EXHIBIT 3.2

                           CERTIFICATE OF DESIGNATION
                                       OF
                               LOYALTYPOINT, INC.

     I, Paul Robinson, Chief Executive Officer of LoyaltyPoint, Inc., a
corporation organized and existing under the laws of the State of Delaware
(hereinafter the "Corporation"), DO HEREBY CERTIFY:

     That pursuant to Sections 151 and 242 of the Delaware General Corporation
Law, the Board of Directors of the Corporation on August 9, 2004, adopted the
following resolution.

     RESOLVED: That the designations, powers, preferences and rights of the
Series B Preferred Stock be, and they hereby are, as set forth below:

     1. DEFINITIONS. For purposes of this Certificate of Designation, the
following definitions apply:

        1.1 "BOARD" shall mean the Board of Directors of the Corporation.

        1.2 "CORPORATION" shall mean this corporation.

        1.3 "COMMON STOCK" shall mean the Common Stock, $0.001 par value, of
the Corporation.

        1.4 "COMMON STOCK DIVIDEND" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.

        1.5 "ORIGINAL ISSUE DATE" shall mean the date on which the first share
of Series B Preferred Stock is issued by the Corporation for the Series B
Preferred Stock.

        1.6 "ORIGINAL ISSUE PRICE" shall mean Thirteen Cents ($0.13) per share
for the Series B Preferred Stock.

        1.7 "PREFERRED STOCK" shall mean any other shares of preferred stock
other than the Series B Preferred Stock.

        1.8 "SERIES B PREFERRED STOCK" shall mean the Series B Preferred
Stock, $0.001 par value per share, of the Corporation.

        1.9 "SUBSIDIARY" shall mean any corporation of which at least fifty
percent (50%) of the outstanding voting stock is at the time owned directly or
indirectly by the Corporation or by one or more of such subsidiary corporations.

     2. DESIGNATION AND AMOUNT OF SHARES OF SERIES B PREFERRED STOCK. The
Corporation hereby authorizes the issuance of up to 30,769,231 shares of its
authorized, but unissued, Preferred Stock, $.001 par value per share, to be
designated as "Series B Preferred Stock".

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     3. DIVIDEND RIGHTS.

        3.1 Series B Preferred Stock. In each calendar year, the holders of
the then outstanding Series B Preferred Stock shall be entitled to receive,
when, as and if declared by the Board, out of any funds and assets of the
Corporation legally available therefor, noncumulative dividends when, as and if
declared by the Board.

        3.2 Participation Rights. If the Board shall declare additional
dividends out of funds legally available therefor in that calendar year, then,
subject to the dividend rights of any holders of Preferred Stock, such
additional dividends shall be declared pro rata on the Common Stock and the
Series B Preferred Stock on a pari passu basis according to the number of shares
of Common Stock held by such holders, where each holder of shares of Series B
Preferred Stock is to be treated for this purpose as holding the greatest whole
number of shares of Common Stock then issuable upon conversion of all shares of
Series B Preferred Stock held by such holder pursuant to Section 6.

        3.3 Non-Cash Dividends. Whenever a dividend provided for in this
Section 3 shall be payable in property other than cash, the value of such
dividend shall be deemed to be the fair market value of such property as
determined in good faith by the Board.

        3.4 Payment on Conversion. If the Corporation shall have declared any
unpaid dividends with respect to any Series B Preferred Stock, then immediately
prior to, and upon a conversion of any of the Series B Preferred Stock as
provided in Section 6, the Corporation shall, subject to the legal availability
of funds and assets therefor and subject to any liquidation preference rights
which may have been previously invoked under Section 4 hereof, pay in cash to
the holder of the shares of Series B Preferred Stock being converted the full
amount of any dividends declared and unpaid on such shares.

     4. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the funds and
assets that may be legally distributed to the Corporation's stockholders (the
"AVAILABLE FUNDS AND ASSETS") shall be distributed to stockholders in the
following manner:

        4.1 Series B Preferred Stock. The holder of each share of Series B
Preferred Stock then outstanding shall be entitled to be paid, out of the
Available Funds and Assets (and prior and in preference to any payment or
distribution setting apart of any payment or distribution of any Available Funds
and Assets on Shares of Common Stock), an amount per share equal to the Original
Issue Price of the Series B Preferred Stock plus all declared but unpaid
dividends thereon. If upon any liquidation, dissolution or winding up of the
Corporation, the Available Funds and Assets to be distributed to the holders of
the Series B Preferred Stock shall be insufficient to permit the payment to such
stockholders of their full preferential amount described in this subsection,
then all of the Available Funds and Assets shall be distributed among the
holders of the then outstanding Series B Preferred Stock pro rata according to
the number of outstanding shares of Series B Preferred Stock held by each holder
thereof.

