Shares  shall be  converted  as of such  date in  accordance  with this
         Section 2 as if the holders of such Series A Preferred Shares had given
         the Conversion  Notice on April 14, 2002,  and the Conversion  Date had
         been fixed as of April 14,  2002,  for all  purposes of this Section 2,
         and all holders of Series A Preferred  Shares shall  thereupon and with
         two  (2)  business  days  thereafter   surrender  all  Preferred  Stock
         Certificates, duly endorsed for cancellation, to the Corporation or the
         Transfer Agent.  No person shall  thereafter have any rights in respect
         of Series A  Preferred  Shares,  except the right to receive  shares of
         Common Stock on conversion thereof as provided in this Section 2.

                  (h) Fractional  Shares.  The  Corporation  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  share  of the  Series A  Preferred  Shares  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 Corporation shall round such fraction of a share of Common Stock up
         or down to the nearest whole share.

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<PAGE>

                  (i) Notwithstanding anything to the contrary set forth in this
         Certificate of Designations,  the Corporation shall not be obligated to
         issue in excess of 11,875,000  conversion Shares upon conversion of the
         Series A Preferred Shares.

         4. Corporation's Right to Redeem at its Election.

                  (a) At any time,  commencing 120 days after the Issuance Date,
         as long as the Corporation has not breached any of the representations,
         warranties,   and  covenants   contained   herein  or  in  any  related
         agreements,   the  Corporation   shall  have  the  right,  in  it  sole
         discretion,  to redeem ("Redemption at Corporation's  Election"),  from
         time to time,  any or all of the Series A Preferred  Shares  which have
         not previously  been redeemed at a price equal to the Redemption  Price
         at Corporation's  Election below,  provided (i) Corporation shall first
         provide  thirty  (30)  days  advance  written  notice  as  provided  in
         subparagraph 4(a)(ii) below (which can be given any time on or after 90
         days after the Issuance Date, and (ii) that the Corporation  shall only
         be entitled to redeem  Series A Preferred  Shares  having an  aggregate
         Stated Value of at least One Hundred  Thousand Dollars  ($100,000).  If
         the  Corporation  elects to redeem  some,  but not all, of the Series A
         Preferred  Shares,  the Corporation shall redeem a pro-rata amount from
         each Holder of the Series A Preferred Shares.

                           (i) Redemption Price At Corporation's  Election.  The
                  "Redemption   Price  at   Corporation's   Election"  shall  be
                  calculated as 120% of the  Liquidation  Value, as that term is
                  defined in Section 10 hereof.

                           (ii)   Mechanics  of  Redemption   at   Corporation's
                  Election. The Corporation shall effect each such redemption by
                  giving at least thirty (30) days prior written notice ("Notice
                  of Redemption at  Corporation's  Election") to (A) the holders
                  of the Series A Preferred  Shares  selected for  redemption at
                  the address and facsimile  number of such holder  appearing in
                  the  Corporation's  Series A Preferred Shares register and (B)
                  the   Transfer   Agent,   which   Notice  of   Redemption   At
                  Corporation's  Election shall be deemed to have been delivered
                  three (3) business  days after the  Corporation's  mailing (by
                  overnight or two (2) day courier, with a copy by facsimile) of
                  such Notice of  Redemption  at  Corporation's  Election.  Such
                  Notice of Redemption At Corporation's  Election shall indicate
                  (i) the  number of shares of Series A  Preferred  Shares  that
                  have been  selected for  redemption,  (ii) the date which such
                  redemption is to become  effective (the "Date of Redemption At
                  Corporation's  Election") and (iii) the applicable  Redemption
                  Price At  Corporation's  Election,  as defined  in  subsection
                  (a)(i) above.  Notwithstanding the above, a holder may convert


                                       10
<PAGE>

                  into Common Stock,  prior to the close of business on the Date
                  of  Redemption  at  Corporation's   Election,   any  Series  A
                  Preferred  Shares which it is  otherwise  entitled to convert,
                  including Series A Preferred Shares that has been selected for
                  redemption  at   Corporation's   election   pursuant  to  this
                  subsection 4(a).

