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                                                                     EXHIBIT 4.2

              CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND
                                   PREFERENCES
                                     OF THE
                      SERIES B CONVERTIBLE PREFERRED STOCK
                                       OF
                       BOUNDLESS MOTOR SPORTS RACING, INC.

      The undersigned, the Chief Executive Officer of Boundless Motor Sports
Racing, Inc., a Colorado corporation (the "Company"), in accordance with the
provisions of the Colorado Business Corporation Act, does hereby certify that,
pursuant to the authority conferred upon the Board of Directors by the Articles
of Incorporation of the Company, the following resolution creating a series of
Series B Convertible Preferred Stock, was duly adopted on February 18, 2005:

      RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by provisions of the Articles of
Incorporation of the Company (the "Articles of Incorporation"), there hereby is
created out of the shares of Preferred Stock, par value $.01 per share, of the
Company authorized in Article IV of the Articles of Incorporation (the
"Preferred Stock"), a series of Preferred Stock of the Company, to be named
"Series B Convertible Preferred Stock," consisting of Eight Thousand (8,000)
shares, which series shall have the following designations, powers, preferences
and relative and other special rights and the following qualifications,
limitations and restrictions:

      1. Designation and Rank. The designation of such series of the Preferred
Stock shall be the Series B Convertible Preferred Stock, par value $.01 per
share (the "Series B Preferred Stock"). The maximum number of shares of Series B
Preferred Stock shall be Eight Thousand (8,000) shares. The Series B Preferred
Stock shall rank pari passu with shares of the Company's Series A Convertible
Preferred Stock and Series C Convertible Preferred Stock and shall rank senior
to the Company's common stock, par value $.0001 per share (the "Common Stock"),
and to all other classes and series of equity securities of the Company which by
their terms do not rank senior to the Series B Preferred Stock ("Junior Stock").
The Series B Preferred Stock shall be subordinate to and rank junior to all
indebtedness of the Company now or hereafter outstanding.

      2. Dividends.

            (a) Payment of Dividends. Commencing eighteen (18) months following
the date of the initial issuance (the "Issuance Date") of the Series B Preferred
Stock and subject to Section 5(c)(ii) hereof, the holders of record of shares of
Series B Preferred Stock shall be entitled to receive, out of any assets at the
time legally available therefor and as declared by the Board of Directors,
dividends at the rate of four percent (4%) of the stated Liquidation Preference
Amount (as defined in Section 4 hereof) per share per annum and increasing to
six percent (6%) of the stated Liquidation Preference Amount per share per annum
commencing thirty (30) months following the Issuance Date (the "Dividend
Payment"), and no more, payable semi-annually on the first business day of June
and December of each year at the option of the

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Company in cash or in shares of Common Stock. If the Company elects to pay any
dividend in shares of Common Stock, the number of shares of Common Stock to be
issued to the holder shall be an amount equal to the quotient of (i) the
Dividend Payment divided by (ii) the Conversion Price (as defined in Section
5(d) hereof). If the Company elects to pay any dividend in shares of Common
Stock, the Company will give the holders of record of shares of the Series B
Preferred Stock ten (10) trading days notice prior to the date of the applicable
Dividend Payment. In the case of shares of Series B Preferred Stock outstanding
for less than a full year, dividends shall be pro rated based on the portion of
each year during which such shares are outstanding. Dividends on the Series B
Preferred Stock shall be cumulative, shall accrue and be payable semi-annually.
Dividends on the Series B Preferred Stock are prior and in preference to any
declaration or payment of any distribution (as defined below) on any outstanding
shares of Junior Stock. Such dividends shall accrue on each share of Series B
Preferred Stock from day to day whether or not earned or declared so that if
such dividends with respect to any previous dividend period at the rate provided
for herein have not been paid on, or declared and set apart for, all shares of
Series B Preferred Stock at the time outstanding, the deficiency shall be fully
paid on, or declared and set apart for, such shares on a pro rata basis with all
other equity securities of the Company ranking on a parity with the Series B
Preferred Stock as to the payment of dividends before any distribution shall be
paid on, or declared and set apart for Junior Stock.

            (b) So long as any shares of Series B Preferred Stock are
outstanding, the Company shall not declare, pay or set apart for payment any
dividend or make any distribution on any Junior Stock (other than dividends or
distributions payable in additional shares of Junior Stock), unless at the time
of such dividend or distribution the Company shall have paid all accrued and
unpaid dividends on the outstanding shares of Series B Preferred Stock.

            (c) In the event of a dissolution, liquidation or winding up of the
Company pursuant to Section 4, all accrued and unpaid dividends on the Series B
Preferred Stock shall be payable on the date of payment of the preferential
amount to the holders of Series B Preferred Stock. In the event of (i) a
mandatory redemption pursuant to Section 9 or (ii) a redemption upon the
occurrence of a Major Transaction (as defined in Section 8(c)) or a Triggering
Event (as defined in Section 8(d)), all accrued and unpaid dividends on the
Series B Preferred Stock shall be payable on the date of such redemption. In the
event of a voluntary conversion pursuant to Section 5(a), all accrued and unpaid
dividends on the Series B Preferred Stock being converted shall be payable on
the Voluntary Conversion Date (as defined in Section 5(b)(i)).

            (d) For purposes hereof, unless the context otherwise requires,
"distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
shares of Common Stock or other equity securities of the Company, or the
purchase or redemption of shares of the Company (other than redemptions set
forth in Section 8 below or repurchases of Common Stock held by employees or
consultants of the Company upon termination of their employment or services
pursuant to agreements providing for such repurchase or upon the cashless
exercise of options held by employees or consultants) for cash or property.

      3. Voting Rights.

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<PAGE>

            (a) Class Voting Rights. The Series B Preferred Stock shall have the
following class voting rights (in addition to the voting rights set forth in
Section 3(b) hereof). So long as any shares of the Series B Preferred Stock
remain outstanding, the Company shall not, without the affirmative vote or
consent of the holders of at least seventy-five percent (75%) of the shares of
the Series B Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting, in which the holders of the Series B
Preferred Stock vote separately as a class: (i) authorize, create, issue or
increase the authorized or issued amount of any class or series of stock,
including but not limited to the issuance of any more shares of Preferred Stock,
ranking pari passu or senior to the Series B Preferred Stock, with respect to
the distribution of assets on liquidation, dissolution or winding up; (ii)
amend, alter or repeal the provisions of the Series B Preferred Stock, whether
by merger, consolidation or otherwise, so as to adversely affect any right,
preference, privilege or voting power of the Series B Preferred Stock; provided,
however, that any creation and issuance of another series of Junior Stock shall
not be deemed to adversely affect such rights, preferences, privileges or voting
powers; (iii) repurchase, redeem or pay dividends on, shares of Common Stock or
any other shares of the Company's Junior Stock (other than de minimus
repurchases from employees of the Company in certain circumstances); (iv) amend
the Articles of Incorporation or By-Laws of the Company so as to affect
materially and adversely any right, preference, privilege or voting power of the
Series B Preferred Stock; provided, however, that any creation and issuance of
another series of Junior Stock shall not be deemed to adversely affect such
rights, preferences, privileges or voting powers; (v) effect any distribution
with respect to Junior Stock; (vi) reclassify the Company's outstanding
securities; (vii) voluntarily file for bankruptcy, liquidate the Company's
assets or make an assignment for the benefit of the Company's creditors; or
(viii) change the nature of the Company's business. Notwithstanding the
foregoing to the contrary, the Company shall not authorize, create, issue or
increase the authorized or issued amount of any class or series of stock or
issue any convertible debt securities ranking pari passu or senior to the Series
B Preferred Stock with respect to the distribution of assets on liquidation,
dissolution or winding up without the affirmative vote or consent of the holders
of at least seventy-five percent (75%) of the shares of the Series B Preferred
Stock outstanding at the time.