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        4.2 Remaining Assets. If there are any Available Funds and Assets
remaining after the payment or distribution (or the setting aside for payment or
distribution) to the holders of the Series B Preferred Stock of their full
preferential amounts described above in this Section 4, then all such remaining
Available Funds and Assets shall be distributed among the holders of the then
outstanding Common Stock pro rata according to the number of shares of Common
Stock held by each holder thereof, subject to the dividend rights of any other
holders of Preferred Stock.

        4.3 Merger or Sale of Assets. Unless otherwise approved by vote of the
holders of at least a majority of the shares of the Series B Preferred Stock,
each of the following transactions shall be deemed to be a liquidation,
dissolution or winding up of the Corporation as those terms are used in this
Section 4: (a) any reorganization, consolidation, merger or similar transaction
or series of related transactions (each, a "COMBINATION TRANSACTION") in which
the Corporation is a constituent corporation or is a party if, as a result of
such combination transaction, the voting securities of the Corporation that are
outstanding immediately prior to the consummation of such combination
transaction (other than any such securities that are held by an "Acquiring
Stockholder", as defined below) do not represent, or are not converted into,
securities of the surviving corporation of such combination transaction (or such
surviving corporation's parent corporation if the surviving corporation is owned
by the parent corporation) that, immediately after the consummation of such
combination transaction, together possess at least a majority of the total
voting power of all securities of such surviving corporation (or its parent
corporation, if applicable) that are outstanding immediately after the
consummation of such combination transaction, including securities of such
surviving corporation (or its parent corporation, if applicable) that are held
by the Acquiring Stockholder; (b) a sale of all or substantially all of the
assets of the Corporation; or (c) any grant of an exclusive, irrevocable license
or licenses to all or substantially all of the Company's intellectual property
to an individual or entity other than a wholly-owned subsidiary of the
Corporation. For purposes of this Section 4.3, an "ACQUIRING STOCKHOLDER" means
a stockholder or stockholders of the corporation that (i) merges or combines
with the Corporation in such combination transaction or (ii) owns or controls a
majority of another corporation that merges or combines with the Corporation in
such combination transaction.

        4.4 Non-Cash Consideration. If any assets of the Corporation
distributed to stockholders in connection with any liquidation, dissolution, or
winding up of the Corporation are other than cash, then the value of such assets
shall be their fair market value as determined by the Board of Directors in good
faith, except that any securities to be distributed to stockholders in a
liquidation, dissolution, or winding up of the Corporation shall be valued as
follows:

               (a) The method of valuation of securities not subject to
investment letter or other similar restrictions on free marketability shall be
as follows:

                    (i) unless otherwise specified in a definitive agreement for
the acquisition of the Corporation, if the securities are then traded on a
national securities exchange or the Nasdaq National Market (or a similar
national quotation system), then the value shall be deemed to be the average of
the closing prices of the securities on such exchange or system over the thirty
(30) day period ending three (3) days prior to the distribution; and

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                    (ii) if (i) above does not apply but the securities are
actively traded over-the-counter, then, unless otherwise specified in a
definitive agreement for the acquisition of the Corporation, the value shall be
deemed to be the average of the closing bid prices over the thirty (30) calendar
day period ending three (3) trading days prior to the distribution; and

                    (iii) if there is no active public market as described in
clauses (i) or (ii) above, then the value shall be the fair market value
thereof, as mutually determined in good faith by the Board and the holders of a
majority of the Series B Preferred Stock then outstanding.

               (b) 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 subparagraphs
(a)(i),(ii) or (iii) of this subsection to reflect the approximate fair market
value thereof, as determined in good faith by the Board.

     5. VOTING RIGHTS.

        5.1 Common Stock. Each holder of shares of Common Stock shall be
entitled to one (1) vote for each share thereof held.

        5.2 Preferred Stock. Each holder of shares of Series B Preferred Stock
shall be entitled to the number of votes equal to the number of whole shares of
Common Stock into which such shares of Series B Preferred Stock could be
converted pursuant to the provisions of Section 6 below at the record date for
the determination of the stockholders entitled to vote on such matters or, if no
such record date is established, the date such vote is taken or any written
consent of stockholders is solicited.

        5.3 General. Subject to the other provisions of this Certificate of
Incorporation, each holder of Series B Preferred Stock shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled to notice of any stockholders' meeting in
accordance with the bylaws of the Corporation (as in effect at the time in
question) and applicable law, and shall be entitled to vote, together with the
holders of Common Stock, with respect to any question upon which holders of
Common Stock have the right to vote, except as may be otherwise provided by
applicable law. Except as otherwise expressly provided herein or as required by
law, the holders of Series B Preferred Stock and the holders of Common Stock
shall vote together and not as separate classes.

