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                                   CYNET, INC.

                     STATEMENT OF THE POWERS, DESIGNATIONS,
                          PREFERENCES AND RIGHTS OF THE
                  SERIES C REDEEMABLE CALLABLE PREFERRED STOCK,
                                  NO PAR VALUE

         Pursuant to Section 2.13 of the Texas Business Corporation Act



     The following resolution was duly adopted by the Board of Directors of
CyNet, Inc. (the "Corporation"), pursuant to the provisions of Section 2.13 of
the Texas Business Corporation Act (the "TBCA"), on January 31, 2000, by the
unanimous written consent of the Board of Directors:

     WHEREAS, the Board of Directors is authorized, within the limitations
and restrictions stated in the Articles of Incorporation of the Corporation, to
provide by resolution or resolutions for the issuance of shares of preferred
stock, no par value, of the Corporation, in one or more series with such voting
powers, full or limited, or without voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions as shall be stated and expressed in
the resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors, and as are not stated and expressed in the Articles of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets and
such other subjects or matters as may be fixed by resolution or resolutions of
the Board of Directors under the TBCA; and

     WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of preferred
stock and the number of shares consisting such series.

     NOW, THEREFORE, BE IT RESOLVED:

     1. DESIGNATION AND NUMBER OF SHARES. There shall be hereby created and
established a series of Preferred Stock designated as "Series C Redeemable
Callable Preferred Stock" (the "Series C Preferred Stock"). The authorized
number of shares of Series C Preferred Stock shall be one million six hundred
thousand (1,600,000) shares.

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     2. RANK. The Series C Preferred Stock shall with respect to
distributions of assets and rights upon the occurrence of a Liquidation rank (i)
senior to (A) all classes of common stock of the Corporation (including, without
limitation, the Class A Common Stock, no par value (the " Class A Common
Stock"), of the Corporation and the Class B Common Stock, no par value (the
"Class B Common Stock"), of the Corporation, (B) the Series D Redeemable
Convertible Preferred Stock, no par value, of the Corporation (the "Series D
Preferred Stock") and (C) each other class or series of Capital Stock of the
Corporation hereafter created which does not expressly rank PARI PASSU with or
senior to the Series C Preferred Stock (the "Junior Stock") and (ii) junior to
(A) all currently outstanding shares of Series A Convertible Non Voting
Preferred Stock, no par value, of the Corporation (the "Series A Preferred
Stock"), and (B) all currently outstanding shares of Series B Cumulative Non
Voting Preferred Stock, no par value, of the Corporation (the " Series B
Preferred Stock").

     3. DIVIDENDS. The shares of Series C Preferred Stock shall not be
entitled to any dividends except liquidating dividends as provided in Section 4
below. Except as provided for in Section 4 below, the Series C Preferred Stock
shall be entitled to no other dividends.

     4.   LIQUIDATION PREFERENCE.

          (a) In the event of a Liquidation, the holders of shares of
Series C Preferred Stock then outstanding shall be entitled to be paid for each
share of Series C Preferred Stock held thereby, out of the assets of the
Corporation available for distribution to its stockholders, before any payment
shall be made or any assets distributed to the holders of any shares of Junior
Stock, an amount (the "Liquidation Amount") in cash equal to the Call Redemption
Price per share (the "Liquidation Preference") (subject to adjustment under
conditions analogous to those provided in Section 7(d)). If the assets of the
Corporation are not sufficient to pay in full the foregoing Liquidation Amounts
to the holders of outstanding shares of the Series C Preferred Stock, then the
holders of all shares of Series C Preferred Stock shall share ratably in such
distribution of assets in accordance with the amount that would be payable on
such distribution if the amounts to which the holders of outstanding shares of
Series C Preferred Stock are entitled were paid in full.

          (b) Upon completion of the distribution required by subsection
(a) of this Section 4, the holders of shares of Series C Preferred Stock shall
not be entitled to any further participation in any distribution of assets by
the Corporation.