            (b) General Voting Rights. Except with respect to transactions upon
which the Series B Preferred Stock shall be entitled to vote separately as a
class pursuant to Section 3(a) above and except as otherwise required by
Colorado law, the Series B Preferred Stock shall have no voting rights. The
Common Stock into which the Series B Preferred Stock is convertible shall, upon
issuance, have all of the same voting rights as other issued and outstanding
Common Stock of the Company.

      4. Liquidation Preference.

            (a) In the event of the liquidation, dissolution or winding up of
the affairs of the Company, whether voluntary or involuntary, the holders of
shares of the Series B Preferred Stock then outstanding shall be entitled to
receive, out of the assets of the Company available for distribution to its
stockholders, an amount equal to $3,000 per share (the "Liquidation Preference
Amount") of the Series B Preferred Stock plus any accrued and unpaid dividends
before any payment shall be made or any assets distributed to the holders of the
Common Stock or any other

                                       3
<PAGE>

Junior Stock. If the assets of the Company are not sufficient to pay in full the
Liquidation Preference Amount plus any accrued and unpaid dividends payable to
the holders of outstanding shares of the Series B Preferred Stock and any series
of preferred stock or any other class of stock on a parity, as to rights on
liquidation, dissolution or winding up, with the Series B Preferred Stock, then
all of said assets will be distributed among the holders of the Series B
Preferred Stock and the other classes of stock on a parity with the Series B
Preferred Stock, if any, ratably in accordance with the respective amounts that
would be payable on such shares if all amounts payable thereon were paid in
full. The liquidation payment with respect to each outstanding fractional share
of Series B Preferred Stock shall be equal to a ratably proportionate amount of
the liquidation payment with respect to each outstanding share of Series B
Preferred Stock. All payments for which this Section 4(a) provides shall be in
cash, property (valued at its fair market value as determined by an independent
appraiser reasonably acceptable to the holders of a majority of the Series B
Preferred Stock) or a combination thereof; provided, however, that no cash shall
be paid to holders of Junior Stock unless each holder of the outstanding shares
of Series B Preferred Stock has been paid in cash the full Liquidation
Preference Amount plus any accrued and unpaid dividends to which such holder is
entitled as provided herein. After payment of the full Liquidation Preference
Amount plus any accrued and unpaid dividends to which each holder is entitled,
such holders of shares of Series B Preferred Stock will not be entitled to any
further participation as such in any distribution of the assets of the Company.

            (b) A consolidation or merger of the Company with or into any other
corporation or corporations, or a sale of all or substantially all of the assets
of the Company, or the effectuation by the Company of a transaction or series of
related transactions in which more than 50% of the voting shares of the Company
is disposed of or conveyed, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this Section 4. In the event of
the merger or consolidation of the Company with or into another corporation, the
Series B Preferred Stock shall maintain its relative powers, designations and
preferences provided for herein and no merger shall result inconsistent
therewith.

            (c) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, stating a payment date
and the place where the distributable amounts shall be payable, shall be given
by mail, postage prepaid, no less than forty-five (45) days prior to the payment
date stated therein, to the holders of record of the Series B Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.

      5. Conversion. The holder of Series B Preferred Stock shall have the
following conversion rights (the "Conversion Rights"):

            (a) Right to Convert. At any time on or after the Issuance Date, the
holder of any such shares of Series B Preferred Stock may, at such holder's
option, subject to the limitations set forth in Section 7 herein, elect to
convert (a "Voluntary Conversion") all or any portion of the shares of Series B
Preferred Stock held by such person into a number of fully paid and
nonassessable shares of Common Stock equal to the quotient of (i) the
Liquidation Preference Amount of the shares of Series B Preferred Stock being
converted divided by (ii) the

                                       4
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Conversion Price (as defined in Section 5(d) below) then in effect as of the
date of the delivery by such holder of its notice of election to convert. In the
event of a notice of redemption of any shares of Series B Preferred Stock
pursuant to Section 8 hereof, the Conversion Rights of the shares designated for
redemption shall terminate at the close of business on the last full day
preceding the date fixed for redemption, unless the redemption price is not paid
on such redemption date, in which case the Conversion Rights for such shares
shall continue until such price is paid in full. In the event of a liquidation,
dissolution or winding up of the Company, the Conversion Rights shall terminate
at the close of business on the last full day preceding the date fixed for the
payment of any such amounts distributable on such event to the holders of Series
B Preferred Stock. In the event of such a redemption or liquidation, dissolution
or winding up, the Company shall provide to each holder of shares of Series B
Preferred Stock notice of such redemption or liquidation, dissolution or winding
up, which notice shall (i) be sent at least fifteen (15) days prior to the
termination of the Conversion Rights and (ii) state the amount per share of
Series B Preferred Stock that will be paid or distributed on such redemption or
liquidation, dissolution or winding up, as the case may be.

            (b) Mechanics of Voluntary Conversion. The Voluntary Conversion of
Series B Preferred Stock shall be conducted in the following manner:

                  (i) Holder's Delivery Requirements. To convert Series B
Preferred Stock into full shares of Common Stock on any date (the "Voluntary
Conversion Date"), the holder thereof shall (A) transmit by facsimile (or
otherwise deliver), for receipt on or prior to 5:00 p.m., New York time on such
date, a copy of a fully executed notice of conversion in the form attached
hereto as Exhibit I (the "Conversion Notice"), to the Company, and (B) surrender
to a common carrier for delivery to the Company as soon as practicable following
such Voluntary Conversion Date but in no event later than three (3) business
days after such date the original certificates representing the shares of Series
B Preferred Stock being converted (or an indemnification undertaking with
respect to such shares in the case of their loss, theft or destruction) (the
"Preferred Stock Certificates") and the originally executed Conversion Notice.