                  (b)  Corporation  Must  Have  Immediately  Available  Funds or
         Credit  Facilities.  The Corporation  shall not be entitled to send any
         Notice of Redemption at Corporation's Election and begin the redemption
         procedure under Sections 4(a) unless it has:

                           (i) the full amount of the redemption  price in cash,
                  available in a demand or other  immediately  available account
                  in a bank or similar financial institution; or

                           (ii) immediately available credit facilities,  in the
                  full  amount of the  redemption  price  with a bank or similar
                  financial institution; or

                           (iii) an agreement with a standby underwriter willing
                  to purchase from the Corporation a sufficient number of shares
                  of stock to  provide  proceeds  necessary  to redeem any stock
                  that is not converted prior to redemptions; or

                           (iv) a  combination  of the  items  set forth in (i),
                  (ii),  and (iii)  above,  aggregating  the full  amount of the
                  redemption price.

                  (c) Payment of Redemption Price. Each Holder submitting Series
         A Preferred Shares being redeemed under this Section 4 shall send their
         Series A Preferred Share Certificates to be redeemed to the Corporation
         or its Transfer  Agent,  and the  Corporation  shall pay the applicable
         redemption  price to that Holder  within five (5) business  days of the
         Date of Redemption at Corporation's Election.

         5.       Redemption at Option of Holders.

                  (a) Redemption Option Upon Major  Transaction.  In addition to
         all other rights of the holders of Series A Preferred  Shares contained
         herein,  after a Major  Transaction (as defined below),  the holders of
         Series A  Preferred  Shares  then  outstanding  shall have the right in
         accordance  with Section 5(f), at the option of the holders of at least
         two-thirds (2/3) of the Series A Preferred Shares then outstanding,  to
         require the Corporation to redeem all of the Series A Preferred  Shares
         then  outstanding at a price per Series A Preferred  Share equal to the
         greater of (i) 100% of the Liquidation Value (as defined below) of such
         shares and (ii) the price  calculated in accordance with the Redemption


                                       11
<PAGE>

         Rate  (as  defined  below)  calculated  as of the  date  of the  public
         announcement  of such Major  Transaction  or the next date on which the
         exchange or market on which the Common  Stock is traded is open if such
         public  announcement is made (A) after 1:00 p.m.  Eastern Standard Time
         on such date or (B) on a date on which the  exchange or market on which
         the Common Stock is traded or quoted is closed.

                  (b) Redemption  Option Upon  Triggering  Event. In addition to
         all other rights of the holders of Series A Preferred  Shares contained
         herein,  after a Triggering  Event (as defined  below),  the holders of
         Series A  Preferred  Shares  the  outstanding  shall  have the right in
         accordance  with Section 5(g), at the option of the holders of at least
         two-thirds (2/3) of the Series A Preferred Shares then outstanding,  to
         require the Corporation to redeem all of the Series A Preferred  Shares
         then  outstanding at a price per Series A Preferred  Share equal to the
         greater of (i) 125% of the Liquidation Value of such share and (ii) the
         price  calculated in accordance with the Redemption Rate as of the date
         immediately  preceding such  Triggering  Event on which the exchange or
         market on which the Common Stock is traded or quoted is open.

                  (c) "Redemption  Rate." The "Redemption Rate" shall, as of any
         date of determination, be equal to (i) the Conversion Rate in effect as
         of such date as calculated  pursuant to Section 3(b) multiplied by (ii)
         the Closing Bid Price of the Common Stock on such date.

                  (d) "Major Transaction." A "Major Transaction" shall be deemed
         to have occurred at such time as any of the following events:

                           (i) the  consummation of any merger,  reorganization,
         restructuring,  consolidation,  or similar  transaction by or involving
         the  Corporation  except  (A)  a  merger  or  consolidation  where  the
         Corporation is the survivor,  or where the holders of the capital stock
         of the Corporation  immediately  prior to such merger or  consolidation
         own at least  50% of the  outstanding  capital  stock of the  surviving
         entity,  (B)  pursuant to a migratory  merger  effected  solely for the
         purpose  of  changing  the   jurisdiction  of   incorporation   of  the
         Corporation,  or (C) any such  transaction in which each of the holders
         of the Series A Preferred  Shares  receives cash at least equal to 120%
         of the  Liquidation  Value of such shares in  accordance  with  Section
         5(d)(ii) hereof;

                           (ii) sale of all or  substantially  all of the assets
         of the Corporation on a consolidated  basis or any similar  transaction
         or related  transactions which effectively  results in a sale of all or
         substantially  all of the assets of the  Corporation  on a consolidated
         basis,  unless, upon consummation of such transaction,  the Corporation
         reserves  an amount in cash at least  equal to 125% of the  Liquidation
         Value of the  Series A  Preferred  Shares for  payment  to the  holders
         thereof.

