Exhibit 4.1

                           CERTIFICATE OF DESIGNATION,
                             PREFERENCES AND RIGHTS

                                       of

                      SERIES B CONVERTIBLE PREFERRED STOCK

                                       of

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)



       INTERNATIONAL  THOROUGHBRED  BREEDERS,  INC., a Delaware corporation (the
"Corporation"),  pursuant  to the  provisions  of  Section  151  of the  General
Corporation Law of the State of Delaware,  does hereby make this  Certificate of
Designation,  and does hereby state and certify that  pursuant to the  authority
expressly  vested in the Board of Directors of the  Corporation  by its Restated
Certificate of  Incorporation  ("Certificate  of  Incorporation"),  the Board of
Directors has duly adopted the following resolution:

       RESOLVED,  that,  pursuant to the FOURTH  Article of the  Certificate  of
Incorporation  (which  authorizes  26 million  shares,  including  five  hundred
thousand  (500,000)  shares of Preferred  Stock,  $10 par value per share),  the
Board of Directors hereby  authorizes a series of the  Corporation's  previously
authorized  Preferred  Stock,  par value $10 per share,  and  hereby  states the
designation and number of shares,  and fixes the relative  rights,  preferences,
privileges, powers and restrictions thereof as follows:

1.     DESIGNATION AND AMOUNT

       The  designation  of this  series,  which  consists of 500,000  shares of
Preferred Stock, par value $10 per share, is the Series B Convertible  Preferred
Stock (the "Series B Preferred Stock"), the subscription price of which shall be
Fifteen Dollars ($15.00) per share (the "Subscription Price").

2.     CERTAIN DEFINITIONS

       For purposes of this Certificate of Designation,  in addition t the other
terms defined herein, the following terms shall have the following meanings:

          "Business Day" means any day, other than a Saturday or Sunday or a day
on which  banking  institutions  in the  State of New  York  are  authorized  or
obligated by law, regulation or executive order to close.

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          "Closing Sales Price" means, for any security as of any date, the last
sales price of such security on the principal trading market where such security
is listed or traded as reported by Bloomberg  Financial Markets (or a comparable
reporting  service  of  national  reputation  selected  by the  Corporation  and
reasonably  acceptable to the Majority Holders if Bloomberg Financial Markets is
not  then  reporting  closing  sales  prices  of such  security)  (collectively,
"Bloomberg"),  or if the foregoing does not apply, the last reported sales price
of such security on a national exchange or in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg,  or, if no
such price is reported for such  security by  Bloomberg,  the average of the bid
prices of all market  makers for such  security as reported in the "pink sheets"
by the National  Quotation Bureau,  Inc., in each case for such date or, if such
date was not a Trading Day for such  security,  on the last  preceding date that
was a Trading  Day. If the Closing  Sales Price  cannot be  calculated  for such
security as of either of such dates on any of the foregoing  bases,  the Closing
Sales  Price of such  security  on such date shall be the fair  market  value as
reasonably  determined by an investment banking firm selected by the Corporation
and  reasonably  acceptable  to the  Majority  Holders,  with the  costs of such
appraisal to be borne by the Corporation.

          "Common  Stock" means the Common Stock of the  Corporation of such par
value as is  available  from  time to time for  issue  out of the  Corporation's
authorized but unissued shares.

          "Conversion Price" means $2.00 initially,  declining by $0.02 for each
full calendar  quarter elapsing from (and including) July 1, 2005 to the date on
which the Required  Conversion  Condition (as defined in Section 3.2) shall have
been  satisfied,  and shall be subject to  adjustment  as described in Section 7
hereof.

          "Excluded  Issuance"  means i) the  issuance of Common  Stock upon the
exercise or conversion of any  Convertible  Securities or Options (as defined in
Section 7.5(b)) outstanding on the Issuance Date and disclosed in the Disclosure
Schedule to the  Subscription  Agreement  in  accordance  with the terms of such
Convertible  Securities and Options as of such date; ii) the grant of Options to
purchase  Common Stock,  with exercise  prices not less than the market price of
the Common Stock on the date of grant, which are issued to employees,  officers,
directors or consultants of the Corporation or its  subsidiaries for the primary
purpose of obtaining or retaining  their  employment  or service  pursuant to an
equity compensation plan approved by the Corporation's  Board of Directors,  and
the  issuance  of Common  Stock  upon the  exercise  thereof;  iii) the grant of
options to purchase not more than 48,000 shares of Common Stock which, as of the
Issuance  Date, had been reserved for issuance under stock options to be granted
to employees of the Corporation or its  subsidiaries at $0.50 per share, and the
issuance of Common Stock upon exercise  thereof;  iv) the issuance of securities
in connection  with a bona fide public  offering at an offering  price per share
(prior  to  underwriter's  commissions  and  discounts)  of not  less  than  the
Conversion  Price that is underwritten by a nationally  recognized  underwriting
firm; and v) the issuance of securities as  consideration  in connection with an
acquisition.

