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                      CERTIFICATE OF DESIGNATION OF SERIES

                   AND DETERMINATION OF RIGHTS AND PREFERENCES

                                       OF

                      CONVERTIBLE PREFERRED STOCK, SERIES B

                                       OF

                              VALESC HOLDINGS INC.

         Valesc Holdings Inc., a Delaware corporation (the "Company"), acting
pursuant to ss.151 of the General Corporation Law of Delaware, does hereby
submit the following Certificate of Designation of Series and Determination of
Rights and Preferences of its Convertible Preferred Stock, Series B.

         FIRST:  The name of the Company is Valesc Holdings Inc.

         SECOND: By unanimous consent of the Board of Directors of the Company
dated June 17, 2003, the following resolutions were duly adopted:

         WHEREAS the Certificate of Incorporation of the Company authorizes
Preferred Stock consisting of up to 20,000,000 shares, par value $.0001 per
share, issuable from time to time in one or more series; and

         WHEREAS the Board of Directors of the Company is authorized, subject to
limitations prescribed by law and by the provisions of Article FOURTH of the
Company's Certificate of Incorporation, as amended, to establish and fix the
number of shares to be included in any series of Preferred Stock and the
designation, rights, preferences, powers, restrictions and limitations of the
shares of such series; and

         WHEREAS it is the desire of the Board of Directors to establish and fix
the number of shares to be included in a new series of Preferred Stock and the
designation, rights, preferences and limitations of the shares of such new
series;

         NOW, THEREFORE, BE IT RESOLVED that pursuant to Article FOURTH of the
Company's Certificate of Incorporation, as amended, there is hereby established
a new series of 100,000 shares of convertible Preferred Stock of the Company
(the "Series B Preferred Stock") to have the designation, rights, preferences,
powers, restrictions and limitations set forth in a supplement of Article FOURTH
as follows:

         1. Dividends.

         The holders of the Series B Preferred Stock shall be entitled to such
dividends paid and distributions made to the holders of Common Stock to the same
extent as if the holders of the Series B Preferred Stock had converted their
shares of Series B Preferred Stock pursuant to the


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provisions of Section 3 hereof and had been issued such Common Stock on the day
before the record date for said dividend or distribution, provided that the
holders of the Series B Preferred Stock will not receive dividends or
distributions which are payable in Common Stock. Cash payments under the
preceding sentence, if any, shall be made concurrently with cash dividends and
cash distributions to the holders of Common Stock.

         2. Voting.

         Except as otherwise provided by applicable law, the holders of
outstanding shares of the Series B Preferred Stock will not have any voting
rights.

         3. Optional Conversion.

         (a) Each holder of Series B Preferred Stock may, at any time and from
time to time beginning three months after the issue date, convert some or all of
such holder's shares of Series B Preferred Stock into a number of shares of
Common Stock determined by multiplying the number of shares to be converted by
$100 and then dividing the product by the Market Price (the "Conversion Ratio").
Each conversion shall be for no fewer than 1,000 shares of Series B Preferred
Stock, unless the holder is converting all shares then held by him or her of
record. "Market Price" shall mean the average closing price of the Common Stock
(in U.S. dollars) over the 60 trading days immediately preceding the date the
shares are submitted to the Company for conversion, as reported on the NASD OTC
Bulletin Board or (if applicable) on the primary national securities exchange
over which the Common Stock is regularly traded in the United States. If the
Common Stock is not listed on the NASD OTC Bulletin Board or a national
securities exchange, then Market Price shall be determined by multiplying the
Company's net income for the prior year by 6 and then dividing the product by
the number of fully diluted common shares outstanding at the time of conversion.

         (b) In order for a holder of Series B Preferred Stock to effect a
conversion of Series B Preferred Stock into shares of Common Stock such holder
shall (i) fax a copy of the fully executed notice of conversion in the form of
Exhibit A attached hereto ("Notice of Conversion") to the Company, and (ii)
surrender or cause to be surrendered the certificates representing the Series B
Preferred Stock being converted accompanied by duly executed stock powers and
the original executed version of the Notice of Conversion as soon as practicable
thereafter.

         (c) Within five business days after the Company's receipt of a Notice
of Conversion, the Company shall require the Company's transfer agent to
promptly issue and deliver to the holder of Series B Preferred Stock who
provided the Notice of Conversion (i) that number of shares of Common Stock
issuable upon conversion of such shares of Series B Preferred Stock being
converted, and (ii) a certificate representing the number of shares of Series B
Preferred Stock not being converted, if any.

         (d) The Company shall at all times reserve and keep available for
issuance upon the conversion of the Series B Preferred Stock, free from any
preemptive rights, such number of its authorized but unissued shares of Common
Stock as will from time to time be necessary to permit the conversion of all
outstanding shares of Series B Preferred Stock into shares of


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Common Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if necessary to permit the conversion of all
outstanding shares of Series B Preferred Stock. In no event will the amount of
Common Stock reserved for conversion of the Series B Preferred Stock be less
than 2,000,000 shares.

         (e) The issuance of certificates for shares of Common Stock upon
conversion of the Series B Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the holder of the Series B Preferred Stock which is being
converted.

         (f) The Company will at no time close its transfer books against the
transfer of any Series B Preferred Stock, or of any shares of Common Stock
issued or issuable upon the conversion of any shares of Series B Preferred Stock
in any manner which interferes with the timely conversion of such Series B
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.

         (g) No fractional shares of Common Stock or scrip shall be issued upon
conversion of shares of Series B Preferred Stock. If more than one certificate
for Series B Preferred Stock shall be surrendered for conversion at any one time
by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series B Preferred Stock to be converted.

         4. Mandatory Conversion.

         Each share of Series B Preferred Stock outstanding on the fifth
anniversary of the date of original issuance of any such shares shall
automatically be converted into shares of Common Stock in accordance with the
terms of Section 3 utilizing the Conversion Ratio then in effect.

         5. Amendment.

         This Certificate of Designation constitutes an agreement between the
Company and the holders of the Series B Preferred Stock. It may be amended by
vote of the Board of Directors of the Company and the holders of not less than
two-thirds of the outstanding shares of Series B Preferred Stock.


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         IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by its President and attested to by its Secretary this 17th day of
June, 2003



                                       By:
                                          --------------------------------------
                                                  Samuel Cohen, President

ATTEST:


--------------------------------------
Secretary

[Seal]



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                                                                       EXHIBIT A

                              NOTICE OF CONVERSION


         As of the date of receipt by the Company, the undersigned hereby
irrevocably elects to convert (the "Conversion") shares of the Series B
Convertible Preferred Stock (the "Series B Preferred Stock") into shares of
common stock, $.0001 par value per share ("Common Stock") of Valesc Holdings
Inc. (the "Corporation") according to the conditions of the Certificate of
Designation of Series and Determination of Rights and Preferences of Convertible
Preferred Stock, Series B of the Corporation.

         The undersigned covenants that all offers and sales by the undersigned
of the Common Stock or other securities issuable to the undersigned upon
conversion of this Series B Preferred Stock shall be made pursuant to
registration of such Common Stock under the Securities Act of 1933, as amended
(the "Act"), or pursuant to an exemption from registration under the Act with a
restrictive legend.

         Date of Conversion:                            _____________

         Number of Preferred Shares to be Converted:    _____________

         Applicable Market Price:                       _____________

         Number of Shares of Common Stock to be Issued: _____________


         In the event of partial exercise, please reissue an appropriate Series
B Preferred Stock certificate(s) for the shares of Series B Preferred Stock that
shall not have been converted.




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


Printed Name:
             ------------------
Address:

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