                  (ii) Company's Response. Upon receipt by the Company of a
facsimile copy of a Conversion Notice, the Company shall immediately send, via
facsimile, a confirmation of receipt of such Conversion Notice to such holder.
Upon receipt by the Company of a copy of the fully executed Conversion Notice,
the Company or its designated transfer agent (the "Transfer Agent"), as
applicable, shall, within three (3) business days following the date of receipt
by the Company of the fully executed Conversion Notice (so long as the
applicable Preferred Stock Certificates and original Conversion Notice are
received by the Company on or before such third business day), issue and deliver
to the Depository Trust Company ("DTC") account on the Holder's behalf via the
Deposit Withdrawal Agent Commission System ("DWAC") as specified in the
Conversion Notice, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be entitled.
Notwithstanding the foregoing to the contrary, the Company or its Transfer Agent
shall only be obligated to issue and deliver the shares to the DTC on a holder's
behalf via DWAC if such conversion is in connection with a sale and such holder
has complied with the applicable prospectus delivery requirements. If the number
of shares of Preferred Stock represented by the

                                       5
<PAGE>

Preferred Stock Certificate(s) submitted for conversion is greater than the
number of shares of Series B Preferred Stock being converted, then the Company
shall, as soon as practicable and in no event later than three (3) business days
after receipt of the Preferred Stock Certificate(s) and at the Company's
expense, issue and deliver to the holder a new Preferred Stock Certificate
representing the number of shares of Series B Preferred Stock not converted.

                  (iii) Dispute Resolution. In the case of a dispute as to the
arithmetic calculation of the number of shares of Common Stock to be issued upon
conversion, the Company shall cause its Transfer Agent to promptly issue to the
holder the number of shares of Common Stock that is not disputed and shall
submit the arithmetic calculations to the holder via facsimile as soon as
possible, but in no event later than two (2) business days after receipt of such
holder's Conversion Notice. If such holder and the Company are unable to agree
upon the arithmetic calculation of the number of shares of Common Stock to be
issued upon such conversion within one (1) business day of such disputed
arithmetic calculation being submitted to the holder, then the Company shall
within one (1) business day submit via facsimile the disputed arithmetic
calculation of the number of shares of Common Stock to be issued upon such
conversion to the Company's independent, outside accountant. The Company shall
cause the accountant to perform the calculations and notify the Company and the
holder of the results no later than seventy-two (72) hours from the time it
receives the disputed calculations. Such accountant's calculation shall be
binding upon all parties absent manifest error. The reasonable expenses of such
accountant in making such determination shall be paid by the Company, in the
event the holder's calculation was correct, or by the holder, in the event the
Company's calculation was correct, or equally by the Company and the holder in
the event that neither the Company's or the holder's calculation was correct.
The period of time in which the Company is required to effect conversions or
redemptions under this Certificate of Designation shall be tolled with respect
to the subject conversion or redemption pending resolution of any dispute by the
Company made in good faith and in accordance with this Section 5(b)(iii).

                  (iv) Record Holder. The person or persons entitled to receive
the shares of Common Stock issuable upon a conversion of the Series B Preferred
Stock shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.

                  (v) Company's Failure to Timely Convert. If within three (3)
business days of the Company's receipt of an executed copy of the Conversion
Notice (so long as the applicable Preferred Stock Certificates and original
Conversion Notice are received by the Company on or before such third business
day) (the "Share Delivery Period") the Transfer Agent shall fail to issue and
deliver to a holder the number of shares of Common Stock to which such holder is
entitled upon such holder's conversion of the Series B Preferred Stock or to
issue a new Preferred Stock Certificate representing the number of shares of
Series B Preferred Stock to which such holder is entitled pursuant to Section
5(b)(ii) (a "Conversion Failure"), in addition to all other available remedies
which such holder may pursue hereunder and under the Series B Convertible
Preferred Stock Purchase Agreement (the "Purchase Agreement") among the Company
and the initial holders of the Series B Preferred Stock (including
indemnification pursuant to Section 6 thereof), the Company shall pay additional
damages to such holder on each

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business day after such third (3rd) business day that such conversion is not
timely effected in an amount equal 0.5% of the product of (A) the sum of the
number of shares of Common Stock not issued to the holder on a timely basis
pursuant to Section 5(b)(ii) and to which such holder is entitled and, in the
event the Company has failed to deliver a Preferred Stock Certificate to the
holder on a timely basis pursuant to Section 5(b)(ii), the number of shares of
Common Stock issuable upon conversion of the shares of Series B Preferred Stock
represented by such Preferred Stock Certificate, as of the last possible date
which the Company could have issued such Preferred Stock Certificate to such
holder without violating Section 5(b)(ii) and (B) the Closing Bid Price (as
defined in Section 5(c)(iii) below) of the Common Stock on the last possible
date which the Company could have issued such Common Stock and such Preferred
Stock Certificate, as the case may be, to such holder without violating Section
5(b)(ii). If the Company fails to pay the additional damages set forth in this
Section 5(b)(v) within five (5) business days of the date incurred, then such
payment shall bear interest at the rate of 2.0% per month (pro rated for partial
months) until such payments are made.

            (c) Mandatory Conversion.

                  (i) The number of outstanding shares of Series B Preferred
Stock referred to below in Section 5(c)(ii) on the Mandatory Conversion Date
shall, automatically and without any action on the part of the holder thereof,
convert into a number of fully paid and nonassessable shares of Common Stock
equal to the quotient of (i) the Liquidation Preference Amount of the number of
shares of Series B Preferred Stock being converted on the Mandatory Conversion
Date divided by (ii) the Conversion Price in effect on the Mandatory Conversion
Date.

                  (ii) As used herein, "Mandatory Conversion Date" shall mean,
subject to the provisions of Section 7 hereof, the date that is at least one
hundred eighty (180) days following the effective date (the "Effectiveness
Date") of the registration statement (the "Registration Statement") providing
for the resale of the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock that the Closing Bid Price (as defined below) of the
Common Stock is equal to or exceeds $6.00 (as may be adjusted for any stock
splits or combinations of the Common Stock) for a period of ten (10) consecutive
trading days; provided, that, (A) the first trading day of such ten (10) trading
day period shall commence at least one hundred eighty (180) days following the
Effectiveness Date, and (B) the dollar trading volume of the Common Stock for
each of such ten (10) trading days exceeds $500,000; and provided further, that,
on the Mandatory Conversion Date, (1) the Registration Statement is effective
and has been effective, without lapse or suspension of any kind, for a period
sixty (60) consecutive calendar days, or the shares of Common Stock into which
the Series B Preferred Stock can be converted may be offered for sale to the
public pursuant to Rule 144(k) ("Rule 144(k)") under the Securities Act of 1933,
as amended, (2) trading in the Common Stock shall not have been suspended by the
Securities and Exchange Commission, the OTC Bulletin Board or the Nasdaq
SmallCap Market (or other exchange or market on which the Common Stock is
trading), and (3) the Company is in material compliance with the terms and
conditions of this Certificate of Designation and the other Transaction
Documents (as defined in the Purchase Agreement). Notwithstanding the foregoing,
the Mandatory Conversion Date shall be extended for as long as

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(i) a Triggering Event (as defined in Section 8(d) hereof) shall have occurred
and be continuing, or (ii) any event shall have occurred and be continuing which
with the passage of time and the failure to cure would result in a Triggering
Event. In the event that a holder of Series B Preferred Stock may not convert
all of its shares of Series B Preferred Stock upon a Mandatory Conversion
because of the restrictions contained in Section 7 hereof, such number of shares
of Series B Preferred Stock that may not be converted because of the
restrictions contained in Section 7 hereof shall remain outstanding but shall
not accrue any dividends pursuant to Section 2 hereof. The Mandatory Conversion
Date and the Voluntary Conversion Date collectively are referred to in this
Certificate of Designation as the "Conversion Date."