          "Issuance  Date" means the date of the closing under the  Subscription
Agreement by and among the  Corporation  and the  purchasers  named therein (the
"Subscription  Agreement"),  pursuant to which the Corporation  issues, and such
purchasers  purchase,  500,000 shares of Series B Preferred Stock upon the terms
and conditions stated therein.

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          "Majority  Holders"  means  the  holders  of a  majority  of the  then
outstanding shares of Series B Preferred Stock.

          "Registration   Rights   Agreement"  means  the  Registration   Rights
Agreement,  dated as of the Issuance Date, by and among the  Corporation and the
initial holders of Series B Preferred Stock.

          "Trading  Day"  means any day on which  the  principal  United  States
securities  exchange or trading  market where the Common Stock is then listed or
traded, is open for trading.

3.     CONVERSION

       3.1 Number of Common Shares  Issuable  upon  Conversion.  Upon  Mandatory
Conversion pursuant to Section 3.2 below, each share of Series B Preferred Stock
automatically  will be converted  into a number of fully paid and  nonassessable
shares of Common  Stock  determined  by dividing the  Subscription  Price by the
Conversion Price then in effect hereunder.

       3.2 Mandatory Conversion.

          (a) When the  Required  Conversion  Condition  as  defined  in Section
3.2(b)  hereof is  satisfied,  then all shares of the Series B  Preferred  Stock
automatically shall be converted into the number of fully paid and nonassessable
shares of Common Stock  determined in  accordance  with the formula set forth in
Section 3.1 above (a "Mandatory  Conversion").  Thereafter,  the Corporation and
the holders  shall  follow the  applicable  conversion  procedures  set forth in
Section  3.3 below  (including  the  requirement  that the  holders  deliver the
Preferred  Stock  Certificates  representing  the Series B Preferred Stock being
converted to the Corporation).

          (b) The  "Required  Conversion  Condition"  is that  the  registration
statement  required to be filed by the Corporation  pursuant to Section 2 of the
Registration  Rights  Agreement  shall  have  been  declared  effective  by  the
Securities  and Exchange  Commission.  The effective  date of such  registration
statement is called the "Conversion Date."

       3.3 Mechanics of Conversion.  Upon Mandatory Conversion,  the Corporation
promptly will notify the holders of the Series B Preferred  Stock thereof.  Each
holder shall  surrender  or cause to be  surrendered  the original  certificates
representing  the Series B Preferred Stock being converted (the "Preferred Stock
Certificates"),  duly  endorsed,  as  soon  as  practicable  thereafter  to  the
Corporation.  The  Corporation  shall not be obligated to issue shares of Common
Stock upon a conversion  unless  either the  Preferred  Stock  Certificates  are
delivered  to the  Corporation  as provided  above,  or the holder  notifies the
Corporation  that such Preferred Stock  Certificates  have been lost,  stolen or
destroyed and delivers the documentation to the Corporation  required by Section
10.2 hereof.

          (a) Delivery of Common Stock Upon  Conversion.  Upon the  surrender of
Preferred Stock Certificates,  the Corporation  (itself, or through its transfer
agent) shall within ten Business Days  following the date of such surrender (or,
in the case of lost,  stolen  or  destroyed  certificates,  after  provision  of
indemnity pursuant to Section 10.2) (the "Delivery  Period"),  issue and deliver
(i.e.,  deposit with a nationally  recognized  overnight courier service postage
prepaid)

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<PAGE>

to the holder or its nominee that number of shares of Common Stock issuable upon
conversion of such shares of Series B Preferred Stock being converted.

          (b)  Taxes.  The  Corporation  shall pay any and all taxes that may be
imposed  upon it with  respect to the  issuance  and  delivery  of the shares of
Common Stock upon the conversion of the Series B Preferred Stock.

