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EXHIBIT 4.8    
    


CORRECTED CERTIFICATE OF DESIGNATIONS

FILED TO CORRECT A CERTAIN ERROR IN

THE CERTIFICATE OF DESIGNATIONS OF

DAOU SYSTEMS, INC.

FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE

ON JULY 23, 1999  


(Pursuant
to Section 103(f)) 


        Daou
Systems, Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the Delaware General
Corporation Law ("DGCL"), 


        DOES
HEREBY CERTIFY THAT: 


        1.     The
present name of the Corporation is Daou Systems, Inc. 


        2.     A
Certificate of Designations (the "Certificate") was filed with the Delaware Secretary of State on July 23, 1999
and said Certificate is an inaccurate record of the corporate action therein referred to in that it incorrectly stated the name of the class of preferred stock as "Series A Preferred Stock"
instead of "Series A-1 Preferred Stock." 


        3.     The
Certificate is hereby corrected to read in its entirety as follows: 


        DAOU
Systems, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of
Delaware, certifies that pursuant to the authority contained in Article IV of its Restated Certificate of Incorporation (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation
by resolution dated July 22, 1999 duly approved and adopted the following resolution which resolution remains in full force and effect on the date hereof: 


        RESOLVED,
that pursuant to the authority vested in the Board of Directors by its Certificate of Incorporation, the Board of Directors does hereby designate, create, authorize and provide
for the issue of Series A-1 Preferred Stock (the "Series A-1 Preferred Stock"), par value $0.001 per share,
consisting of Three Million Five Hundred Twenty Thousand Two Hundred Fifty-Five (3,520,255) shares, having the following voting powers, preferences and relative, participating, optional
and other special rights, and qualifications, limitations and restrictions thereof as follows: 



        1.    Dividend Provisions.    Subject to the rights of series of Preferred Stock which may from time to time come into
existence in compliance with the provisions of Section 7 and the other limitations set forth in this Section 1,  the holders of shares of the
Series A-1 Preferred Stock shall be entitled to receive dividends out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (other than a dividend payable solely in Common Stock or other securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock) on the Common Stock, at the rate (1) of six percent (6%) per annum based on the Series A-1 Issue Price (as
hereinafter defined in Subsection 2(a)) per share of the Series A-1 Preferred Stock (appropriately adjusted for any stock
split, dividend, combination or other recapitalization) for the first two years after the date upon which any shares of Series A-1 Preferred Stock were first issued (the
"Purchase Date" with respect to such series), plus (2) an additional one percent (1%) per annum based on the Series A-1 Issue
Price (appropriately adjusted for any stock split, dividend, combination or other recapitalization) for each successive year after the second anniversary of the Purchase Date, which shall accrue and
be payable (whether or not declared) semi-annually in shares of Series A-1 Preferred valued at such Series A-1 Issue Price (the
"PIK Dividend"). The PIK Dividend shall increase to a rate of twelve percent (12%) per annum if a Registration Statement on Form S-3
(or other similar form) covering the continuous sale of the shares of Common Stock into 







 



which
the Series A-1 Preferred Stock shall have converted pursuant to Rule 415 under the Securities Act or any successor thereto has not been declared effective by the
Securities and Exchange Commission ("SEC") by the date that is 120 days after the Purchase Date (the "Shelf Registration
Deadline"). In such event, the PIK Dividend rate shall return to its prior rate (six percent (6%) as of the Purchase Date) after the date that the Registration Statement is
declared effective. Such dividends shall be subject to the rights of series of Preferred Stock which may from time to time come into existence in compliance with the provisions of  Section 7, shall
be paid to the extent assets are legally available therefor and any amounts for which assets are not legally available shall be
paid promptly as assets become legally available therefor; any partial payment will be made pro rata among the holders of such shares. Unless full dividends on the Series A-1
Preferred Stock for the then current dividend period shall have been paid or declared and a sum sufficient for the payment thereof set apart, no dividend whatsoever (other than a dividend payable
solely in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock) shall be paid or declared,
and no distribution shall be made, on any Common Stock. After full dividends on the Series A-1 Preferred Stock for the then current dividend period have been paid, the holders of
shares of Series A-1 Preferred Stock and the holders of shares of Common Stock shall participate in any further dividends on a pro rata basis determined by the number of shares of
Common Stock held by each (assuming conversion of all such Series A-1 Preferred Stock). In the event that payment of PIK Dividends on any dividend payment date would cause the
Corporation to issue more than 19.9% of its outstanding shares of Common Stock at a price below the market price on the principal market on which its equity securities are traded
("Principal Market"), the dividends which otherwise would be payable as PIK Dividends shall become payable in cash. 