                                       12
<PAGE>

                  (e)  "Triggering  Event."   A  "Triggering   Event"  shall  be
         deemed  to have occurred at such time as any of the following events:

                           (i)  either  (A)  the  failure  of  the  Registration
         Statement to be declared effective by the SEC or to cover the resale of
         all of the shares of Common Stock issued or issuable upon conversion of
         the Series A Preferred  Shares at any time after ninety (90) days after
         the Scheduled Effective Date (provided that for purposes of determining
         the Closing Bid Price under Section 5(c) above,  the  Triggering  Event
         shall be deemed to have  occurred  on the first day of such ninety (90)
         day period) or (B) for any period of ninety (90) consecutive days after
         the date that is ninety (90) days after the  Scheduled  Effective  Date
         that Common Stock issued or issuable  upon  conversion  of the Series A
         Preferred  Shares cannot be sold under the  Registration  Statement for
         any reason  (provided that for purposes of determining  the Closing Bid
         Price under Section 5(c) above, the Triggering Event shall be deemed to
         have occurred on the first day of such ninety (90) day period);

                           (ii) if for  any  reason  the  Corporation  fails  to
         perform  or  observe  any  covenant,   agreement,  or  other  provision
         contained in Section 9 or 10 hereof;

                           (iii)  the  Corporation's  notice to the  holders  of
         Series A  Preferred  Shares  as a  class,  including  by way of  public
         announcement,  at any time, of its intention not to comply,  other than
         in accordance  with the terms hereof,  with requests for  conversion of
         any Series A Preferred Shares for shares of Common Stock;

                           (iv) if for  any  reason  the  Corporation  fails  to
         perform  or  observe  any  covenant,   agreement,  or  other  provision
         contained  herein  or  in  the  Securities  Purchase   Agreement,   the
         Registration  Rights Agreement,  or in any related agreement,  and such
         failure is not cured  within 30 days after the  Corporation  knows,  or
         should have known with the  exercise of  reasonable  diligence,  of the
         occurrence  thereof,  and such failure has had, or could  reasonably be
         expected  to have,  a  material  adverse  effect  on (A) the  financial
         condition,  operating results,  business,  properties, or operations of
         the  Corporation  and its  subsidiaries  taken as a whole  taking  into
         account  any  proceeds  reasonably  expected  to  be  received  by  the
         Corporation  or  its  subsidiaries  in  the  foreseeable   future  from
         insurance  policies  or rights of  indemnification  or (B) the Series A
         Preferred Shares; or

                                       13
<PAGE>

                           (v) any  representation or warranty  contained in the
         Securities  Purchase Agreement or the Registration  Rights Agreement is
         false or misleading on or as of the date made and which either reflects
         or has had a material  adverse effect on and which,  upon the date that
         the  holders  require the  Corporation  to redeem the Class A Preferred
         Shares continues to have a material adverse effect on (A) the financial
         condition,  operating results,  business,  properties, or operations of
         the  Corporation  and its  subsidiaries  taken as a whole  taking  into
         account  any  proceeds  reasonably  expected  to  be  received  by  the
         Corporation  or  its  subsidiaries  in  the  foreseeable   future  from
         insurance  policies  or rights of  indemnification  or (B) the Series A
         Preferred Shares.

                  (f)  Mechanics  of  Redemption  at Option of Buyer  Upon Major
         Transaction.  No sooner than  fifteen (15) days nor later than ten (10)
         days prior to the consummation of a Major Transaction, but not prior to
         the public  announcement  of such Major  Transaction,  the  Corporation
         shall  deliver  written  notice  thereof via  facsimile  and  overnight
         courier  ("Notice  of Major  Transaction")  to each  holder of Series A
         Preferred  Shares.  At any time  after  receipt  of a  Notice  of Major
         Transaction,  the holders of at least  two-thirds (2/3) of the Series A
         Preferred Shares then outstanding may require the Corporation to redeem
         all of the  holders'  Series A  Preferred  Shares then  outstanding  in
         accordance  with Section 5(a) by delivering  written notice thereof via
         facsimile  and  overnight  courier  ("Notice of Redemption at Option of
         Buyer Upon Major  Transaction")  to the  Corporation,  which  Notice of
         Redemption at Option of Buyer Upon Major Transaction shall indicate (i)
         the number of Series A Preferred Shares that such holders are voting in
         favor of  redemption  and  (ii) the  applicable  redemption  price,  as
         calculated pursuant to Section 5(a) above. Unless the Corporation shall
         fail to fully  redeem all of the  holder's  Series A  Preferred  Shares
         pursuant to this Section 5, any notice delivered by the holder pursuant
         to this subsection shall be irrevocable.