          (c) No  Fractional  Shares.  If any  conversion  of Series B Preferred
Stock  would  result in the  issuance  of a  fractional  share of  Common  Stock
(aggregating  all shares of Series B  Preferred  Stock  being  converted  by the
holder  thereof),  such fractional share shall be payable in cash based upon the
ten day average  Closing  Sales Price of the Common Stock at such time,  and the
number of shares  of Common  Stock  issuable  upon  conversion  of the  Series B
Preferred  Stock  shall  be the  next  lower  whole  number  of  shares.  If the
Corporation elects not to, or is unable to, make such a cash payment, the holder
shall be  entitled  to receive,  in lieu of the final  fraction of a share,  one
whole share of Common Stock.

          (d)  Conversion  Disputes.  In the case of any dispute with respect to
conversion, the Corporation shall promptly issue such number of shares of Common
Stock in  accordance  with  Section  3.3(a) above as are not  disputed.  If such
dispute  involves the calculation of the Conversion  Price,  and such dispute is
not  promptly  resolved  by  discussion  between  the  relevant  holder  and the
Corporation,  the  Corporation  shall  submit the  disputed  calculations  to an
independent   outside   accountant  via  facsimile.   The  accountant,   at  the
Corporation's  sole expense,  shall promptly review the  calculations and notify
the  Corporation  and the holder of the results no later than five Business Days
from  the  date  it  receives  the  disputed   calculations.   The  accountant's
calculation shall be deemed  conclusive,  absent manifest error. The Corporation
shall then issue the appropriate  number of shares of Common Stock in accordance
with Section 3.3(a) above.

4.     RESERVATION OF SHARES OF COMMON STOCK

       4.1 Reserved  Amount.  On or prior to the Issuance Date, the  Corporation
shall reserve  3,900,000  shares of its authorized but unissued shares of Common
Stock for  issuance  upon  conversion  of the  Series B  Preferred  Stock,  and,
thereafter,  the number of  authorized  but  unissued  shares of Common Stock so
reserved (the "Reserved Amount") shall at all times be sufficient to provide for
the full  conversion of all of the Series B Preferred  Stock  outstanding at the
then current Conversion Price thereof.

       4.2 Increases to Reserved  Amount.  If the Reserved  Amount shall be less
than one hundred percent (100%) of the number of shares of Common Stock issuable
upon full conversion of the then outstanding shares of Series B Preferred Stock,
the Corporation shall take immediate action  (including,  if necessary,  seeking
stockholder  approval to authorize the issuance of  additional  shares of Common
Stock) to increase  the  Reserved  Amount to one hundred  percent  (100%) of the
number of shares of Common Stock then  issuable  upon full  conversion of all of
the outstanding Series B Preferred Stock at the then current Conversion Price.


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5.     RANK

       All shares of the Series B  Preferred  Stock  shall rank (a) prior to the
Corporation's  Common  Stock and any class or  series  of  capital  stock of the
Corporation  hereafter created (unless, with the consent of the Majority Holders
obtained in accordance  with Section 10 hereof,  such class or series of capital
stock specifically,  by its terms, ranks senior to or pari passu with the Series
B Preferred Stock)  (collectively with the Common Stock,  "Junior  Securities");
(b) pari  passu  with any class or series of  capital  stock of the  Corporation
hereafter  created (with the written consent of the Majority Holders obtained in
accordance with Section 10 hereof) specifically ranking, by its terms, on parity
with the  Series B  Preferred  Stock (the "Pari  Passu  Securities");  and (iii)
junior to the Series A Preferred  Stock of the  Corporation  outstanding  on the
Issuance  Date  and  junior  to any  class or  series  of  capital  stock of the
Corporation  hereafter created (with the written consent of the Majority Holders
obtained in  accordance  with Section 10 hereof)  specifically  ranking,  by its
terms,  senior  to the  Series B  Preferred  Stock  (collectively,  the  "Senior
Securities"),  in each  case as to  distribution  of  assets  upon  liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.

