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                                                                     EXHIBIT 3.5


                     CERTIFICATE OF DESIGNATION, PREFERENCES
                       AND RIGHTS OF SERIES A CONVERTIBLE
                                 PREFERRED STOCK

                                       OF


                          AMPERSAND MEDICAL CORPORATION


         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Certificate of
Incorporation, as amended, there be, and hereby is, created out of the class of
5,000,000 shares of Preferred Stock of the Company authorized in Section 4.1 of
its Certificate of Incorporation, as amended, a series of Preferred Stock of the
Company with the following voting powers, designation, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions:

         1.       Designation and Number of Shares.

                  590,197 shares of Preferred Stock are hereby designated as
Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A
Preferred Stock").

         2.       Dividends. The Series A Preferred Stock shall not bear any
dividend.

         3.       Redemption. The Series A Preferred Stock shall not be
redeemable.

         4.       Liquidation

                  Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary ("Liquidation"), the holders of record
of the shares of the Series A Preferred Stock shall be entitled to receive,
before and in preference to any distribution or payment of assets of the Company
or the proceeds thereof that may be made or set apart for the holders of Common
Stock or any other security junior to the Series A Preferred Stock in respect of
distributions upon Liquidation out of the assets of the Company legally
available for distribution to its stockholders, an amount in cash equal to $4.50
per share (the "Stated Value") on the date fixed for distribution of assets of
the Company (the "Liquidation Preference"). If, upon such Liquidation, the
assets of the Company available for distribution to the holders of Series A
Preferred Stock and any other series of Preferred Stock then outstanding ranking
in parity with the Series A Preferred Stock upon Liquidation (the "Parity
Stock") shall be insufficient to permit payment in full to the holders of the
Series A Preferred Stock and the Parity Stock, then the entire assets and funds
of the Company legally available for distribution to such holders shall be
distributed ratably among the holders of the Series A Preferred Stock and the
Parity Stock based upon the relative amounts that would have been payable to the
holders of each series of Preferred Stock had there been sufficient assets and
funds to make full payment of the respective amounts due to such holders. By way
of illustration only, if 1,000,000 shares of Series A Preferred Stock were
issued and outstanding, and the Stated Value was $4.50 per share, the aggregate
Liquidation Preference of such shares would be $4,500,000. If 1,000,000 shares
of Parity Stock were also issued and outstanding at the same time, and the
Stated Value was $2.00 per share, the aggregate Liquidation Preference of such
shares would be $2,000,000. The Liquidation Preference of each of


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the two series of Preferred Stock would then be added together (i.e.,
$4,5000,000 plus $2,000,000 = $6,500,000) and the result would be divided into
the Liquidation Preference of each of the two series of Preferred Stock to
determine the relative percentage of the total assets and funds of the Company
that would be the aggregate Liquidation Preference of each series. The aggregate
Liquidation Preference of each series would then be divided by the number of
issued and outstanding shares of such series in order to determine the per share
Liquidation Preference. A merger or consolidation shall be considered a
Liquidation unless the holders of the Series A Preferred Stock receive
securities of the surviving corporation having rights substantially similar to
the rights of the Series A Preferred Stock and the stockholders of the Company
immediately prior to such transaction become the holders of at least a majority
in interest of the voting securities of the surviving corporation immediately
thereafter. Notwithstanding Section 7 hereof, such provision may be waived in
writing by a majority in interest of the holders of the then outstanding shares
of Series A Preferred Stock.

         5.       Other Series of Preferred Stock. The Company may issue, at any
time and from time to time, without the consent of the holders of the Series A
Preferred Stock, other series of Preferred Stock.

         6.       Conversion Rights.

                  Each holder of record of shares of the Series A Preferred
Stock shall have the right to convert all or any part of such holder's shares of
Series A Preferred Stock into Common Stock as follows:

                  (A)      Each share of the Series A Preferred Stock shall be
convertible, at the option of the respective holders thereof, at any time after
the date of issuance, at the office of any transfer agent for the Series A
Preferred Stock, or if there is none, then at the office of the transfer agent
for the Common Stock, or if there is no such transfer agent, at the principal
executive office of the Company, into that number-of shares of Common Stock of
the Company equal to the Stated Value divided by the conversion price in effect
at the time of conversion (the "Conversion Price"). The Conversion Price shall
initially be $10.3034. The number of shares of Common Stock into which each
share of Series A Preferred Stock is convertible is hereinafter collectively
referred to as the "Conversion Rate."

                  (B)      During the three (3) year period commencing on March
1, 2001, if the then current market price of the Company's Common Stock (as
determined in accordance with Paragraph 6(G)(ii) hereof) equals or exceeds
$13.50, each share of Series A Preferred Stock then outstanding shall, at the
option of the Company, upon giving twenty (20) days' prior written notice to
each holder of record, by virtue of such condition, and without any action on
the part of the holder thereof, be deemed automatically converted into that
number of shares of Common Stock into which the Series A Preferred Stock would
then be converted at the then effective Conversion Rate.