                  (iii) The term "Closing Bid Price" shall mean, for any
security as of any date, the last closing bid price of such security on the OTC
Bulletin Board, Nasdaq SmallCap Market or other principal exchange on which such
security is traded as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last closing trade price of such
security as reported by Bloomberg, or, if no last closing trade price is
reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such
security on such date on any of the foregoing bases, the Closing Bid Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the holders of a majority of the outstanding shares of Series
B Preferred Stock.

                  (iv) On the Mandatory Conversion Date, the outstanding shares
of Series B Preferred Stock shall be converted automatically without any further
action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its Transfer Agent;
provided, however, that the Company shall not be obligated to issue the shares
of Common Stock issuable upon conversion of any shares of Series B Preferred
Stock unless certificates evidencing such shares of Series B Preferred Stock are
either delivered to the Company or the holder notifies the Company that such
certificates have been lost, stolen, or destroyed, and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection therewith. Upon the occurrence of a Mandatory Conversion of the
Series B Preferred Stock pursuant to this Section 5, the holders of the Series B
Preferred Stock shall surrender the certificates representing the Series B
Preferred Stock for which the Mandatory Conversion Date has occurred to the
Company and the Company shall cause its Transfer Agent to deliver the shares of
Common Stock issuable upon such conversion (in the same manner set forth in
Section 5(b)(ii)) to the holder within three (3) business days of the holder's
delivery of the applicable Preferred Stock Certificates.

            (d) Conversion Price.

                  (i) The term "Conversion Price" shall mean $3.00 per share,
subject to adjustment under Section 5(e) hereof. Notwithstanding any adjustment
hereunder, at no time shall the Conversion Price be greater than $3.00 per share
except if it is adjusted pursuant to Section 5(e)(i).

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                  (ii) Notwithstanding the foregoing to the contrary, if during
any period (a "Black-out Period"), a holder of Series B Preferred Stock is
unable to trade any Common Stock issued or issuable upon conversion of the
Series B Preferred Stock immediately due to the postponement of filing or delay
or suspension of effectiveness of the Registration Statement or because the
Company has otherwise informed such holder of Series B Preferred Stock that an
existing prospectus cannot be used at that time in the sale or transfer of such
Common Stock (provided that such postponement, delay, suspension or fact that
the prospectus cannot be used is not due to factors solely within the control of
the holder of Series B Preferred Stock or due to the Company exercising its
rights under Section 3(n) of the Registration Rights Agreement (as defined in
the Purchase Agreement)), such holder of Series B Preferred Stock shall have the
option but not the obligation on any Conversion Date within ten (10) trading
days following the expiration of the Black-out Period of using the Conversion
Price applicable on such Conversion Date or any Conversion Price selected by
such holder of Series B Preferred Stock that would have been applicable had such
Conversion Date been at any earlier time during the Black-out Period or within
the ten (10) trading days thereafter.

            (e) Adjustments of Conversion Price.

                  (i) Adjustments for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the Issuance Date, effect a
stock split of the outstanding Common Stock, the Conversion Price shall be
proportionately decreased. If the Company shall at any time or from time to time
after the Issuance Date, combine the outstanding shares of Common Stock, the
Conversion Price shall be proportionately increased. Any adjustments under this
Section 5(e)(i) shall be effective at the close of business on the date the
stock split or combination becomes effective.

                  (ii) Adjustments for Certain Dividends and Distributions. If
the Company shall at any time or from time to time after the Issuance Date, make
or issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in shares of Common
Stock, then, and in each event, the Conversion Price shall be decreased as of
the time of such issuance or, in the event such record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction:

                        (1) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date; and

                        (2) the denominator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.

                  (iii) Adjustment for Other Dividends and Distributions. If the
Company shall at any time or from time to time after the Issuance Date, make or
issue or set a

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<PAGE>

record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in securities of the Company other than
shares of Common Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the holders of Series
B Preferred Stock shall receive upon conversions thereof, in addition to the
number of shares of Common Stock receivable thereon, the number of securities of
the Company which they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the Conversion
Date, retained such securities (together with any distributions payable thereon
during such period), giving application to all adjustments called for during
such period under this Section 5(e)(iii) with respect to the rights of the
holders of the Series B Preferred Stock; provided, however, that if such record
date shall have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
shall be adjusted pursuant to this paragraph as of the time of actual payment of
such dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of Series B Preferred Stock
simultaneously receive (i) a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Series B Preferred Stock had been
converted into Common Stock on the date of such event or (ii) a dividend or
other distribution of shares of Series B Preferred Stock which are convertible,
as of the date of such event, into such number of shares of Common Stock as is
equal to the number of additional shares of Common Stock being issued with
respect to each share of Common Stock in such dividend or distribution.

                  (iv) Adjustments for Reclassification, Exchange or
Substitution. If the Common Stock issuable upon conversion of the Series B
Preferred Stock at any time or from time to time after the Issuance Date shall
be changed to the same or different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other
than by way of a stock split or combination of shares or stock dividends
provided for in Sections 5(e)(i), (ii) and (iii), or a reorganization, merger,
consolidation, or sale of assets provided for in Section 5(e)(v)), then, and in
each event, an appropriate revision to the Conversion Price shall be made and
provisions shall be made (by adjustments of the Conversion Price or otherwise)
so that the holder of each share of Series B Preferred Stock shall have the
right thereafter to convert such share of Series B Preferred Stock into the kind
and amount of shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by holders of the
number of shares of Common Stock into which such share of Series B Preferred
Stock might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.