6.     LIQUIDATION PREFERENCE

       6.1 If the  Corporation  shall  commence a voluntary  case under the U.S.
Federal  bankruptcy  laws or any  other  applicable  bankruptcy,  insolvency  or
similar  law,  or consent to the entry of an order for relief in an  involuntary
case under any law or to the  appointment of a receiver,  liquidator,  assignee,
custodian,  trustee, sequestrator (or other similar official) of the Corporation
or of any  substantial  part of its  property,  or make  an  assignment  for the
benefit of its  creditors,  or admit in writing its  inability  to pay its debts
generally  as they  become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having  jurisdiction in the premises
in an  involuntary  case  under the U.S.  Federal  bankruptcy  laws or any other
applicable bankruptcy, insolvency or similar law resulting in the appointment of
a receiver,  liquidator,  assignee,  custodian,  trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and any such decree or
order shall be unstayed and in effect for a period of 90  consecutive  days and,
on account of any such event, the Corporation shall liquidate,  dissolve or wind
up, or if the Corporation shall otherwise liquidate, dissolve or wind up (each a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation  (other than Senior  Securities  pursuant to
the  rights,  preferences  and  privileges  thereof,  if any) upon  liquidation,
dissolution or winding up unless prior thereto the holders of shares of Series B
Preferred Stock shall have received the  Liquidation  Preference with respect to
each share of Series B Preferred Stock. If, upon the occurrence of a Liquidation
Event, the assets and funds available for distribution  among the holders of the
Series B Preferred Stock and holders of Pari Passu Securities,  if any, shall be
insufficient to permit the payment to such holders of the  preferential  amounts
payable  thereon,  then the entire assets and funds of the  Corporation  legally
available for  distribution  to the Series B Preferred  Stock and the Pari Passu
Securities, if any, shall be distributed ratably among such shares in proportion
to the ratio that the Liquidation Preference payable on each such share bears to
the aggregate Liquidation Preference payable on all such shares.

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       6.2 The purchase or redemption by the  Corporation of stock of any class,
in any manner permitted by law, shall not, for the purposes hereof,  be regarded
as a liquidation, dissolution or winding up of the Corporation.

       6.3 The  "Liquidation  Preference"  with  respect  to a share of Series B
Preferred Stock means the Subscription Price.

7.     ADJUSTMENTS TO THE CONVERSION PRICE

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

       7.1 Stock Splits,  Stock Dividends,  Etc. If, at any time on or after the
Issuance Date, the number of outstanding  shares of Common Stock is increased by
a stock split, stock dividend,  combination,  reclassification  or other similar
event, the Conversion Price shall be proportionately  reduced,  or if the number
of  outstanding  shares of Common Stock is  decreased by a reverse  stock split,
combination, reclassification or other similar event, the Conversion Price shall
be  proportionately  increased.  In such event, the Corporation shall notify the
Corporation's  transfer  agent of such  change on or before the  effective  date
thereof.

       7.2 Merger, Consolidation,  Etc. If, at any time after the Issuance Date,
there shall be (a) any  reclassification  or change of the outstanding shares of
Common  Stock  (other  than a change in par  value,  or from par value to no par
value,  or from no par value to par value,  or as a result of a  subdivision  or
combination),  (b) any consolidation or merger of the Corporation with any other
entity  (other  than a merger  in which  the  Corporation  is the  surviving  or
continuing entity and its capital stock is unchanged),  (c) any sale or transfer
of all or  substantially  all of the assets of the  Corporation or (d) any share
exchange or other transaction pursuant to which all of the outstanding shares of
Common  Stock are  converted  into other  securities  or  property  (each of (a)
through  (d) above  being a  "Corporate  Change"),  then the holders of Series B
Preferred Stock shall thereafter have the right to receive upon  conversion,  in
lieu of the shares of Common  Stock  otherwise  issuable,  such shares of stock,
securities  and/or  other  property as would have been issued or payable in such
Corporate  Change  with  respect to or in  exchange  for the number of shares of
Common Stock which would have been issuable upon  conversion  had such Corporate
Change not taken place,  and in any such case,  appropriate  provisions (in form
and substance  reasonably  satisfactory  to the Majority  Holders) shall be made
with  respect  to the  rights  and  interests  of the  holders  of the  Series B
Preferred  Stock to the end that the  economic  value of the  shares of Series B
Preferred  Stock is in no way diminished by such  Corporate  Change and that the
provisions  hereof  (including,  without  limitation,  in the  case of any  such
consolidation, merger or sale in which the successor entity or purchasing entity
is not the Corporation,  an immediate adjustment of the Conversion Price so that
the Conversion  Price  immediately  after the Corporate Change reflects the same
relative value as compared to the value of the surviving  entity's  common stock
that existed  between the  Conversion  Price and the value of the  Corporation's
Common Stock  immediately  prior to such Corporate  Change) shall  thereafter be
applicable,  as nearly as may be  practicable in relation to any shares of stock
or  securities   thereafter   deliverable  upon  the  conversion  thereof.   The
Corporation  shall not effect any  Corporate  Change  unless (i) each  holder of
Series B Preferred  Stock has received  written  notice of such  transaction  at
least 30 days  prior  thereto,  but in no event  later than 15 days prior to the
record date for the determination of stockholders  entitled to vote with respect
thereto, (ii) the