        5.4 Board of Directors Election. So long as 40% of the shares of
Series B Preferred Stock initially issued are outstanding, the holders of the
Series B Preferred Stock, voting as a separate class, shall be entitled to elect
one (1) director of the Corporation. The holders of Common Stock and Series B
Preferred Stock, voting together as a single class, shall be entitled to elect
the remaining directors of the Corporation, subject to the rights of any other
holders of Preferred Stock.

     6. CONVERSION RIGHTS. The outstanding shares of Series B Preferred Stock
shall be convertible into Common Stock as follows:

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        6.1 Optional Conversion.

               (a) At the option of the holder thereof, each share of Series B
Preferred Stock shall be convertible, at any time or from time to time into
fully paid and nonassessable shares of Common Stock as provided herein.

               (b) Each holder of Series B Preferred Stock who elects to convert
the same into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the transfer agent for
the Common Stock, and shall give written notice to the Corporation at such
office that such holder elects to convert the same and shall state therein the
number of shares of Series B Preferred Stock being converted. Thereupon the
Corporation shall promptly issue and deliver at such office to such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled upon such conversion. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the certificate or certificates representing the shares of Series B
Preferred Stock to be converted, and the person entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock on such date.

        6.2 Automatic Conversion.

               (a) Each share of Series B Preferred Stock shall automatically be
converted into fully paid and nonassessable shares of Common Stock, as provided
herein upon the Corporation's receipt of the written consent of the holders of a
majority of the then outstanding shares of Series B Preferred Stock to the
conversion of all then outstanding Series B Preferred Stock under this Section
6.

               (b) Upon the occurrence of the event specified in subparagraph
6.2(a) above, the outstanding shares of Series B Preferred Stock shall be
converted into Common Stock automatically without the need for any further
action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent; provided, however, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such conversion
unless the certificates evidencing such shares of Series B Preferred Stock are
either delivered to the Corporation or its transfer agent as provided below, or
the holder notifies the Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. Upon the occurrence of such automatic
conversion of the Series B Preferred Stock, the holders of Series B Preferred
Stock shall surrender the certificates representing such shares at the office of
the Corporation or any transfer agent for the Common Stock. Thereupon, there
shall be issued and delivered to such holder promptly at such office and in its
name as shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Series B Preferred Stock surrendered were convertible on the date on which such
automatic conversion occurred.

        6.3 Conversion Price. Each share of Series B Preferred Stock
shall be convertible in accordance with subsection 6.1 or subsection 6.2 above
into the number of shares

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of Common Stock which results from dividing the Original Issue Price for such
series of Preferred Stock by the conversion price for the Series B Preferred
Stock that is in effect at the time of conversion (the "Conversion Price"). The
initial Conversion Price of the Series B Stock shall be the its Original Issue
Price. The Conversion Price of the Series B Preferred Stock shall be subject to
adjustment from time to time as provided below. Following each adjustment of the
Conversion Price, such adjusted Conversion Price shall remain in effect until a
further adjustment of such Conversion Price hereunder.

        6.4 Adjustment Upon Common Stock Event. Upon the happening of a
Common Stock Event (as hereinafter defined), the Conversion Price of the Series
B Preferred Stock shall, simultaneously with the happening of such Common Stock
Event, be adjusted by multiplying the Conversion Price of such series of Series
B Preferred Stock in effect immediately prior to such Common Stock Event by a
fraction, (i) the numerator of which shall be the number of shares of Common
Stock issued and outstanding immediately prior to such Common Stock Event, and
(ii) the denominator of which shall be the number of shares of Common Stock
issued and outstanding immediately after such Common Stock Event, and the
product so obtained shall thereafter be the Conversion Price for the Series B
Preferred Stock. The Conversion Price of the Series B Preferred Stock shall be
readjusted in the same manner upon the happening of each subsequent Common Stock
Event. As used herein, the term the "Common Stock Event" shall mean at any time
or from time to time after the Original Issue Date, (i) the issue by the
Corporation of additional shares of Common Stock as a dividend or other
distribution on outstanding Common Stock, (ii) a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common Stock, or (iii)
a combination of the outstanding shares of Common Stock into a smaller number of
shares of Common Stock.

        6.5 Adjustments for Other Dividends and Distributions. If at any time
or from time to time after the Original Issue Date the Corporation pays a
dividend or makes another distribution to the holders of the Common Stock
payable in securities of the Corporation, other than an event constituting a
Common Stock Event, then in each such event provision shall be made so that the
holders of the Series B Preferred Stock shall receive upon conversion thereof,
in addition to the number of shares of Common Stock receivable upon conversion
thereof, the amount of securities of the Corporation which they would have
received had their Series B Preferred Stock been converted into Common Stock on
the date of such event (or such record date, as applicable) and had they
thereafter, during the period from the date of such event (or such record date,
as applicable) to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 6 with respect to
the rights of the holders of the Series B Preferred Stock or with respect to
such other securities by their terms.