                  (v) Adjustments for Reorganization, Merger, Consolidation or
Sales of Assets. If at any time or from time to time after the Issuance Date
there shall be a capital reorganization of the Company (other than by way of a
stock split or combination of shares or stock dividends or distributions
provided for in Section 5(e)(i), (ii) and (iii), or a reclassification, exchange
or substitution of shares provided for in Section 5(e)(iv)), or a merger or
consolidation of the Company with or into another corporation where the holders
of outstanding voting securities prior to such merger or consolidation do not
own over 50% of the outstanding voting

                                       10
<PAGE>

securities of the merged or consolidated entity, immediately after such merger
or consolidation, or the sale of all or substantially all of the Company's
properties or assets to any other person (an "Organic Change"), then as a part
of such Organic Change an appropriate revision to the Conversion Price shall be
made if necessary and provision shall be made if necessary (by adjustments of
the Conversion Price or otherwise) so that the holder of each share of Series B
Preferred Stock shall have the right thereafter to convert such share of Series
B Preferred Stock into the kind and amount of shares of stock and other
securities or property of the Company or any successor corporation resulting
from Organic Change. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 5(e)(v) with respect to the
rights of the holders of the Series B Preferred Stock after the Organic Change
to the end that the provisions of this Section 5(e)(v) (including any adjustment
in the Conversion Price then in effect and the number of shares of stock or
other securities deliverable upon conversion of the Series B Preferred Stock)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.

                  (vi) Adjustments for Issuance of Additional Shares of Common
Stock.

                  (A) In the event the Company, shall, at any time, from time to
time, issue or sell any additional shares of Common Stock (otherwise than as
provided in the foregoing subsections (i) through (v) of this Section 5(e) or
pursuant to Common Stock Equivalents (hereafter defined) granted or issued prior
to the Issuance Date) (the "Additional Shares of Common Stock"), at a price per
share less than the Conversion Price, or without consideration, the Conversion
Price then in effect upon each such issuance shall be adjusted to that price
(rounded to the nearest cent) determined by multiplying the Conversion Price by
a fraction:

                  (1) the numerator of which shall be equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus (B) the number of shares
of Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common Stock so
issued would purchase at a price per share equal to the then Conversion Price,
and

                  (2) the denominator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.

No adjustment of the number of shares of Common Stock shall be made under
paragraph (A) of Section 5(e)(vi) upon the issuance of any Additional Shares of
Common Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Common Stock Equivalents (as defined below), if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Common Stock Equivalents (or upon the
issuance of any warrant or other rights therefore) pursuant to Section
5(e)(vii).

                                       11
<PAGE>

                  (vii) Issuance of Common Stock Equivalents. If the Company, at
any time after the Issuance Date, shall issue any securities convertible into or
exchangeable for, directly or indirectly, Common Stock ("Convertible
Securities"), other than the Series B Preferred Stock, or any rights or warrants
or options to purchase any such Common Stock or Convertible Securities, shall be
issued or sold (collectively, the "Common Stock Equivalents") and the aggregate
of the price per share for which Additional Shares of Common Stock may be
issuable thereafter pursuant to such Common Stock Equivalent, plus the
consideration received by the Company for issuance of such Common Stock
Equivalent divided by the number of shares of Common Stock issuable pursuant to
such Common Stock Equivalent (the "Aggregate Per Common Share Price") shall be
less than the Conversion Price, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so amended or
adjusted shall make the Aggregate Per Common Share Price be less than Conversion
Price in effect at the time of such amendment or adjustment, then the Conversion
Price then in effect shall be adjusted pursuant to Section (5)(e)(vi) above
assuming that all Additional Shares of Common Stock have been issued pursuant to
the Convertible Securities or Common Stock Equivalents for a purchase price
equal to the Aggregate Per Common Share Price. No adjustment of the Conversion
Price shall be made under this subsection (vii) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefore, if any adjustment shall
previously have been made to the exercise price of such warrants then in effect
upon the issuance of such warrants or other rights pursuant to this subsection
(vii). No adjustment shall be made to the Conversion Price upon the issuance of
Common Stock pursuant to the exercise, conversion or exchange of any Convertible
Security or Common Stock Equivalent where an adjustment to the Conversion Price
was made as a result of the issuance or purchase of any Convertible Security or
Common Stock Equivalent.

                  (viii) Consideration for Stock. In case any shares of Common
Stock or Convertible Securities other than the Series B Preferred Stock, or any
rights or warrants or options to purchase any such Common Stock or Convertible
Securities, shall be issued or sold:

                        (1) in connection with any merger or consolidation in
which the Company is the surviving corporation (other than any consolidation or
merger in which the previously outstanding shares of Common Stock of the Company
shall be changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Company, of such portion of the assets and business of the nonsurviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or

                        (2) in the event of any consolidation or merger of the
Company in which the Company is not the surviving corporation or in which the
previously outstanding shares of Common Stock of the Company shall be changed
into or exchanged for the stock or other securities of another corporation, or
in the event of any sale of all or substantially all of the assets of the
Company for stock or other securities of any corporation, the Company shall be

                                       12
<PAGE>

deemed to have issued a number of shares of its Common Stock for stock or
securities or other property of the other corporation computed on the basis of
the actual exchange ratio on which the transaction was predicated, and for a
consideration equal to the fair market value on the date of such transaction of
all such stock or securities or other property of the other corporation. If any
such calculation results in adjustment of the applicable Conversion Price, or
the number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, the determination of the applicable Conversion Price or the
number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock immediately prior to such merger, consolidation or sale, shall
be made after giving effect to such adjustment of the number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock. In the event any
consideration received by the Company for any securities consists of property
other than cash, the fair market value thereof at the time of issuance or as
otherwise applicable shall be as determined in good faith by the Board of
Directors of the Company. In the event Common Stock is issued with other shares
or securities or other assets of the Company for consideration which covers
both, the consideration computed as provided in this Section (5)(e)(viii) shall
be allocated among such securities and assets as determined in good faith by the
Board of Directors of the Company.

                  (ix) Record Date. In case the Company shall take record of the
holders of its Common Stock or any other Preferred Stock for the purpose of
entitling them to subscribe for or purchase Common Stock or Convertible
Securities, then the date of the issue or sale of the shares of Common Stock
shall be deemed to be such record date.

                  (x) Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment to the
Conversion Price upon (i) the Company's issuance of any Additional Shares of
Common Stock and warrants therefore in connection with a merger, acquisition or
consolidation of the Company, (ii) the Company's issuance of Additional Shares
of Common Stock pursuant to a bona fide firm underwritten public offering of the
Company's securities, (iii) any issuances of warrants issued pursuant to the
Purchase Agreement or the Series C Convertible Preferred Stock Purchase
Agreement, (iv) securities issued pursuant to the conversion or exercise of
convertible or exercisable securities issued or outstanding on or prior to the
date hereof or issued pursuant to the Purchase Agreement or the Series C
Convertible Preferred Stock Purchase Agreement, (v) any warrants issued to the
placement agent for the transactions contemplated by the Purchase Agreement or
the Series C Convertible Preferred Stock Purchase Agreement or in connection
with other financial services rendered to the Company, (vi) the payment of any
dividends on the Series B Preferred Stock or on the Series A Convertible
Preferred Stock of the Company, (vii) the Company's issuance of Additional
Shares of Common Stock in connection with strategic license agreements and other
partnering arrangements so long as such issuances are not for the purpose of
raising capital, (viii) the Company's issuance of Common Stock or the issuance
or grants of options to purchase Common Stock pursuant to the Company's stock
option plans and employee stock purchase plans outstanding on the date hereof,
(ix) any shares of Common Stock issued by the Company to Paul Kruger to satisfy
any obligations of the Company which have been satisfied by Paul Kruger's
transfer of his currently outstanding shares of Common Stock so long as such
issuances by the Company to Paul Kruger does not exceed the number of shares of