        2.    Liquidation Preference.    



        a.     In
the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, subject to the rights of series of Preferred Stock which
may from time to time come into existence in compliance with the provisions of Section 7, the holders of Series A-1 Preferred
Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount
per share equal to the sum of (i) Five Dollars and Fifty Cents ($5.50) for each outstanding share of Series A-1 Preferred Stock (the
"Series A-1 Issue Price") and (ii) an amount in cash equal to any accrued (whether or not declared) but unpaid dividends (such
amount, in the aggregate, being referred to herein as the "Premium"). If upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series A-1 Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of
series of Preferred Stock which may from time to time come into existence in compliance with the provisions of Section 7, the entire assets and
funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A-1 Preferred Stock in proportion to the amount of such
stock owned by each such holder. 


        b.     Upon
the completion of the distribution required by Subsection (a) of this Section 2  and any other distribution which may be required with respect to
series of Preferred Stock which may from time to
time come into existence in compliance with the provisions of Section 7, remaining assets shall be distributed among the holders of the Common
Stock of the Corporation. 


        c.     A
consolidation or merger of the Corporation with or into any other corporation or corporations, or a sale, conveyance or disposition of all or substantially all of the
assets of the Corporation or the effectuation by the Corporation of a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding up within the meaning of this Section 2, but shall instead be
treated pursuant to Section 5.



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        d.     The
Corporation shall give each holder of record of Series A-1 Preferred Stock written notice of a liquidation, dissolution or winding up described in
subsection (a), above, not later than ten (10) days prior to the stockholders' meeting called to approve such transaction, or ten (10) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this Section 2, and the Corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than five (5) days after
the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock which are
entitled to such notice rights or similar notice rights and which represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock. 




        3.    Redemption.    



        a.     Subject
to the rights of series of Preferred Stock which may from time to time come into existence in compliance with the provisions of  Section 7, within thirty (30) days after the occurrence of a
Redemption Event (defined below) upon receipt by the Corporation of a written
request from the holders of a majority of the then outstanding Series A-1 Preferred Stock, that all or some of such holders' shares be redeemed, and concurrently with surrender by
such holders of the certificates representing such shares to be redeemed, the Corporation shall, to the extent it may lawfully do so, redeem in cash the shares specified in such request by paying in
cash therefor a sum per share equal to the Series A-1 Issue Price plus any accrued but unpaid dividends (the "Series A-1 Redemption
Price"). The Corporation shall give each holder of Series A-1 Preferred Stock at least ten (10) days prior written notice of the date (the
"Redemption Date") and place of redemption and the dollar amount of the Series A-1 Redemption Price, which notice shall be effective
upon delivery or three days after deposit in the United States mail, postage prepaid and addressed to each holder of record at his address appearing on the books of the Corporation. If the certificate
surrendered represents a greater number of shares than the number redeemed, the Corporation shall issue to such holder a new certificate representing the shares which remain outstanding. 




        For
purposes of this Subsection (a) of Section 3, a Redemption Event shall
be (1) the resignation of Larry D. Grandia as Chief Executive Officer of the Corporation; (2) the failure of the Corporation to hire a replacement for Larry D. Grandia as Chief Executive
Officer of the Corporation within 180 days following his termination as Chief Executive Officer by the Corporation, or (3) the failure of Georges J. Daou or Daniel J. Daou to vote their
shares of the Corporation in favor of a transaction described in Section 2(a) or (c), above, in
the event that the majority of the Board of Directors of the Corporation vote in favor of such transaction. 