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consent of the Majority Holders shall have been obtained in accordance with such
Section 9 hereof, and (iii) the resulting  successor or acquiring entity (if not
the Corporation) assumes by written instrument (in form and substance reasonable
satisfactory  to the Majority  Holders) the  obligations of this  Certificate of
Designation (including,  without limitation,  the obligation to make payments of
Dividend  accrued but unpaid through the date of such  consolidation,  merger or
sale and accruing  thereafter).  The above  provisions shall apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

       7.3  Distributions.  If,  at  any  time  after  the  Issuance  Date,  the
Corporation  shall declare or make any  distribution of its assets (or rights to
acquire  its  assets)  to  holders  of  Common  Stock as a  partial  liquidating
dividend,  by way of return of capital or otherwise  (including  any dividend or
distribution to the  Corporation's  stockholders in cash or shares (or rights to
acquire  shares)  of  capital  stock of a  subsidiary  (i.e.,  a  spin-off))  (a
"Distribution"), then the holders of Series B Preferred Stock shall be entitled,
upon  conversion  of the shares of Series B  Preferred  Stock  after the date of
record for determining stockholders entitled to such Distribution (or if no such
record is taken,  the date on which such  Distribution  is declared or made), to
receive  the amount of such  assets  that would have been  payable to the holder
with respect to the shares of Common Stock  issuable  upon such  conversion  had
such holder  been the holder of such  shares of Common  Stock on the record date
for the  determination of stockholders  entitled to such  Distribution (or if no
such record is taken, the date on which such Distribution is declared or made).

       7.4 Convertible Securities and Purchase Rights. If, at any time after the
Issuance Date, the Corporation  issues any securities or other  instruments that
are  convertible   into  or  exercisable  or   exchangeable   for  Common  Stock
("Convertible  Securities") or options,  warrants or other rights to purchase or
subscribe for Common Stock or  Convertible  Securities  ("Purchase  Rights") pro
rata to the record holders of the Common Stock,  whether or not such Convertible
Securities  or  Purchase  Rights are  immediately  convertible,  exercisable  or
exchangeable,  then the holders of Series B Preferred  Stock shall be  entitled,
upon any  conversion  of shares of Series B  Preferred  Stock  after the date of
record  for  determining  stockholders  entitled  to  receive  such  Convertible
Securities or Purchase Rights (or if no such record is taken,  the date on which
such  Convertible  Securities  or Purchase  Rights are  issued),  to receive the
aggregate  number of Convertible  Securities or Purchase Rights that such holder
would have  received  with respect to the shares of Common Stock  issuable  upon
such  conversion  had such holder been the holder of such shares of Common Stock
on the record date for the  determination  of  stockholders  entitled to receive
such  Convertible  Securities or Purchase Rights (or if no such record is taken,
the date on which such Convertible Securities or Purchase Rights were issued).

       7.5 Price Protection.

          (a) In the event that the Corporation shall sell or issue, at any time
after the Issuance  Date and before the  Conversion  Date,  any shares of Common
Stock (other than in an Excluded  Issuance as defined  above and other than in a
transaction  to which Section 7.1,  7.2, 7.3 or 7.4 applies) at a  consideration
per share less than the Conversion Price in effect immediately prior to the time
of such sale or issuance, then, upon such sale or issuance, the Conversion Price
shall  be  reduced  to an  adjusted  price  (calculated  to  the  nearest  cent)
determined  by dividing  (A) the sum of (i) the total  number of shares of Stock
Outstanding (as defined below) immediately

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prior to such sale or issuance multiplied by the then-existing Conversion Price,
plus (ii) the aggregate of the amount of all consideration,  if any, received by
the Corporation upon such sale or issuance, by (B) the total number of shares of
Stock Outstanding immediately after such sale or issuance.

In no  event  shall  any  such  adjustment  be made  if it  would  increase  the
Conversion  Price in  effect  immediately  prior to such  adjustment,  except as
provided in Section 7.5(d) and 7.5(e) below.

          (b) For purposes of this Section 7.5, the following  definitions shall
apply:

               (i)  "Convertible  Securities"  shall  mean any  indebtedness  or
equity securities convertible into or exchangeable for Common Stock.

               (ii)  "Options"  shall mean any  rights,  warrants  or options to
subscribe for or purchase Common Stock or Convertible Securities.

               (iii) "Stock  Outstanding" shall mean the aggregate of all Common
Stock outstanding and all Common Stock issuable upon exercise of all outstanding
Options and conversion of all outstanding Convertible Securities.