        6.6 Adjustment for Reclassification, Exchange and Substitution. If at
any time or from time to time after the Original Issue Date the Common Stock
issuable upon the conversion of the Series B Preferred Stock is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than by a Common Stock
Event or a stock dividend, reorganization, merger, or consolidation provided for
elsewhere in this Section 6), then in any such event each holder of Series B
Preferred Stock shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable upon such
recapitalization,

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reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series B Preferred Stock could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.

        6.7 Reorganizations, Mergers and Consolidations. If at any time or from
time to time after the Original Issue Date there is a reorganization of the
Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 6)
or a merger or consolidation of the Corporation with or into another corporation
(except an event which is governed under subsection 4.3), then, as a part of
such reorganization, merger or consolidation, provision shall be made so that
the holders of the Series B Preferred Stock thereafter shall be entitled to
receive, upon conversion of the Series B Preferred Stock, the number of shares
of stock or other securities or property of the Corporation, or of such
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such reorganization, merger or consolidation. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 6 with respect to the rights of the holders of the
Series B Preferred Stock after the reorganization, merger or consolidation to
the end that the provisions of this Section 6 (including adjustment of the
Conversion Price then in effect and number of shares issuable upon conversion of
the Series B Preferred Stock) shall be applicable after that event and be as
nearly equivalent to the provisions hereof as may be practicable. This
subsection 6.7 shall similarly apply to successive reorganizations, mergers and
consolidations.

       6.8 Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the Series B Preferred Stock, the
Corporation, at its expense, shall cause its Chief Financial Officer to compute
such adjustment or readjustment in accordance with the provisions hereof and
prepare a certificate showing such adjustment or readjustment, and shall mail
such certificate, by first class mail, postage prepaid, to each registered
holder of the Series B Preferred Stock at the holder's address as shown in the
Corporation's books.

       6.9 Fractional Shares. No fractional shares of Common Stock shall be
issued upon any conversion of Series B Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such fraction
multiplied by the Common Stock's fair market value as determined in good faith
by the Board as of the date of conversion.

       6.10 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 B 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 shares of the Series B 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 B
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
purpose.

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       6.11 Notices. Any notice required by the provisions of this Certificate
of Designation to be given to the holders of shares of the Series B Preferred
Stock shall be deemed given upon the earlier of actual receipt or deposit in the
United States mail, by certified or registered mail, return receipt requested,
postage prepaid, or delivery by a recognized express courier, fees prepaid,
addressed to each holder of record at the address of such holder appearing on
the books of the Corporation.

       6.12 No Impairment. The Corporation shall not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the rights, preferences and privileges of the holders of the
Series B Preferred Stock against impairment.

     7. RESTRICTIONS AND LIMITATIONS. So long as any shares of Series B
Preferred Stock remain outstanding, the Corporation shall not (by merger,
consolidation or otherwise), without the approval, by vote or written consent,
of the holders of at least a majority of the Series B Preferred Stock then
outstanding:

        (a) adversely alter or change the rights, preferences, or privileges
of, or restrictions provided for the benefit of, the Series B Preferred Stock;

        (b) authorize or issue (by reclassification or otherwise) any security
having rights or preferences senior to or being on a parity with the Series B
Preferred Stock;

        (c) increase or decrease the total number of authorized shares of
Common Stock, Series B Preferred Stock or Preferred Stock;

        (d) issue any shares of Series B Preferred Stock other than pursuant to
that certain Series B Preferred Stock and Common Stock Warrants Purchase
Agreement dated as of August __, 2004, by and between the Corporation and the
investors named therein, as such agreement may be duly amended;

        (e) increase the authorized number of directors of the Corporation;

        (f) take any action requiring the separate vote of the Series B
Preferred Stock, voting as a separate series, under any applicable law, rule or
regulation;

        (g) amend this Section 7; or

        (h) commit itself to take any of the foregoing actions.

     8. MISCELLANEOUS

        8.1 No Reissuance of Preferred Stock. No share or shares of Preferred
Stock acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and all such shares shall be cancelled, retired
and eliminated from the shares that the Corporation shall be authorized to
issue.

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        8.2 Preemptive Rights. No stockholder of the Corporation shall have a
right to purchase shares of capital stock of the Corporation sold or issued by
the Corporation except to the extent that such a right may from time to time be
set forth in a written agreement between the Corporation and a stockholder.


     IN WITNESS WHEREOF, the undersigned has signed and executed the foregoing
Certificate of Designation on this 11th day of August, 2004

_________________________           LOYALTYPOINT, INC.

_________________________           By:_______________________________
                                       Paul Robinson, Chief Executive Officer



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