                  (g) Mechanics of Redemption at Option of Buyer Upon Triggering
         Event. As soon as  practicable,  but in any event no more than five (5)
         business  days  after  the  occurrence  of  a  Triggering   Event,  the
         Corporation  shall  deliver  written  notice  thereof via facsimile and
         overnight  courier  ("Notice  of  Triggering  Event") to each holder of
         Series A  Preferred  Shares.  At any time after  receipt of a Notice of
         Triggering  Event,  the  holders  of at least  two-thirds  (2/3) of the
         Series A Preferred  Shares then outstanding may require the Corporation
         to redeem all of the Series A  Preferred  Shares  then  outstanding  in
         accordance  with Section 5(b) by delivering  written notice thereof via
         facsimile  and  overnight  courier  ("Notice of Redemption at Option of
         Buyer Upon  Triggering  Event")  to the  Corporation,  which  Notice of
         Redemption at Option of Buyer Upon Triggering  Event shall indicate (i)
         the number of Series A Preferred Shares that such holders are voting in
         favor of  redemption  and  (ii) the  applicable  redemption  price,  as
         calculated pursuant to Section 5(b) above. Unless the Corporation shall
         fail to fully  redeem all of the  holder's  Series A  Preferred  Shares
         pursuant to this Section 5, any notice delivered by the holder pursuant
         to this subsection shall be irrevocable.

                                       14
<PAGE>

                  (h)  Payment  of  Redemption  Price.  Upon  the  Corporation's
         receipt  of a  Notice(s)  of  Redemption  at Option of Buyer Upon Major
         Transaction  or a  Notice(s)  of  Redemption  at Option  of Buyer  Upon
         Triggering  Event,  as the case may be,  from the  holders  of at least
         two-thirds (2/3) of the Series A Preferred Shares then outstanding, the
         Corporation  shall  immediately  notify each holder by facsimile of the
         Corporation's  receipt of such requisite  notices necessary to effect a
         redemption  and  each  holder  of  Series  A  Preferred   Shares  shall
         thereafter  promptly send such holder's Preferred Stock Certificates to
         be redeemed to the Corporation or its Transfer  Agent.  The Corporation
         shall pay the applicable  redemption  price, as calculated  pursuant to
         Section 5(a) or 5(b) above,  in cash to such holder  within thirty (30)
         days after the Corporation's  receipt of the requisite notices required
         to  effect a  redemption;  provided  that a  holder's  Preferred  Stock
         Certificates  shall have been so  delivered to the  Corporation  or its
         Transfer Agent;  provided  further that if the Corporation is unable to
         redeem all of the Series A  Preferred  Shares,  the  Corporation  shall
         redeem an amount from each holder of Series A Preferred Shares equal to
         such  holder's  pro-rata  amount  (based  on the  number  of  Series  A
         Preferred Shares held by such holder relative to the number of Series A
         Preferred  Shares  outstanding) of all Series A Preferred  Shares being
         redeemed.  If the Corporation  shall fall to redeem all of the Series A
         Preferred  Shares  submitted for  redemption  (other than pursuant to a
         dispute  as to  the  determination  of the  Closing  Bid  Price  or the
         arithmetic   calculation  of  the  Redemption   Rate),  the  applicable
         redemption  price  payable  in  respect  of such  unredeemed  Series  A
         Preferred Shares shall bear interest at the rate of 2.5% per month (pro
         rated for partial  months)  until paid in full.  Until the  Corporation
         pays such unpaid  applicable  redemption  price in full to each holder,
         holders of at least  two-thirds  (2/3) of the Series A Preferred Shares
         then  outstanding,  including  shares  of  Series  A  Preferred  Shares
         submitted for  redemption  pursuant to this Section 4 and for which the
         applicable  redemption  price has not been paid,  shall have the option
         (the "Void  Optional  Redemption  Option")  to, in lieu of  redemption,
         require the  Corporation  to promptly  return to each holder all of the
         Series A Preferred  Shares that were  submitted for  redemption by such
         holder  under this  Section 5 and for which the  applicable  redemption
         price has not been  paid,  by  sending  written  notice  thereof to the
         Corporation via facsimile (the "Void Optional Redemption Notice"). Upon
         the Corporation's  receipt of such Void Optional  Redemption  Notice(s)
         and prior to payment of the full  applicable  redemption  price to each
         holder,  (i) the  Notice(s)  of  Redemption  at  Option  of Buyer  Upon
         Triggering Event or the Notice(s) of Redemption at Option of Buyer Upon
         Major  Transaction,  as the  case may be,  shall be null and void  with
         respect to those Series A Preferred Shares submitted for redemption and
         for which the applicable  redemption  price has not been paid, (ii) the
         Corporation  shall  immediately  return any  Certificates  for Series A
         Preferred  Shares  submitted  to the  Corporation  by each  holder  for