                  (C)      Before any holder of Series A Preferred Stock shall
be entitled to convert the same into shares of Common Stock, such holder shall
surrender the certificate or certificates therefore, duly endorsed, or
accompanied by a duly executed stock power, at the office of the Company or of
any transfer agent for the Series A Preferred Stock, and shall give written
notice to the Company at its principal corporate office, of the election to
convert the same. The Company shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Series A Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid.


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                  (D)      All shares of Common Stock that may be issued upon
conversion of the Series A Preferred Stock will, upon issuance, be duly issued,
fully paid and nonassessable, and free from all taxes, liens, and charges with
respect to the issuance thereof At all times that any shares of Series A
Preferred Stock are issued and outstanding, the Company shall have authorized
and shall have reserved for the purpose of issuance upon such conversion into
Common Stock of all Series A Preferred Stock, a sufficient number of shares of
Common Stock to provide for the conversion of all issued and outstanding shares
of Series A Preferred Stock at the then effective Conversion Rate.

                  (E)      The Conversion Price shall be subject to adjustment
from time to time as follows:

                           (i)      In case the Company shall (a) issue Common
Stock as a dividend or distribution on any class of the capital stock of the
Company, (b) split or otherwise subdivide its outstanding Common Stock, (c)
combine the outstanding Common Stock into a smaller number of shares, or (d)
issue by reclassification of its Common Stock (except in the case of a merger,
consolidation or sale of all or substantially all of the assets of the Company
as set forth in Paragraph 6(E)(ii) hereof) any shares of the capital stock of
the Company, the Conversion Price in effect on the record date for any stock
dividend or the effective date of any such other event shall be increased (or
decreased in the case of a reverse stock split) so that the holder of each share
of the Series A Preferred Stock shall thereafter be entitled to receive, upon
the conversion of such share, the number of shares of Common Stock or other
capital stock that it would own or be entitled to receive immediately after the
happening of any of the events mentioned above had such share of the Series A
Preferred Stock been converted immediately prior to the close of business on
such record date or effective date. The adjustments herein provided shall become
effective immediately following the record date for any such stock dividend or
the effective date of any such other events. There shall be no reduction in the
Conversion Price in the event that the Company pays a cash dividend.

                           (ii)     In case of any reclassification or similar
change of outstanding shares of Common Stock of the Company, or in case of the
consolidation or merger of the Company with another corporation, or the
conveyance of all or substantially all of the assets of the Company in a
transaction in which holders of the Common Stock receive shares of stock or
other property, including cash, each share of the Series A Preferred Stock
shall, after such event and subject to the other rights of the Series A
Preferred Stock as set forth elsewhere herein, be convertible only into the
number of shares of stock or other securities or property, including cash, to
which a holder of the number of shares of Common Stock of the Company
deliverable upon conversion of such shares of the Series A Preferred Stock would
have been entitled to upon such reclassification, change, consolidation, merger
or conveyance had such share been converted immediately prior to the effective
date of such event.

                           (iii)    No adjustment in the Conversion Price or the
number of shares of Common Stock into which a share of Series A Preferred Stock
may be converted shall be required unless such adjustment (plus any adjustments
not previously made by reason of this subparagraph (iii)) would require an
increase or decrease of at least 1 and 1/2% in the number of shares of Common
Stock into which each share of the Series A Preferred Stock is then convertible;
provided, however, that any adjustments that are not required to be made by
reason of this subparagraph (iii) shall be carried forward and taken into
account in any subsequent adjustment. All calculations and adjustments shall be
made to the nearest cent or to the nearest 1/100th of a


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share, as the case may be.

                           (iv)     After each adjustment of the Conversion
Price, the Company shall promptly prepare a certificate signed by its Chairman
or Chief Financial Officer and a Secretary or Assistant Secretary setting forth
the Conversion Price as so adjusted, the number of shares of Common Stock into
which the Series A Preferred Stock may be converted, and a statement of the
facts upon which such adjustment is based, and such certificate shall forthwith
be filed with the transfer agent, if any, for the Series A Preferred Stock, and
the Company shall cause a copy of such statement to be sent by ordinary first
class mail to each holder of record of Series A Preferred Stock.

                  (F)      The Company shall at all times reserve and keep
available, out of its authorized but unissued shares of Common Stock or out of
shares of Common Stock held in its treasury, solely for the purpose of effecting
the conversion of the shares of the Series A Preferred Stock, the full number of
shares of Common Stock deliverable upon the conversion of all shares of the
Series A Preferred Stock from time to time outstanding. The Company shall from
time to time in accordance with Delaware law take all steps necessary to
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of Common Stock remaining unissued shall not be sufficient to
permit the conversion of all of the shares of the Series A Preferred Stock.

                  (G)      (i) No fractional- shares or scrip representing
fractional shares of Common Stock shall be issued upon the conversion of the
Series A Preferred Stock. In lieu of any fractional shares to which a holder
would otherwise be entitled, the Company shall pay cash, equal to such fraction
multiplied by the then current market price per share of the Common Stock (as
determined in accordance with the provisions of Paragraph 6(G)(ii) hereof) on
the date of conversion.