                                       13
<PAGE>

Common Stock surrendered by Paul Kruger to satisfy such obligations of the
Company, (x) the issuance of up to $2,000,000 of additional shares of Series B
Preferred Stock to strategic investors on the same terms and conditions as the
Purchase Agreement to be consummated no later than March 20, 2005, and (xi) the
issuance of up to $1,000,000 of shares of the Company's Series A Convertible
Preferred Stock and warrants to Boundless Investments, L.L.C. in exchange for
cancellation of $1,000,000 of principal amount of a promissory note issued on
July 30, 2004.

            (f) No Impairment. The Company shall not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment. In the event a holder shall elect
to convert any shares of Series B Preferred Stock as provided herein, the
Company cannot refuse conversion based on any claim that such holder or any one
associated or affiliated with such holder has been engaged in any violation of
law, unless, an injunction from a court, on notice, restraining and/or adjoining
conversion of all or of said shares of Series B Preferred Stock shall have been
issued and the Company posts a surety bond for the benefit of such holder in an
amount equal to 130% of the Liquidation Preference Amount of the Series B
Preferred Stock such holder has elected to convert, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such holder in the event it obtains
judgment.

            (g) Certificates as to Adjustments. Upon occurrence of each
adjustment or readjustment of the Conversion Price or number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such Series B Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the holder of
such affected Series B Preferred Stock, at any time, furnish or cause to be
furnished to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the time, and 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 the conversion of a share of such
Series B Preferred Stock. Notwithstanding the foregoing, the Company shall not
be obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted amount.

            (h) Issue Taxes. The Company shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of Series B Preferred Stock pursuant thereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such conversion.

                                       14
<PAGE>

            (i) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by facsimile or
three (3) business days following being mailed by certified or registered mail,
postage prepaid, return-receipt requested, addressed to the holder of record at
its address appearing on the books of the Company. The Company will give written
notice to each holder of Series B Preferred Stock at least twenty (20) days
prior to the date on which the Company closes its books or takes a record (I)
with respect to any dividend or distribution upon the Common Stock, (II) with
respect to any pro rata subscription offer to holders of Common Stock or (III)
for determining rights to vote with respect to any Organic Change, dissolution,
liquidation or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public. The Company
will also give written notice to each holder of Series B Preferred Stock at
least twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no event shall
such notice be provided to such holder prior to such information being made
known to the public.

            (j) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series B Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the average
of the Closing Bid Prices of the Common Stock for the five (5) consecutive
trading immediately preceding the Voluntary Conversion Date or the Mandatory
Conversion Date, as applicable.

            (k) Reservation of Common Stock. The Company shall, so long as any
shares of Series B Preferred Stock are outstanding, reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Series B Preferred Stock, such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Series B Preferred Stock then outstanding. The initial
number of shares of Common Stock reserved for conversions of the Series B
Preferred Stock and any increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Series B Preferred Stock based on
the number of shares of Series B Preferred Stock held by each holder of record
at the time of issuance of the Series B Preferred Stock or increase in the
number of reserved shares, as the case may be. In the event a holder shall sell
or otherwise transfer any of such holder's shares of Series B Preferred Stock,
each transferee shall be allocated a pro rata portion of the number of reserved
shares of Common Stock reserved for such transferor. Any shares of Common Stock
reserved and which remain allocated to any person or entity which does not hold
any shares of Series B Preferred Stock shall be allocated to the remaining
holders of Series B Preferred Stock, pro rata based on the number of shares of
Series B Preferred Stock then held by such holder.

            (l) Retirement of Series B Preferred Stock. Conversion of Series B
Preferred Stock shall be deemed to have been effected on the Conversion Date.
Upon conversion of only a portion of the number of shares of Series B Preferred
Stock represented by a certificate surrendered for conversion, the Company shall
issue and deliver to such holder at the expense of the Company, a new
certificate covering the number of shares of Series B Preferred Stock

                                       15
<PAGE>

representing the unconverted portion of the certificate so surrendered as
required by Section 5(b)(ii).

            (m) Regulatory Compliance. If any shares of Common Stock to be
reserved for the purpose of conversion of Series B Preferred Stock require
registration or listing with or approval of any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon
conversion, the Company shall, at its sole cost and expense, in good faith and
as expeditiously as possible, endeavor to secure such registration, listing or
approval, as the case may be.

      6. No Preemptive Rights. Except as provided in Section 5 hereof and in the
Purchase Agreement, no holder of the Series B Preferred Stock shall be entitled
to rights to subscribe for, purchase or receive any part of any new or
additional shares of any class, whether now or hereinafter authorized, or of
bonds or debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of
any class, or any bond, debentures or other evidences of indebtedness
convertible into or exchangeable for shares, may be issued and disposed of by
the Board of Directors on such terms and for such consideration (to the extent
permitted by law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.

      7. Conversion Restrictions.

            (a) Notwithstanding anything to the contrary set forth in Section 5
of this Certificate of Designation, at no time may a holder of shares of Series
B Preferred Stock convert shares of the Series B Preferred Stock if the number
of shares of Common Stock to be issued pursuant to such conversion would cause
the number of shares of Common Stock owned by such holder at such time to
exceed, when aggregated with all other shares of Common Stock owned by such
holder at such time, the number of shares of Common Stock which would result in
such holder beneficially owning (as determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in
excess of 4.9% of the then issued and outstanding shares of Common Stock
outstanding at such time; provided, however, that upon a holder of Series B
Preferred Stock providing the Company with sixty-one (61) days notice (pursuant
to Section 5(i) hereof) (the "Waiver Notice") that such holder would like to
waive Section 7(a) of this Certificate of Designation with regard to any or all
shares of Common Stock issuable upon conversion of Series B Preferred Stock,
this Section 7(a) shall be of no force or effect with regard to those shares of
Series B Preferred Stock referenced in the Waiver Notice.