     5. REDEMPTION. (a) On or after the date of issuance of the Series C
Preferred Stock, unless a Notice of Redemption (defined herein in Section
5(c) below) has been given by the holders of the Series C Preferred Stock
pursuant to Section 5(b) below, the Corporation may redeem all or any portion
of the shares of Series C Preferred Stock then outstanding at the applicable
Call Redemption Price.

(b) On or after February 3, 2001, the holders of the Series C Preferred Stock
may put to the Corporation for mandatory redemption all or any portion of the
shares of Series C Preferred Stock then outstanding held by each such holder at
the applicable Redemption Price. If the funds of the

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Corporation legally available for redemption of shares of Series C Preferred
Stock are insufficient to redeem the total number of shares of Series C
Preferred Stock on a redemption date set pursuant to this Section 5(b), those
funds which are legally available will be used to redeem the maximum possible
number of whole shares ratably among the holders of such shares. The shares
of Series C Preferred Stock not redeemed shall remain outstanding and
entitled to all rights and preferences provided herein.

      (c) Notice of a redemption of shares of Series C Preferred
Stock pursuant to either subparagraph (a) or (b of this Section 5 shall be
delivered by the requesting party to the other party not less than ten (10) nor
more than thirty (30) days prior to the date proposed by the requesting party
for the redemption. Notices to be delivered to the holders of Series C Preferred
Stock shall be made to each such holder at its addresses as it appears on the
transfer books of the Corporation. Notices to be delivered to the Corporation
shall be sent to 12777 Jones Road, Suite 400, Houston, Texas 77070, attention
President. All notices placed in the mail shall be deemed delivered on the date
it is placed into the custody of any office of the United States Post Office,
properly addressed and stamped.

      (d) A notice of redemption shall include (i) the name of the
requesting party, (ii) the number of shares of Series C Preferred Stock to be
redeemed, (iii) the proposed date of redemption, (iv) the aggregate and per
share redemption prices and (iv) if the notice is for a redemption pursuant to
Section 5(b), the certificate(s) evidencing the shares of Series C Preferred
Stock to be redeemed.

      (e) The redemption date with respect to any shares of Series C
Preferred Stock shall be the day in which such redemption occurs.

   5A. MANDATORY AUTOMATIC REDEMPTION. After the date hereof, the Corporation
shall redeem shares of Series C Preferred Stock then outstanding at the
applicable Call Redemption Price upon each issuance of any equity or debt
security of the Corporation. The amount of shares of Series C Preferred Stock
to be redeemed pursuant to this Section 5A shall equal the aggregate dollar
amount of consideration received by the Corporation, other than for
outstanding stock options and warrants, from any such equity or debt issuance
divided by the applicable Call Redemption Price on the date of redemption.
Any redemption required by this Section 5A shall occur within five (5)
business days after each issuance of debt or equity by the Corporation. Each
issuance of debt or equity of the Corporation shall automatically, without
notice or confirmation, give rise to the obligation of the Corporation to
redeem shares of Series C Preferred Stock pursuant to this Section 5A.


   6. VOTING RIGHTS: ELECTION OF DIRECTOR. The holders of Series C
Preferred Stock shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the shareholders of the Corporation.

   7. CONVERSION. The Shares of Series C Preferred Stock shall not be
convertible, whether at the option of the holder therefore or the Corporation

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   8. PROTECTIVE PROVISIONS. So long as any shares of Series C Preferred
Stock remain 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 sixty six and two thirds of the then outstanding shares of Series C
Preferred Stock:

      (a) sell, convey or otherwise dispose of 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 (50%) of the
voting power of the Corporation is disposed of;

      (b) alter or change the rights, preferences or privileges of
the shares of Series C Preferred Stock so as to affect adversely the shares;

      (c) increase or decrease the total number of authorized shares
of Series C Preferred Stock (other than by redemption);

      (d) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security, except for any securities to be issued pursuant to (i)
that certain Subscription Agreement, dated July 22, 1998 and amended on January
3, 2000, by and between the Corporation and CyNet Holding, L.LC. or (ii) any
options, warrants or other commitments to issue equity securities of the
Corporation, in each such case, issued and outstanding as of January 31, 2000;

      (e) declare or pay dividends on its Class A Common Stock or
Class B Common Stock;