                           (ii)     For the purposes of any computation under
this Paragraph 6, the current market price per share of Common Stock on any date
shall be deemed to be the average of the closing prices for the twenty (20)
consecutive trading days commencing forty-five (45) business days before the day
in question. The closing price for each day shall be the last reported sales
price regular way, or, in case no sale takes place on such day, the average of
the closing high bid and low asked prices regular way, in either case (a) as
officially quoted on the principal United States market for the Common Stock, as
determined by the Board of Directors of the Company, or b) if, in the reasonable
judgment of the Board of Directors of the Company, there exists no principal
United States market for the Common Stock, then as reasonably determined by the
Board of Directors of the Company.

                  (H)      The Company will pay any taxes that may be payable
with respect to any issuance or delivery of shares of Common Stock upon
conversion of shares of the Series A Preferred Stock. However, the Company shall
not be required to pay any tax that may be payable with respect to any transfer
of any shares of the Series A Preferred Stock or any shares of Common Stock
issued as a consequence of a conversion hereunder, and no such transfer shall be
made unless and until the person requesting such transfer has paid to the
Company the amount of any such tax, or has established, to the satisfaction of
the Company, that such tax has been paid or that no such tax is payable.

                  (I)      The Company will not, by amendment of its Certificate
of Incorporation, as amended, or through any reorganization, recapitalization,
transfer of assets,


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consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Paragraph 6 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 Preferred Stock against impairment.

                  (J)      For purposes of this Paragraph 6, any and all
conversions shall be deemed to have been made immediately prior to the close of
business on the date of surrender of the shares of Series A Preferred Stock to
be converted, and the former holder of such shares of Series A Preferred Stock,
or such holder's designee, shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of such date.

         7.       Voting Rights. The holders of the Series A Preferred Stock
shall have no right to vote for any purpose, except as specifically required by
the General Corporation Law of the State of Delaware and except as follows:

                  (A)      So long as any shares of the Series A Preferred Stock
remain outstanding, the affirmative vote of the holders of a majority of the
then outstanding shares of Series A Preferred Stock, voting as one class
together with any other series of the Company's Preferred Stock then entitled to
vote on such matter, regardless of series, either expressed in writing or at a
meeting called for that purpose, shall be necessary to repeal, amend or
otherwise change this Certificate of Designation, Preferences and Rights or the
Certificate of Incorporation of the Company in a manner which would alter or
change the powers, preferences or rights of the Series A Preferred Stock so as
to adversely affect the Series A Preferred Stock. However, in case the Series A
Preferred Stock would be affected by any action referred to in this Paragraph
7(A) in a different manner than any other series of Preferred Stock then
outstanding, the holders of the shares of the Series A Preferred Stock shall be
entitled to vote as a single and separate class, and the Company shall not take
such action without the affirmative vote, as above provided, of at least a
majority of the total number of shares of the Series A Preferred Stock then
outstanding, in addition to or as a specific part of the consent or affirmative
vote hereinabove otherwise required.

                  (B)      Each share of the Series A Preferred Stock shall
entitle the holder thereof to one vote on all matters to be voted on by the
holders of the Series A Preferred Stock, as set forth above. However, if the
Series A Preferred Stock is entitled to vote together with the holders of Common
Stock as one class, then each share of Series A Preferred Stock shall entitle
the holder thereof to the number of votes per share that equals the number of
whole shares of Common Stock into which each such share of Series A Preferred
Stock is then convertible, calculated to the nearest whole share.

         8.       Miscellaneous.

                  (A)      All shares of the Series A Preferred Stock purchased
or otherwise acquired by the Company or surrendered to it for conversion into
Common Stock as provided above shall be cancelled and shall be restored to the
status of authorized but unissued Preferred Stock of the Company.

                  (B)      There shall be no sinking fund with respect to the
Series A Preferred Stock.


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                  (C)      The shares of the Series A Preferred Stock shall not
have any preferences, voting powers or relative, participating, optional,
preemptive or other special rights except as set forth above in this Certificate
of Designation, Preferences and Rights and in the Certificate of Incorporation
of the Company, as amended.

                  (D)      The holders of record of shares of the Series A
Preferred Stock shall be entitled to receive all communications sent by the
Company to the holders of the Common Stock, sent by regular U.S. mail to such
holder's address as set forth in the records of the registrar for the Series A
Preferred Stock.

         IN WITNESS WHEREOF, Ampersand Medical Corporation. has caused this
Certificate to be signed by Peter P. Gombrich, its Chairman of the Board and
Chief Executive Officer, on February 6, 2001, and such person hereby affirms
under penalty of perjury that this Certificate is the act and deed of Ampersand
Medical Corporation and that the facts stated herein are true and correct.


                                   AMPERSAND MEDICAL CORPORATION


                                   By:___________________________________
                                       Peter P. Gombrich, Chairman of the Board
                                       and Chief Executive Officer



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