            (b) Notwithstanding anything to the contrary set forth in Section 5
of this Certificate of Designation, at no time may a holder of shares of Series
B Preferred Stock convert shares of the Series B Preferred Stock if the number
of shares of Common Stock to be issued pursuant to such conversion would cause
the number of shares of Common Stock owned by such holder at such time to
exceed, when aggregated with all other shares of Common Stock owned by such
holder at such time, the number of shares of Common Stock which would result in
such holder beneficially owning (as determined in accordance with Section 13(d)
of the Securities

                                       16
<PAGE>

Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.9% of
the then issued and outstanding shares of Common Stock outstanding at such time;
provided, however, that upon a holder of Series B Preferred Stock providing the
Company with a Waiver Notice that such holder would like to waive Section 7(b)
of this Certificate of Designation with regard to any or all shares of Common
Stock issuable upon conversion of Series B Preferred Stock, this Section 7(b)
shall be of no force or effect with regard to those shares of Series B Preferred
Stock referenced in the Waiver Notice.

      8. Redemption.

            (a) Redemption Option Upon Major Transaction. In addition to all
other rights of the holders of Series B Preferred Stock contained herein,
simultaneous with the occurrence of a Major Transaction (as defined below), each
holder of Series B Preferred Stock shall have the right, at such holder's
option, to require the Company to redeem all or a portion of such holder's
shares of Series B Preferred Stock at a price per share of Series B Preferred
Stock equal to one hundred ten percent (110%) of the Liquidation Preference
Amount, plus any accrued but unpaid dividends and liquidated damages (the "Major
Transaction Redemption Price"); provided that the Company shall have the sole
option to pay the Major Transaction Redemption Price in cash or shares of Common
Stock. If the Company elects to pay the Major Transaction Redemption Price in
shares of Common Stock, the price per share shall be based upon the Conversion
Price then in effect on the day preceding the date of delivery of the Notice of
Redemption at Option of Buyer Upon Major Transaction (as hereafter defined) and
the holder of such shares of Common Stock shall have demand registration rights
with respect to such shares.

            (b) Redemption Option Upon Triggering Event. In addition to all
other rights of the holders of Series B Preferred Stock contained herein, after
a Triggering Event (as defined below), each holder of Series B Preferred Stock
shall have the right, at such holder's option, to require the Company to redeem
all or a portion of such holder's shares of Series B Preferred Stock at a price
per share of Series B Preferred Stock equal to one hundred twenty percent (120%)
of the Liquidation Preference Amount, plus any accrued but unpaid dividends and
liquidated damages the "Triggering Event Redemption Price" and, collectively
with the "Major Transaction Redemption Price," the "Redemption Price"); provided
that with respect to the Triggering Events described in clauses (i), (ii), (iii)
and (v) of Section 8(d), the Company shall have the sole option to pay the
Triggering Event Redemption Price in cash or shares of Common Stock; and
provided, further, that with respect to the Triggering Event described in clause
(iv) of Section 8(d), the Company shall pay the Triggering Event Redemption
Price in cash. If the Company elects to pay the Triggering Event Redemption
Price in shares of Common Stock in accordance with this Section 8(b), the price
per share shall be based upon the Conversion Price then in effect on the day
preceding the date of delivery of the Notice of Redemption at Option of Buyer
Upon Triggering Event and the holder of such shares of Common Stock shall have
demand registration rights with respect to such shares.

            (c) "Major Transaction". A "Major Transaction" shall be deemed to
have occurred at such time as any of the following events:

                                       17
<PAGE>

                  (i) the consolidation, merger or other business combination of
the Company with or into another Person (other than (A) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (B) a consolidation, merger or other business
combination in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities).

                  (ii) the sale or transfer of more than 50% of the Company's
assets other than inventory in the ordinary course of business in one or a
related series of transactions; or

                  (iii) closing of a purchase, tender or exchange offer made to
the holders of more than fifty percent (50%) of the outstanding shares of Common
Stock in which more than fifty percent (50%) of the outstanding shares of Common
Stock were tendered and accepted.

            (d) "Triggering Event". A "Triggering Event" shall be deemed to have
occurred at such time as any of the following events:

                  (i) so long as any shares of Series B Preferred Stock are
outstanding, the effectiveness of the Registration Statement, after it becomes
effective, (i) lapses for any reason (including, without limitation, the
issuance of a stop order) and such lapse continues for a period of twenty (20)
consecutive trading days, or (ii) is unavailable to the holder of the Series B
Preferred Stock for sale of the shares of Common Stock, and such lapse or
unavailability continues for a period of twenty (20) consecutive trading days,
and the shares of Common Stock into which such holder's Series B Preferred Stock
can be converted cannot be sold in the public securities market pursuant to Rule
144(k) ("Rule 144(k)") under the Securities Act of 1933, as amended, provided
that the cause of such lapse or unavailability is not due to factors solely
within the control of such holder of Series B Preferred Stock.

                  (ii) the suspension from listing, without subsequent listing
on any one of, or the failure of the Common Stock to be listed on at least one
of the OTC Bulletin Board, the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, Inc. or the American Stock Exchange, Inc.,
for a period of five (5) consecutive trading days;

                  (iii) the Company's notice to any holder of Series B Preferred
Stock, including by way of public announcement, at any time, of its inability to
comply (including for any of the reasons described in Section 9) or its
intention not to comply with proper requests for conversion of any Series B
Preferred Stock into shares of Common Stock; or

                  (iv) the Company's failure to comply with a Conversion Notice
tendered in accordance with the provisions of this Certificate of Designation
within ten (10)

                                       18
<PAGE>

business days after the receipt by the Company of the Conversion Notice and the
Preferred Stock Certificates; or

                  (v) the Company breaches any representation, warranty,
covenant or other term or condition of the Purchase Agreement, this Certificate
of Designation or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated thereby or hereby,
except to the extent that such breach would not have a Material Adverse Effect
(as defined in the Purchase Agreement) and except, in the case of a breach of a
covenant which is curable, only if such breach continues for a period of a least
ten (10) days.

            (e) Mechanics of Redemption at Option of Buyer Upon Major
Transaction. No sooner than fifteen (15) days nor later than ten (10) days prior
to the consummation of a Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver written notice
thereof via facsimile and overnight courier ("Notice of Major Transaction") to
each holder of Series B Preferred Stock. At any time after receipt of a Notice
of Major Transaction (or, in the event a Notice of Major Transaction is not
delivered at least ten (10) days prior to a Major Transaction, at any time
within ten (10) days prior to a Major Transaction), any holder of Series B
Preferred Stock then outstanding may require the Company to redeem, effective
immediately prior to the consummation of such Major Transaction, all of the
holder's Series B Preferred Stock then outstanding by delivering written notice
thereof via facsimile and overnight courier ("Notice of Redemption at Option of
Buyer Upon Major Transaction") to the Company, which Notice of Redemption at
Option of Buyer Upon Major Transaction shall indicate (i) the number of shares
of Series B Preferred Stock that such holder is electing to redeem and (ii) the
applicable Major Transaction Redemption Price, as calculated pursuant to Section
8(a) above.