          (c) For the purposes of this Section  7.5,  the  following  provisions
shall also be applicable.

               (i)  Cash  Consideration.   In  case  of  the  sale  or  issuance
(otherwise  than upon  conversion  or exchange  of  Convertible  Securities)  of
additional  Common  Stock,  Options  or  convertible  Securities  for cash,  the
consideration  received by the  Corporation  therefore shall be deemed to be the
amount of cash  received  by the  Company  for such  Common  Stock,  Options  or
Convertible  Securities  (or, if such Common Stock is offered by the Corporation
for  subscription,  the  subscription  price, or if such Common Stock is sold to
underwriters or dealers for public offering without a subscription offering, the
public offering price), without deducting therefrom any compensation or discount
paid or allowed to underwriters or dealers or others performing similar services
or for any expenses incurred in connection therewith.

               (ii)  Non-Cash  Consideration.  In case of the  sale or  issuance
(otherwise  than upon  conversion  or exchange  of  Convertible  Securities)  of
additional Common Stock,  Options or Convertible  Securities for a consideration
other than cash or a consideration a part of which shall be other than cash, the
fair value of such  consideration  as determined by agreement of the Corporation
and the  Majority  Holders  or,  if they  fail to so  agree,  by an  independent
appraiser mutually acceptable to the Corporation and the Majority Holders, shall
be  deemed  to  be  the  value,  for  purposes  of  this  Section  7.5,  of  the
consideration other than case received by the Corporation for such securities.

               (iii)  Options and  Convertible  Securities.  In case the Company
shall in any manner  issue or grant any Options or any  Convertible  Securities,
the total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon  conversion or exchange of the total maximum amount of such
Convertible  Securities  at the time such  Convertible  Securities  first become
convertible  or  exchangeable  shall  (as of the  date of issue or grant of such
Options or, in the case of the sale or issue of  Convertible  Securities  (other
than

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where the same are issuable  upon the  exercise of  Options),  as of the date of
such  sale or  issue) be  deemed  to be  issued  and to be  outstanding  for the
purposes  of this  Section 7.5 and to have been issued for the sum of the amount
(if any) paid for such Options or Convertible Securities and the amount (if any)
payable upon the exercise of such Options or upon conversion or exchange of such
Convertible  Securities  at the time such  Convertible  Securities  first become
convertible or exchangeable; provided that, subject to the provisions of Section
7.5(d),  no further  adjustment of the  Conversion  Price shall be made upon the
actual issuance of any such shares of Common Stock or Convertible  Securities or
upon the conversion or exchange of any such Convertible Securities.

               (d) In the event  that the  purchase  price  provided  for in any
Option  referred  to  in  subsection  7.5(c)(iii)  or  the  rate  at  which  any
Convertible  Securities  referred to in subsection  7.5(c)(iii)  are convertible
into or exchangeable for Common Stock shall change at any time or any additional
consideration  shall be payable in connection with the exercise of any Option or
the conversion or exchange of any Convertible Securities (other than under or by
reason of provisions designed to protect against dilution upon the occurrence of
events of the type  described  in this  Section 7),  then,  for  purposes of any
adjustment  required by Section 7.5, the Conversion  Price in effect at the time
of such event shall  forthwith be readjusted to the Conversion  Price that would
have  been in effect at such time had such  Options  or  Convertible  Securities
still outstanding  provided for such changed purchase price,  conversion rate or
additional  consideration,  as the case may be, at the time  initially  granted,
issued  or sold,  provided,  that if such  readjustment  is an  increase  in the
Conversion Price, such readjustment  shall not exceed the amount (as adjusted by
Sections  7.1,  7.2,  7.3 or 7.4) by which the  Conversion  Price was  decreased
pursuant  to  Section  7.5  upon  the  issuance  of the  Option  or  Convertible
Securities.