      (f) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Series A
Preferred Stock (except upon conversion thereof), Series B Preferred Stock
(except upon conversion thereof), Class A Common Stock or Class B Common Stock
(except upon the exchange thereof for shares of Class A Common Stock); PROVIDED,
HOWEVER, that this restriction shall not apply to the repurchase of shares of
Common Stock from employees, officers, directors, consultants or other persons
performing services for the Corporation or any subsidiary pursuant to agreements
under which the Corporation has the option to repurchase such shares at cost
upon the occurrence of certain events, such as the termination of employment;

      (g) increase the authorized number of directors of the
Corporation to a number greater than nine (9); or

      (h) incur any debt, obligation or other liabilities of the
Corporation, except ordinary trade payable and accrued operating expenses.

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     9. REACQUIRED SHARES. Any shares of Series C Preferred Stock redeemed,
converted, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
No such shares of Series C Preferred Stock shall upon their cancellation be
reissued or restored by the Corporation to the status of authorized but unissued
capital stock.

     10. CERTAIN REMEDIES. Any registered holder of Series C Preferred Stock
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Statement of Designations and to enforce specifically the
terms and provisions of this Statement of Designations in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which such holder may be entitled at law or in equity.

     11. BUSINESS DAY. If any payment shall be required by the terms hereof
to be made on a day that is not a Business Day, such payment shall be made on
the immediately succeeding Business Day.

     12. DEFINITIONS. As used in this Statement of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:

      "Articles of Incorporation" shall mean the Articles of Incorporation
of the Corporation as filed with the Secretary of State of the State of Texas.

     "Board of Directors" means the Board of Directors of the Corporation.

     "Business Day" means any day except a Saturday, a Sunday, or other day
on which commercial banks in the State of Texas are authorized or required by
law or executive order to close.

     "Call Redemption Price" means, with respect to a Call Redemption, (i)
from the date of issuance to July 31, 2000, $1.09, (ii) from August 1, 2000 to
January 31, 2001, $1.18, (iii) from February 1, 2001 to July 31, 2001, $1.31,
(iv) from August 1, 2001 to January 31, 2002, $1.45, (v) from February 1, 2002
to July 31, 2002, $1.64 and (vi) on and after August 1, 2002, $1.86.

     "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).

     "Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.

     "Corporation" shall have the meaning ascribed to it in the first
paragraph of this Resolution.

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      "Exchange Act" means the Securities Exchange Act of 1934, and the
rules and regulations of the Commission promulgated thereunder.

     "Junior Stock" shall have the meaning ascribed to it in Section 2 hereof.

     "Liquidation" shall mean the voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, dissolution or winding up
of the Corporation. For purposes of Section 4, "Liquidation" shall be deemed to
be occasioned by, or to include (unless the holders of at least a majority of
the them outstanding shares of Series C Preferred Stock shall determine
otherwise), (A) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the
Corporation; or (B) a sale of all or substantially all of the assets of the
Corporation.

     "Liquidation Amount" shall have the meaning ascribed to it in Section
4(a) hereof.

     "Liquidation Preference" shall have the meaning ascribed to it in
Section 4(a) hereof.

     "Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.

     "Redemption Price" means (i) from February 1, 2001 to July 31, 2001,
$1.31, (ii) from August 1, 2001 to January 31, 2002, $1.45, (iii) from February
1, 2002 to July 31, 2002, $1.64 and (iv) on and after August 1, 2002, $1.86.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

     "Series C Preferred Stock" shall have the meaning ascribed to it in
Section 1 hereof.

      "Statement of Designations" shall mean this statement of the Powers,
Designations, Preferences and Rights of the Series C Redeemable Callable
Preferred Stock, no par value, adopted by the Board of Directors and filed with
the Secretary of State of State of Texas.


     IN WITNESS WHEREOF, the undersigned authorized officer of the Company
has executed and subscribed this statement and does affirm the foregoing as true
this 3rd day of February, 2000.


                                       CYNET, INC.


                                       By: /s/ Bernard B. Beale
                                           -----------------------------------
                                       Bernard B. Beale, Vice President

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