        b.     From
and after the Redemption Date, unless there shall have been a default in payment of the Series A-1 Redemption Price, all dividends on the
Series A-1 Preferred Stock designated for redemption in the Redemption Notice shall cease to accrue, all rights of the holders of such shares as holders of
Series A-1 Preferred Stock (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. Subject to the rights of series of Preferred
Stock which may from time to time come into existence in compliance with the provisions of Section 7, if the funds of the Corporation legally
available for redemption of shares of Series A-1 Preferred Stock on any Redemption Date, or any subsequent date as provided in Subsection 3(a),  are insufficient to redeem the total number of
shares of Series A-1 Preferred Stock to be redeemed on such date, those funds which are legally available will
be used to redeem the maximum possible 



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number
of such shares ratably among the holders of such shares to be redeemed. The shares of Series A-1 Preferred Stock not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein. Subject to the rights of series of Preferred Stock which may from time to time come into existence in compliance with the provisions of  Section 7, at any
time thereafter when additional funds of the Company are legally available for the redemption of shares of
Series A-1 Preferred Stock, such funds will immediately be used to redeem the balance of the shares which the Company has become obligated to redeem on any Redemption Date but which
it has not redeemed. 


        c.     The
Corporation may, upon a vote of its Board of Directors, redeem the remaining outstanding Series A-1 Preferred Stock by payment in cash of the
Series A-1 Redemption Price in accordance with the notice and other terms and conditions set forth above in this Section 3 at
any date which is four years after the Purchase Date. 




        4.    Conversion.    The holders of the Series A-1 Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"): 



        a.    Right To Convert.    



        i.      Subject
to Subsection (c), each share of Series A-1 Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such share and prior to the close of business on any Redemption Date as may have been fixed in any Redemption Notice with
respect to such share, at the office of the Corporation or any transfer agent for the Series A-1 Preferred Stock, into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Series A-1 Issue Price by the Conversion Price at the time in effect for such share. The initial "Conversion Price" per share for shares of
Series A-1 Preferred Stock shall be the Series A-1 Issue Price; provided, however, that the Conversion Price for the Series A-1 Preferred Stock
shall be subject to adjustment as set forth in Subsection 4(c).



        ii.     In
the event of a call for redemption of any shares of Series A-1 Preferred Stock pursuant to Section 3,  unless there shall have been a default in payment of the Series A-1 Redemption Price,
the Conversion Rights shall terminate as to the shares designated for
redemption at the close of business on the Redemption Date. 


        iii.    Each
share of Series A-1 Preferred Stock shall automatically and immediately be converted into shares of Common Stock at the Conversion Price at the
time in effect for such Series A-1 Preferred Stock in the event that the closing price of the Corporation's Common Stock on the Principal Market equals or exceeds $11.00 per share
(appropriately adjusted for any stock split, dividend, combination or other recapitalization) for twenty (20) consecutive trading days at any time after the first anniversary date of the
Purchase Date. In addition, fifty percent (50%) of the Series A-1 Preferred Stock held by each Holder shall automatically and immediately convert into shares of Common Stock at the
Conversion Price at the time in effect for such Series A-1 Preferred Stock in the event that at any time during the period commencing 180 days from the Purchase Date and
ending on the anniversary date of the Purchase Date the closing price of the Corporation's Common Stock on the Principal Market equals or exceeds $13.75 (appropriately adjusted for any stock split,
dividend, combination or other recapitalization) for twenty (20) consecutive trading days. 




        b.    Mechanics Of Conversion.    Before any holder of Series A-1 Preferred Stock shall be entitled
to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the
Series A-1 Preferred Stock, and shall give written notice by mail, postage prepaid, to the Corporation at its principal corporate office, of the election to convert the same and
shall state 



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therein
the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series A-1 Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of
Series A-1 Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date. 



        c.    Conversion Price Adjustments of Preferred Stock.    The Conversion Price of the Series A-1
Preferred Stock shall be subject to adjustment from time to time as follows: 



        i.      A.
Upon each issuance by the Corporation of any Additional Stock (as defined below) after the Purchase Date and before the first anniversary date of the Purchase Date,
without consideration or for a consideration per share less than the Conversion Price for such series in effect immediately prior to the issuance of such Additional Stock, the Conversion Price for
such series in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this Clause (i)) be adjusted to a price determined by multiplying such Conversion
Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance (not including shares excluded from the definition of
Additional Stock by Subsection 4(c)(ii)(b)) plus the number of shares of Common Stock which the aggregate consideration received by the
Corporation for such issuance of Additional Stock would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to
such issuance (not including shares excluded from the definition of Additional Stock by Subsection 4(c)(ii)(b)) plus the number of shares of such
Additional Stock. 