                                       15
<PAGE>

         redemption  under  this  Section  4(h)  and for  which  the  applicable
         redemption price had not been paid, (iii) the Fixed Conversion Price of
         such returned Series A Preferred Shares shall be adjusted to the lesser
         of (A) the Fixed Conversion Price as in effect on the date on which the
         Void Option  Redemption  Notice(s) is delivered to the  Corporation and
         (B) the lowest  Closing Bid Price  during the period  beginning  on the
         date on which the Notice(s) of Redemption of Option of Buyer Upon Major
         Transaction  or the  Notice(s)  of  Redemption  at Option of Buyer Upon
         Triggering  Event,  as the case may be, is delivered to the Corporation
         and ending on the date on which the Void Optional Redemption  Notice(s)
         is delivered to the  Corporation;  provided that no adjustment shall be
         made if such  adjustment  would  result  in an  increase  of the  Fixed
         Conversion Price then in effect, and (iv) the Conversion  Percentage in
         effect  at such time and  thereafter  shall be  reduced  by a number of
         percentage  points equal to the product of (A) two and  one-half  (2.5)
         and (B) the  number of months  (prorated  for  partial  months)  in the
         period  beginning on the date on which the  Notice(s) of  Redemption at
         Option of Buyer Upon Major  Transaction  or the Notice(s) of Redemption
         at  Option  of Buyer  Upon  Triggering  Event,  as the case may be,  is
         delivered to the  Corporation  and ending on the date on which the Void
         Optional   Redemption   Notice(s)  is  delivered  to  the  Corporation.
         Notwithstanding  the  foregoing,  in the event of a  dispute  as to the
         determination of the Closing Bid Price or the arithmetic calculation of
         the Redemption Rate, such dispute shall be resolved pursuant to Section
         3(f)(iii) above with the term "Closing Bid Price" being substituted for
         the term "Average  Market Price" and the term  "Redemption  Rate" being
         substituted for the term "Conversion Rate."

         6.       Inability to Fully Convert.

                  (a) Holder's Option if Corporation Cannot Fully Convert. If at
         any  time  after  the  earlier  to occur  of (i)  effectiveness  of the
         Registration  Statement  or (ii) ninety  (90) days after the  Scheduled
         Effective Date, upon the Corporation's  receipt of a Conversion Notice,
         the  Corporation  does not  issue  shares  of  Common  Stock  which are
         registered for resale under the Registration Statement within seven (7)
         business  days of the time  required in  accordance  with  Section 3(f)
         hereof, for any reason or for no reason, including, without limitation,
         because the Corporation (x) does not have a sufficient number of shares
         of Common Stock authorized and available,  (y) is otherwise  prohibited
         by applicable law or by the rules or regulations of any stock exchange,
         inter-dealer  quotation  system or other  self-regulatory  organization
         with  jurisdiction  over the Corporation or its securities from issuing
         all of the Common  Stock  which is to be issued to a holder of Series A
         Preferred Shares pursuant to a Conversion Notice or (z) fails to have a
         sufficient number of shares of Common Stock registered and eligible for
         resale under the  Registration  Statement,  then the Corporation  shall
         issue  as many  shares  of  Common  Stock  as it is able  to  issue  in


                                       16
<PAGE>

         accordance with Stockholder's Conversion Notice and pursuant to Section
         3(f) above and,  with  respect to the  unconverted  Series A  Preferred
         Shares, the holder, solely at such holder's option, can, in addition to
         any other remedies such holder may have hereunder, under the Securities
         Purchase Agreement (including indemnification under Section 8 thereof),
         under the Registration Rights Agreement, at law or in equity, elect to:

                           (i)  require  the  Corporation  to  redeem  from such
         holder those  Series A Preferred  Shares for which the  Corporation  is
         unable  to  issue  Common  Stock  in  accordance   with  such  holder's
         Conversion  Notice  ("Mandatory  Redemption")  at a price per  Series A
         Preferred Share (the "Mandatory Redemption Price") equal to the greater
         of (x)  120%  of the  Liquidation  Value  of  such  share  and  (y) the
         Redemption Rate as of such Conversion Date;

                           (ii) void its  Conversion  Notice  and retain or have
         returned,  as  the  case  may  be  the  Certificates  representing  the
         unconverted  Series  A  Preferred  Shares  that  were  to be  converted
         pursuant to such holder's Conversion Notice.

         7.  Reissuance  of  Certificates.  In  the  event  of a  conversion  or
redemption  pursuant to this Certificate of Designations of less than all of the
Series  A  Preferred  Shares   represented  by  a  particular   Preferred  Stock
Certificate,  the Corporation shall promptly cause to be issued and delivered to
the holder of such  Series A  Preferred  Shares a  Preferred  Stock  Certificate
representing  the  remaining  Series A Preferred  Shares  which have not been so
converted or redeemed.

         8. Reservation of Shares.  The Corporation shall, so long as any of the
Series A Preferred Shares are outstanding, reserve and keep available out of its
authorized  and  unissued  shares of Common  Stock,  solely  for the  purpose of
effecting the conversion of the Series A Preferred Shares,  11,875,000 shares of
the Common  Stock to effect  the  conversion  of all of the  Series A  Preferred
Shares.  If at any time,  the  Corporation  does not have  available  11,500,000
authorized and unissued  shares of Common Stock to satisfy  conversion of all of
the Series A Preferred Shares outstanding, the Corporation shall call and hold a
special shareholders  meeting with thirty (30) days of such occurrence,  for the
sole  purpose  of  increasing  the  number of  authorized  shares.  Furthermore,
management of the  Corporation  shall  recommend to the  shareholders to vote in
favor of increasing  the number of common shares  authorized.  Management  shall
also vote all of its  shares in favor of  increasing  the  number of  authorized
shares of Common Stock.

         9. Voting  Rights.  Holders of Series A 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 New Jersey and as expressly provided in
this Certificate of Designations.

                                       17
<PAGE>

         10. Liquidation, Dissolution, Winding-Up. In the event of any voluntary
or involuntary liquidation,  dissolution, or winding up of the Corporation,  the
holders of the Series A  Preferred  Shares  shall be entitled to receive in cash
out of the assets of the  Corporation,  whether  from  capital or from  earnings
available for distribution to its stockholders (the "Preferred  Funds"),  before
any  amount  shall be paid to the  holders  of any of the  capital  stock of the
Corporation  of any class  junior in rank to the  Series A  Preferred  Shares in
respect  of  the  preferences  as to  the  distributions  and  payments  on  the
liquidation, dissolution and winding up of the Corporation, an amount per Series
A Preferred  Share equal to the sum off (i) $10,000 and (ii) an amount  equal to
the  product  of (.06)  (N/365)  ($10,000)  (such sum being  referred  to as the
"Liquidation Value");  provided that, if the Preferred Funds are insufficient to
pay the full amount due to the holders of Series A Preferred  Shares and holders
of shares of other classes or series of preferred stock of the Corporation  that
are of equal rank with the Series A Preferred Shares as to payments of Preferred
Funds (thc "Pari Passu Shares"),  then each holder of Series A Preferred  Shares
and Pari Passu Shares shall receive a percentage of the Preferred Funds equal to
the full  amount of  Preferred  Funds  payable to such  holder as a  liquidation
preference,  in accordance with their  respective  Certificate of  Designations,
Preferences  and Rights as a percentage  or the full amount of  Preferred  Funds
payable to all holders of Series A Preferred  Shares and Pari Passu Shares.  The
purchase or  redemption by the  Corporation  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  Corporation.  Neither  the
consolidation  or merger of the Corporation  with or into any other Person,  nor
the sale or transfer by the  Corporation 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  Corporation.  No holder of Series A Preferred
Shares shall be entitled to receive any amounts  with  respect  thereto upon any
liquidation, dissolution or winding up of the Corporation other than the amounts
provided for herein.