               (e) In the event of the termination or expiration of any right to
purchase  Common Stock under any Option  granted after the date hereof or of any
right to  convert  or  exchange  Convertible  Securities  issued  after the date
hereof, the Conversion Price shall, upon such termination,  be readjusted to the
Conversion  Price that would have been in effect at the time of such  expiration
or  termination  had  such  Option  or  Convertible  Securities,  to the  extent
outstanding  immediately  prior to such  expiration or  termination,  never been
issued, and the Common Stock issuable thereunder shall no longer be deemed to be
Stock  Outstanding;  provided,  that if such  readjustment is an increase in the
Conversion Price, such readjustment  shall not exceed the amount (as adjusted by
Sections  7.1,  7.2,  7.3 or 7.4) by which the  Conversion  Price was  decreased
pursuant  to  Section  7.5  upon  the  issuance  of the  Option  or  Convertible
Securities.  The termination or expiration of any right to purchase Common Stock
under any  Option  granted on or prior to the  Issuance  Date or of any right to
convert or exchange  Convertible  Securities  issued on or prior to the Issuance
Date shall not trigger any adjustment to the Conversion Price, but the shares of
Common Stock  issuable  under such Options or  Convertible  Securities  shall no
longer be counted in  determining  the number of shares of Stock  Outstanding on
the Issuance  Date for purposes of  subsequent  calculations  under this Section
7.5.


       7.6 Other Action  Affecting  Conversion  Price. If, at any time after the
Issuance Date, the Corporation  takes any action affecting the Common Stock that
would be covered by Sections  7.1 through  7.5, but for the manner in which such
action is taken or structured,  which would in any way diminish the value of the
Series B Preferred Stock, then the Conversion Price shall be

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adjusted in such manner as the Board of  Directors of the  Corporation  shall in
good faith determine to be equitable under the circumstances.

       7.7 Notice of  Adjustments.  Upon the  occurrence  of each  adjustment or
readjustment  of the Conversion  Price pursuant to this Section 7 amounting to a
more than one percent (1%) change in such Conversion Price, or any change in the
number  or type  of  stock,  securities  and/or  other  property  issuable  upon
conversion of the Series B Preferred  Stock,  the  Corporation,  at its expense,
shall promptly compute such adjustment or readjustment or change and prepare and
furnish to each holder of Series B Preferred  Stock a certificate  setting forth
such  adjustment or  readjustment or change and showing in detail the facts upon
which such adjustment or readjustment or change is based. The Corporation shall,
upon the written request at any time of any holder of Series B Preferred  Stock,
furnish to such holder a like  certificate  setting forth (a) such adjustment or
readjustment or change,  (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 securities
or property  which at the time would be received  upon  conversion of a share of
Series B Preferred Stock.

8.     VOTING RIGHTS

       The  holders of the Series B Preferred  Stock shall have no voting  power
whatsoever, except as otherwise provided by the Delaware General Corporation Law
(the "DGCL"), in this Section 8 and in Section 9 below.

       Notwithstanding  the above, the Corporation  shall provide each holder of
Series  B  Preferred  Stock  with  prior  notification  of  any  meeting  of the
stockholders  (and  copies  of proxy  materials  and other  information  sent to
stockholders).  If the Corporation  takes a record of its  stockholders  for the
purpose of  determining  stockholders  entitled  to (a)  receive  payment of any
dividend  or  other  distribution,  any  right to  subscribe  for,  purchase  or
otherwise   acquire   (including   by   way   of   merger,    consolidation   or
recapitalization) any share of any class or any other securities or property, or
to receive any other right, or (b) to vote in connection with any proposed sale,
lease  or  conveyance  of  all  or  substantially  all  of  the  assets  of  the
Corporation, or any proposed merger, consolidation,  liquidation, dissolution or
winding  up of the  Corporation,  the  Corporation  shall  mail a notice to each
holder of Series B  Preferred  Stock,  at least 15 days prior to the record date
specified  therein (or 45 days prior to the  consummation  of the transaction or
event, whichever is earlier, but in no event earlier than public announcement of
such proposed transaction),  of the date on which any such record is to be taken
for the purpose of such vote, dividend,  distribution, right or other event, and
a brief  statement  regarding the amount and  character of such vote,  dividend,
distribution, right or other event to the extent known at such time.

       To the extent that under the DGCL the vote of the holders of the Series B
Preferred  Stock,  voting  separately as a class or series,  as  applicable,  is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least a majority of the then outstanding  shares of
the  Series B  Preferred  Stock  represented  at a duly held  meeting at which a
quorum is present  or by written  consent  of the  Majority  Holders  (except as
otherwise may be required under the DGCL) shall  constitute the approval of such
action by the class. To the extent
that under the DGCL holders of the Series B Preferred Stock are entitled to vote
on a matter with holders of Common Stock, voting together as one class, each
share of Series B Preferred Stock

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<PAGE>

shall be  entitled  to a number of votes equal to the number of shares of Common
Stock into which it is then convertible  using the record date for the taking of
such  vote of  stockholders  as the date as of  which  the  Conversion  Price is
calculated.