        However,
the foregoing calculation shall not take into account shares deemed issued pursuant to Subsection 4(c)(i)(e) on account of
options, rights or convertible or exchangeable securities (or the actual or deemed consideration therefor), except to the extent (i) such options, rights or convertible or exchangeable
securities have been exercised, converted or exchanged or (ii) the consideration to be paid upon such exercise, conversion or exchange per share of underlying Common Stock is less than or equal
to the per share consideration for the Additional Stock which has given rise to the Conversion Price adjustment being calculated. 




        B.    Except
to the limited extent provided for in Subsections (e)(3) and (e)(4),  no adjustment of such Conversion Price pursuant to this Subsection 4(c)(i) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such adjustment, and (for purposes of clarification only) in no event will such adjustment have the effect of increasing the
Conversion Price above the Series A-1 Issue Price. 


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


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


        E.    In
the case of the issuance (whether before, on or after the applicable Purchase Date) of options to purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock or options to purchase or rights to 




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subscribe
for such convertible or exchangeable securities, the following provisions shall apply for all purposes of this Subsection 4(c)(i) and  Subsection 4(c)(ii):



        1.     The
aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without
limitation, the passage of time, but without taking into account potential antidilution adjustments) of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Subsections 4(c)(i)(c)  and (c)(i)(d)), if any, received by the Corporation upon the issuance of such options or rights plus the exercise price provided
in such options or rights for the Common Stock covered thereby. 


        2.     The
aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange (assuming the satisfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any,
to be received by the Corporation upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner
provided in Subsections 4(c)(i)(c) and (c)(i)(d)).



        3.     In
the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to the Corporation upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the Conversion Price
of the Series A-1 Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no
further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such
securities. 


        4.     Upon
the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the Series A-1 Preferred Stock, to the extent in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities which
remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such
securities. 


        5.     The
number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to Subsections 4(c)(i)(e)(1)  and (2) shall be
appropriately adjusted to reflect any change, termination or expiration of the type described in either  Subsection 4(c)(i)(e)(3) or (4).





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        ii.     "Additional Stock" shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to  Subsection 4(c)(i)(e)) by the Corporation after the
Purchase Date and before the first anniversary date of the Purchase Date, other than: 



        A.    Common
Stock issued pursuant to a transaction described in Subsection 4(c)(iii),



        B.    shares
of Common Stock issuable or issued to employees, consultants or directors of the Corporation directly or pursuant to a stock option plan, stock option agreement,
stock purchase plan or restricted stock plan approved by the Board of Directors of the Corporation, or in connection with lease lines, bank financings or other similar transactions, 


        C.    securities
issued in connection with an underwritten public offering, 


        D.    securities
issued in connection with a merger or stock or asset acquisition, or 



        E.    securities
issued to multiple Qualified Institutional Buyers in a transaction which is managed by an investment bank and in which the gross proceeds equal or exceeds
Fifty Million Dollars ($50,000,000). 




        iii.    In
the event the Corporation should at any time or from time to time after the Purchase Date fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities
or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series A-1 Preferred Stock shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with
respect to Common Stock Equivalents determined from time to time in the manner provided for deemed issuances in Subsection 4(c)(i)(e).



        iv.    If
the number of shares of Common Stock outstanding at any time after the Purchase Date is decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price for the Series A-1 Preferred Stock shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares. 


        v.     Notwithstanding
the above, in no event shall the Conversion Price on the Series A-1 Preferred Stock be adjusted to a price that would cause the
Corporation to issue that number of shares of Common Stock upon conversion of the Series A-1 Preferred Stock which would be greater than 19.9% of the number of outstanding shares of
the Corporation's Common Stock on the Purchase Date. 




        d.    Other Distributions.    In the event the Corporation shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in  Subsection 4(c)(iii), then, in each such
case for the purpose of this Subsection 4(d), the
holders of the Series A-1 Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock
of the Corporation into which their shares of Series A-1 


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Preferred
Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the Corporation entitled to receive such distribution. 