         11.  Preferred Rank. All shares of Common Stock shall be of junior rank
to  all  Series  A  Preferred  Shares  in  respect  to  the  preferences  as  to
distributions and payments upon the liquidation,  dissolution, and winding up of
the  Corporation.  The rights of the shares of Common  Stock shall be subject to
the preferences and relative rights of the Series A Preferred Shares. The Series
A Preferred  Shares shall be senior in rights and liquidation  preference to the
Common  Stock or and any series of  Preferred  Stock  hereinafter  issued by the
Corporation.  Without the prior  express  written  consent of the holders of not
less than two-thirds (2/3) of the then issued and outstanding Series A Preferred
Shares,  the Corporation  shall not hereafter  authorize or issue  additional or
other  capital  stock that is of senior or equal rank to the Series A  Preferred
Shares in respect of the preferences as to  distributions  and payments upon the
liquidation,  dissolution and winding up of the  Corporation.  Without the prior
express written consent of the holders off not less than two-thirds (2/3) of the
then issued and outstanding Series A Preferred Shares, the Corporation shall not
hereafter  authorize or make any amendment to the  Corporation's  Certificate of


                                       18
<PAGE>

Incorporation  or Bylaws,  or make any resolution of the board of directors with
the New  Jersey  Secretary  of State  containing  any  provisions,  which  would
adversely  affect or  otherwise  impair the rights or  relative  priority of the
holders of the Series A 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 Corporation with or into another corporation, the
Series A Preferred  Shares shall maintain their relative  powers,  designations,
and  preferences  provided for herein and no merger  shall  result  inconsistent
therewith.

         12.      Restriction on Redemption and Dividends.

                  (a) Restriction on Dividend.  If any Series A Preferred Shares
         are  outstanding,  without  the prior  express  written  consent of the
         holders  of not less  than  two-thirds  (2/3)  of the then  outstanding
         Series A  Preferred  Shares,  the  Corporation  shall not  directly  or
         indirectly  declare,  pay or make any dividends or other  distributions
         upon any of the Common Stock so long as written notice thereof has been
         given to  holders  of the  Series A  Preferred  Shares at least 30 days
         prior  to the  earlier  of (a) the  record  date  taken  for or (b) the
         payment of any such dividend or other distribution. Notwithstanding the
         foregoing,  this Section 12(a) shall not prohibit the Corporation  from
         declaring  and  paying a  dividend  in cash with  respect to the Common
         Stock  so long as the  Corporation:  (i)  pays  simultaneously  to each
         holder of  Series A  Preferred  Shares  an amount in cash  equal to the
         amount such holder would have received had all of such holder's  Series
         A Preferred Shares been converted to Common Stock pursuant to Section 2
         hereof one business day prior to the record date for any such dividend,
         and (ii) after  giving  effect to the payment of any  dividend  and any
         other  payments  required  in  connection  therewith  including  to the
         holders of the Series A Preferred  Shares under clause 12(a)(i) hereof,
         the Corporation has in cash or cash  equivalents an amount equal to the
         aggregate of: (A) all of its liabilities reflected on its most recently
         available balance sheet, (B) the amount of any indebtedness incurred by
         the  Corporation  or any of its  subsidiaries  since  its  most  recent
         balance sheet and (C) 125% of the amount  payable to all holders of any
         shares of any class of preferred  stock of the  Corporation  assuming a
         liquidation  of the  Corporation  as the  date  of  its  most  recently
         available balance sheet.

                                       19
<PAGE>

                  (b)  Restriction  on  Redemption.  If any  Series A  Preferred
         Shares are  outstanding,  without the prior express  written consent of
         the holders of not less than two-thirds  (2/3) of the then  outstanding
         Series A  Preferred  Shares,  the  Corporation  shall not  directly  or
         indirectly  redeem,  purchase or  otherwise  acquire from any person or
         entity' other than from a direct or indirect wholly-owned subsidiary of
         the Corporation, or permit any subsidiary of the Corporation to redeem,
         purchase or otherwise acquire from any person or entity other than from
         the Corporation or another direct or indirect  wholly-owned  subsidiary
         of  the  Corporation,  any  of the  Corporation's  or any  subsidiary's
         capital   stock  or  other  equity   securities   (including,   without
         limitation,  warrants, options and other rights to acquire such capital
         stock or other equity securities).