       If in connection  with any Liquidation  Event,  the holders of the Series
Preferred  Stock are  entitled to vote to approve  such  Liquidation  Event as a
class,  then the  holders of the Series B  Preferred  Stock  shall agree to vote
their shares in favor of the  Liquidation  Event,  conditioned on the receipt by
all  holders  of  Series  B  Preferred  Stock of  their  respective  Liquidation
Preference, in full.

9.     PROTECTION PROVISIONS

       So long as any shares of Series B Preferred  Stock are  outstanding,  the
Corporation  shall not take any of the following  corporate  actions (whether by
merger,  consolidation  or otherwise)  without first  obtaining the approval (by
vote or written consent, as provided by the DGCL) of the Majority Holders:

          (a) alter or change  the  rights,  preferences  or  privileges  of the
Series B Preferred Stock, or increase the authorized  number of shares of Series
A Preferred Stock;

          (b) alter or change  the  rights,  preferences  or  privileges  of any
capital  stock  of the  Corporation  so as to  affect  adversely  the  Series  B
Preferred Stock;

          (c) create or issue any Senior Securities or Pari Passu Securities;

          (d) issue any shares of Series B Preferred  Stock other than  pursuant
to the Subscription Agreement;

          (e) increase the par value of the Common Stock;

          (f) issue any of the Corporation's  equity or securities at a price or
with a conversion or exercise price, as applicable,  below the Conversion Price,
except for Excluded Issuances; or

          (g)  enter  into any  agreement,  commitment,  understanding  or other
arrangement to take any of the foregoing actions.

10.    MISCELLANEOUS

       10.1  Cancellation of Series B Preferred Stock. Upon conversion or if any
shares  of  Series  B  Preferred  Stock  are  redeemed  or  repurchased  by  the
Corporation, the shares so converted, redeemed or repurchased shall be canceled,
shall return to the status of  authorized,  but unissued  Preferred  Stock of no
designated  series,  and shall not be  issuable by the  Corporation  as Series B
Preferred Stock.

       10.2 Lost or Stolen Certificates.  Upon receipt by the Corporation of (a)
evidence of the loss,  theft,  destruction or mutilation of any Preferred  Stock
Certificate(s) and (b) (i) in the case of loss, theft or destruction,  indemnity
(without any bond or other security) reasonably

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<PAGE>

satisfactory  to the  Corporation,  or  (ii)  in the  case  of  mutilation,  the
Preferred Stock Certificate(s)  (surrendered for cancellation),  the Corporation
shall execute and deliver new Preferred Stock  Certificate(s)  of like tenor and
date.  However,  the  Corporation  shall not be  obligated to reissue such lost,
stolen, destroyed or mutilated Preferred Stock Certificate(s), and instead shall
issue Common Stock upon  conversion,  if the Required  Conversion  Condition has
been satisfied.

       10.3 Status as Stockholder.  Upon Mandatory Conversion,  i) the shares of
Series B Preferred  Stock shall be deemed  converted into shares of Common Stock
and ii) the  holder's  rights as a holder of such  converted  shares of Series B
Preferred  Stock shall cease and terminate,  excepting only the right to receive
certificates  for such shares of Common Stock and to any  remedies  available at
law or in equity to such  holder  because  of a failure  by the  Corporation  to
comply with the terms of this Certificate of Designation.

       10.4 Remedies.  The Corporation  acknowledges  that a breach by it of its
obligations  hereunder  will cause  irreparable  harm to the holders of Series B
Preferred  Stock  and  that  the  remedy  at law  for  any  such  breach  may be
inadequate. The Corporation therefore agrees, in the event of any such breach or
threatened  breach,  that the  holders  of  Series B  Preferred  Stock  shall be
entitled,  in  addition  to  all  other  available  remedies,  to an  injunction
restraining  any breach,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

       10.5  Waiver.  Notwithstanding  any  provision  in  this  Certificate  of
Designation to the contrary, any provision contained herein and any right of the
holders of Series B Preferred  Stock  granted  hereunder may be waived as to all
shares of Series B Preferred  Stock (and the holders  thereof)  upon the written
consent of the  Majority  Holders,  unless a higher  percentage  is  required by
applicable  law,  in which case the  written  consent of the holders of not less
than such  higher  percentage  of shares of Series B  Preferred  Stock  shall be
required.

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       IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation this 29th day of June, 2005.


                                        INTERNATIONAL THOROUGHBRED
                                        BREEDERS, INC.


                                        By:    S/ Francis W. Murray
                                             ----------------------
                                        Name: Francis W. Murray
                                        Title: CEO / President



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