        e.    Recapitalizations.    If at any time or from time to time there shall be a recapitalization of the Common Stock
(other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 4 or  Section 5), provision
shall be made so that the holders of the Series A-1 Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series A-1 Preferred Stock the number of shares of stock or other securities or property of the Company or otherwise, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this  Section 4 with respect to the rights of the holders of the Series A-1 Preferred Stock after the recapitalization to the end
that the provisions of this Section 4 (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A-1 Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. 


        f.    No Impairment.    The Corporation will not, by amendment of its Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this  Section 4 and
in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the
Series A-1 Preferred Stock against impairment. 


        g.    No Fractional Shares and Certificate as to Adjustments.    



        i.      No
fractional shares shall be issued upon conversion of the Series A-1 Preferred Stock, and the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole share. 


        ii.     Upon
the occurrence of each adjustment or readjustment of the Conversion Price of Series A-1 Preferred Stock pursuant to this  Section 4, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series A-1 Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of
Series A-1 Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion
Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of
Series A-1 Preferred Stock. 




        h.    Notices of Record Date.    In the event of any taking by the Corporation of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series A-1
Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution
or right, and the amount and character of such dividend, distribution or right. 


        i.    Reservation of Stock Issuable upon Conversion.    The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series A-1 Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding 


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shares
of the Series A-1 Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series A-1 Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such
purposes. 


        j.    Notices.    Any notice required by the provisions of this Section 4  to be given to the holders of shares of
Series A-1 Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the Corporation. 


        5.    Merger, Consolidation.    



        a.     At
any time, in the event of: 



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


        ii.     a
sale of all or substantially all of the assets of the Corporation, unless the Corporation's stockholders immediately prior to such sale will, as a result of such sale,
hold (by virtue of securities issued as consideration for the Corporation's sale) at least fifty percent (50%) of the voting power of the purchasing entity, then, subject to the rights of series of
Preferred Stock which may from time to time come into existence in compliance with the provisions of Section 7, unless waived as evidenced by the
consent of the holders of a majority of the shares of Series A-1 Preferred Stock, holders of the Series A-1 Preferred Stock shall receive for each share of such
stock in cash or in securities received from the acquiring corporation, or in a combination thereof, at the closing of any such transaction, an amount equal to the greater of (A) the
Series A-1 Issue Price, plus an amount equal to the Premium as of the date of closing of such transaction or (B) that share of the total consideration to be paid by the
acquiring entity in such transaction as equals the proportion that the number of shares of Common Stock and Common Stock issuable upon conversion of the outstanding Series A-1
Preferred Stock then held by each of them bears to the total number of shares of outstanding Common Stock and shares of Common Stock issuable upon conversion of the outstanding
Series A-1 Preferred Stock. Such payments shall be made with respect to the Series A-1 Preferred Stock (A) by redemption of such shares in one installment
pursuant to Subsection 3(b) (provided that in such event the moment immediately prior to the closing of such transaction shall, for purposes of
this subparagraph, be deemed to be the "Redemption Date", only ten (10) days' prior notice of the date fixed for redemption need be given and the
consent of the holders of the Series A-1 Preferred Stock shall be deemed to have been given) or (B) by purchase of such shares of Series A-1 Preferred
Stock by the surviving corporation, entity or person or by the Corporation. In the event the proceeds of the transaction are not sufficient to make full payment of the aforesaid preferential amounts
to the holders of the Series A-1 Preferred Stock in accordance herewith, then, subject to the rights of series of Preferred Stock which may from time to time come into existence in
compliance with the provisions of Section 7, the entire amount payable in respect of the proposed transaction shall be distributed among the
holders of the Series A-1 Preferred Stock in proportion to the amount of such stock owned by each such holder. 




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        b.     Any
securities to be delivered to the holders of the Series A-1 Preferred Stock pursuant to Subsection 5(a)  above shall be valued as follows: 



        i.      Securities
not subject to investment letter or other similar restrictions on free marketability (covered by (ii) below): 



        A.    If
traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the 15-day
period ending three (3) days prior to the closing; 


        B.    If
actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever are applicable) over
the 15-day period ending three (3) days prior to the closing; and 


        C.    If
there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Corporation and the holders of Preferred Stock which
would be entitled to receive such securities or the same type of securities and which Preferred Stock represents at least a majority of the voting power of all then outstanding shares of such
Preferred Stock. 