         13.  Vote to  Change  the  Terms of  Series  A  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 two-thirds  (2/3) of
the then outstanding Series A Preferred Shares, shall be required for any change
to  this  Certificate  of  Designations  or  the  Corporation's  Certificate  of
Incorporation  which  would  amend,  alter,  change or repeal any of the powers,
designations, preferences and rights of the Series A Preferred Shares.

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

         15. Withholding Tax Obligations. Notwithstanding anything herein to the
contrary, to the extent that the Corporation receives advice in writing from its
counsel that there is a  reasonable  basis to believe  that the  Corporation  is
required by applicable  federal laws or regulations  and delivers a copy of such
written advice to the holders of the Series A Preferred Shares so affected,  the
Corporation  may reasonably  condition the making of any  distribution  (as such
term is defined under applicable  federal tax law and regulations) in respect of
any Series A Preferred  Shares on the holder of such  Series A Preferred  Shares
depositing  with the  Corporation  an amount of cash  sufficient  to enable  the
Corporation to satisfy its withholding tax obligations (the  "Withholding  Tax")
with respect to such distribution,  Notwithstanding the foregoing or anything to
the  contrary,  if any  holder of the  Series A  Preferred  Shares  so  affected
receives advice in writing from its counsel that there is a reasonable  basis to


                                       20
<PAGE>

believe that the  Corporation  is not so required by applicable  federal laws or
regulations and delivers a copy of such written advice to the  Corporation,  the
Corporation  shall  not be  permitted  to  condition  the  making  of  any  such
distribution  in respect of any Series A  Preferred  Share on the holder of such
Series A Preferred  Shares  depositing  with the Corporation any Withholding Tax
with  respect to such  distribution,  provided,  however,  the  Corporation  may
reasonably  condition  the  making of any such  distribution  in  respect of any
Series A  Preferred  Share on the  holder  of such  Series  A  Preferred  Shares
executing  and  delivering  to the  Corporation,  at the election of the holder,
either:  (i) if applicable,  a properly  completed Internal Revenue Service Form
4224, or (a) an  indemnification  agreement in reasonably  acceptable form, with
respect to any federal tax liability, penalties and interest that may be imposed
upon  the  Corporation  by the  Internal  Revenue  Service  as a  result  of the
Corporation's  failure to withhold in connection with such  distribution to such
holder.  If the  conditions in the preceding two sentences are fully  satisfied,
the Corporation shall not be required to pay any additional damages set forth in
Section  3(f)(v) of this  Certificate of  Designations  if its failure to timely
deliver  any  Conversion  Shares  results  solely from the  holder's  failure to
deposit any  withholding tax hereunder or provide to the Corporation an executed
indemnification   agreement  in  the  form   reasonably   satisfactory   to  the
Corporation.


         3. The  Certificate of  Incorporation  of the Corporation is amended so
that the designation and number of shares of each class and series acted upon in
the  resolutions  set forth above,  and the relative  rights,  preferences,  and
limitations of each such class and series are as state in the above resolutions.



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<PAGE>




         IN WITNESS  WHEREOF,  the  Corporation  has caused this  Certificate of
Amendment to be signed by James K.T. Lu, its  President,  as of this day of 14th
April, 2000.

DIAMOND ENTERTAINMENT CORPORATION


By:
         Name:    James K. T. Lu
         Title:   President and Chief Executive Officer




                                       22
<PAGE>


                                    EXHIBIT I

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder
in order to Convert Shares of Preferred Stock)

         The undersigned hereby elects to convert the number of shares of Series
A Convertible  Preferred Stock indicated below,  into shares of Common Stock, no
par value per share (the "Common Stock"), of Diamond  Entertainment  Corporation
(the "Company") according to the condition hereof, as of the date written below.
If shares are to be issued in the name of a person  other than the  undersigned,
the under signed will pay all transfer taxes payable with respect thereto and is
delivering  herewith such  certificates and opinions as reasonably  requested by
the Company in  accordance  therewith.  No fee will be charged to the Holder for
any conversion, except for such transfer taxes.


Conversion calculations:         ---------------------------------------
                                  Date to Effect Conversion

                                  ---------------------------------------
                                  Number of Shares of Preferred Stock
                                  to be Converted

                                  ---------------------------------------
                                  Number of shares of Common Stock to be issued

                                  ---------------------------------------
                                  Applicable Conversion Price


                                  ---------------------------------------
                                  Signature

                                  ---------------------------------------
                                  Name

                                  ---------------------------------------
                                  Address