        ii.     The
method of valuation of securities subject to investment letter or other restrictions on free marketability shall be to make an appropriate discount from the market
value determined as above in (i) (A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by the Corporation and the holders of Preferred Stock which
would be entitled to receive such securities or the same type of securities and which represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock. 




        c.     In
the event the requirements of Subsection 5(a) are not complied with, the Corporation shall forthwith either: 



        i.      cause
such closing to be postponed until such time as the requirements of this Section 5 have been complied with,
or 


        ii.     cancel
such transaction, in which event the rights, preferences and privileges of the holders of the Series A-1 Preferred Stock shall revert to and be
the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in Section 5.




        d.     The
Corporation shall give each holder of record of Series A-1 Preferred Stock written notice of such impending transaction not later than ten
(10) days prior to the stockholders' meeting called to approve such transaction, or ten (10) days prior to the closing of such transaction, whichever is earlier, and shall also notify
such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this  Section 5,
and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take
place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than five (5) days after the Corporation has given notice of any material
changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock which is entitled
to such notice rights or similar notice rights and which represents at least a majority of the voting power of all then outstanding shares of such Preferred Stock. 


        e.     The
provisions of this Section 5 are in addition to the protective provisions of  Section 7.




        6.    Voting Rights.    Except as set forth below, the holder of each share of Series A-1 Preferred
Stock shall have the right to one vote for each share of Common Stock into which such Series A-1 


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Preferred
Stock could then be converted (with any fractional share determined on an aggregate conversion basis being rounded up to the nearest whole share), and with respect to such vote, such holder
shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common
Stock have the right to vote. 


        7.    Protective Provisions.    So long as fifty percent (50%) of the Series A-1 Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of
Series A-1 Preferred Stock, voting as a separate class: 



        a.     liquidate
or dissolve, or sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any
other corporation (other than a wholly owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the
Corporation is disposed of (provided, however that the holders of Series A-1 Preferred Stock will not be entitled to vote as a class on a liquidation, a dissolution, mergers,
consolidations, sales of assets, business combinations or similar transactions in which the holders of Series A-1 Preferred Stock receive per share consideration of at least Eight
Dollars ($8.00) (appropriately adjusted for any stock split, dividend, combination or other recapitalization) after the Purchase Date; or 


        b.     alter
or change the rights, preferences or privileges of the shares of Series A-1 Preferred Stock so as to affect adversely such shares; or 


        c.     increase
the authorized number of shares of Series A-1 Preferred Stock; or 



        d.     create
any new class or reclassify any series of stock or any other securities convertible into equity securities of the Corporation having a preference over, or being on
a parity with, the Series A-1 Preferred Stock with respect to voting, redemption, dividends or upon liquidation; or 


        e.     repurchase
or redeem any shares of the Corporation's capital stock other than the Series A-1 Preferred Stock and shares repurchased at cost from
employees or officers; or 


        f.      declare
or pay any dividend on any shares of capital stock, except the Series A-1 Preferred Stock; or 


        g.     increase
to more than seven the authorized size of the Corporation's Board of Directors; or 


        h.     amend
the Certificate of Incorporation or Bylaws of the Corporation to adversely effect the rights, preferences or privileges of the Series A-1
Preferred Stock; or 


        i.      approve
any acquisitions of capital stock or assets that would require the issuance of more than ten percent (10%) of the Corporation's then outstanding Common Stock
(assuming conversion of the Series A-1 Preferred Stock) or cash consideration of more than $15,000,000. 




        8.    Status of Converted or Redeemed Stock.    In the event any shares of Series A-1 Preferred
Stock shall be redeemed or converted pursuant to Section 3 or Section 4, the shares so converted or redeemed shall be canceled and shall
not be issuable by the Corporation. The Certificate of Incorporation of the Corporation shall be appropriately amended to effect the corresponding reduction in the Corporation's authorized capital
stock. 


[REMAINDER
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        IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Correction to be duly executed by John A. Roberts, its Chief Financial Officer and Secretary, this    day
of June, 2005. 



	 	 	DAOU SYSTEMS, INC.
	
 	
 	

By:	


	 	 	Name:	 	John A. Roberts
	 	 	Title:	 	Chief Financial Officer and Secretary




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EXHIBIT 4.8