            (f) Mechanics of Redemption at Option of Buyer Upon Triggering
Event. Within one (1) day after the occurrence of a Triggering Event, the
Company shall deliver written notice thereof via facsimile and overnight courier
("Notice of Triggering Event") to each holder of Series B Preferred Stock. At
any time after the earlier of a holder's receipt of a Notice of Triggering Event
and such holder becoming aware of a Triggering Event, any holder of Series B
Preferred Stock then outstanding may require the Company to redeem all of the
Series B Preferred Stock by delivering written notice thereof via facsimile and
overnight courier ("Notice of Redemption at Option of Buyer Upon Triggering
Event") to the Company, which Notice of Redemption at Option of Buyer Upon
Triggering Event shall indicate (i) the number of shares of Series B Preferred
Stock that such holder is electing to redeem and (ii) the applicable Triggering
Event Redemption Price, as calculated pursuant to Section 8(b) above.

            (g) Payment of Redemption Price. Upon the Company's receipt of a
Notice(s) of Redemption at Option of Buyer Upon Triggering Event or a Notice(s)
of Redemption at Option of Buyer Upon Major Transaction from any holder of
Series B Preferred Stock, the Company shall immediately notify each holder of
Series B Preferred Stock by facsimile of the Company's receipt of such Notice(s)
of Redemption at Option of Buyer Upon Triggering Event or Notice(s) of
Redemption at Option of Buyer Upon Major Transaction and each holder which

                                       19
<PAGE>

has sent such a notice shall promptly submit to the Company such holder's
Preferred Stock Certificates which such holder has elected to have redeemed.
Other than with respect to the Triggering Event described in clause (iv) of
Section 8(d), the Company shall have the sole option to pay the Redemption Price
in cash or shares of Common Stock in accordance with Sections 8(a) and (b) and
Section 9 of this Certificate of Designation. The Company shall deliver the
applicable Major Transaction Redemption Price immediately prior to the
consummation of the Major Transaction; provided that a holder's Preferred Stock
Certificates shall have been so delivered to the Company; provided further that
if the Company is unable to redeem all of the Series B Preferred Stock to be
redeemed, the Company shall redeem an amount from each holder of Series B
Preferred Stock being redeemed equal to such holder's pro-rata amount (based on
the number of shares of Series B Preferred Stock held by such holder relative to
the number of shares of Series B Preferred Stock outstanding) of all Series B
Preferred Stock being redeemed. If the Company shall fail to redeem all of the
Series B Preferred Stock submitted for redemption (other than pursuant to a
dispute as to the arithmetic calculation of the Redemption Price), in addition
to any remedy such holder of Series B Preferred Stock may have under this
Certificate of Designation and the Purchase Agreement, the applicable Redemption
Price payable in respect of such unredeemed Series B Preferred Stock shall bear
interest at the rate of 1.0% per month (prorated for partial months) until paid
in full. Until the Company pays such unpaid applicable Redemption Price in full
to a holder of shares of Series B Preferred Stock submitted for redemption, such
holder shall have the option (the "Void Optional Redemption Option") to, in lieu
of redemption, require the Company to promptly return to such holder(s) all of
the shares of Series B Preferred Stock that were submitted for redemption by
such holder(s) under this Section 8 and for which the applicable Redemption
Price has not been paid, by sending written notice thereof to the Company via
facsimile (the "Void Optional Redemption Notice"). Upon the Company's receipt of
such Void Optional Redemption Notice(s) and prior to payment of the full
applicable Redemption Price to such holder, (i) the Notice(s) of Redemption at
Option of Buyer Upon Major Transaction shall be null and void with respect to
those shares of Series B Preferred Stock submitted for redemption and for which
the applicable Redemption Price has not been paid and (ii) the Company shall
immediately return any Series B Preferred Stock submitted to the Company by each
holder for redemption under this Section 8(d) and for which the applicable
Redemption Price has not been paid and (iii) the Conversion Price of such
returned shares of Series B Preferred Stock shall be adjusted to the lesser of
(A) the Conversion Price and (B) the lowest Closing Bid Price during the period
beginning on the date on which the Notice(s) of Redemption of Option of Buyer
Upon Major Transaction is delivered to the Company and ending on the date on
which the Void Optional Redemption Notice(s) is delivered to the Company;
provided that no adjustment shall be made if such adjustment would result in an
increase of the Conversion Price then in effect. A holder's delivery of a Void
Optional Redemption Notice and exercise of its rights following such notice
shall not effect the Company's obligations to make any payments which have
accrued prior to the date of such notice other than interest payments. Payments
provided for in this Section 8 shall have priority to payments to other
stockholders in connection with a Major Transaction.

            (h) Demand Registration Rights. If the Redemption Price upon the
occurrence of a Major Transaction or a Triggering Event is paid in shares of
Common Stock and such shares have not been previously registered on a
registration statement under the Securities

                                       20
<PAGE>

Act, a holder of Series B Preferred Stock may make a written request for
registration under the Securities Act pursuant to this Section 8(h) of all of
its shares of Common Stock issued upon such Major Transaction or Triggering
Event. The Company shall use its reasonable best efforts to cause to be filed
and declared effective as soon as reasonably practicable (but in no event later
than the ninetieth (90th) day after such holder's request is made) a
registration statement under the Securities Act, providing for the sale of all
of the shares of Common Stock issued upon such Major Transaction or Triggering
Event by such holder. The Company agrees to use its reasonable best efforts to
keep any such registration statement continuously effective for resale of the
Common Stock for so long as such holder shall request, but in no event later
than the date that the shares of Common Stock issued upon such Major Transaction
or Triggering Event may be offered for resale to the public pursuant to Rule
144(k).

      9. Inability to Fully Convert.

            (a) Holder's Option if Company Cannot Fully Convert. If, upon the
Company's receipt of a Conversion Notice or on the Mandatory Conversion Date,
the Company cannot issue shares of Common Stock registered for resale under the
Registration Statement for any reason, including, without limitation, because
the Company (w) does not have a sufficient number of shares of Common Stock
authorized and available, (x) is otherwise prohibited by applicable law or by
the rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over the Company or its
securities from issuing all of the Common Stock which is to be issued to a
holder of Series B Preferred Stock pursuant to a Conversion Notice or (y)
subsequent to the Effectiveness Date, fails to have a sufficient number of
shares of Common Stock registered for resale under the Registration Statement,
then the Company shall issue as many shares of Common Stock as it is able to
issue in accordance with such holder's Conversion Notice and pursuant to Section
5(b)(ii) above and, with respect to the unconverted Series B Preferred Stock,
the holder, solely at such holder's option, can elect, within five (5) business
days after receipt of notice from the Company thereof to:

                  (i) require the Company to redeem from such holder those
Series B Preferred Stock for which the Company is unable to issue Common Stock
in accordance with such holder's Conversion Notice ("Mandatory Redemption") at a
price per share equal to the Major Transaction Redemption Price as of such
Conversion Date (the "Mandatory Redemption Price"); provided that the Company
shall have the sole option to pay the Mandatory Redemption Price in cash or
shares of Common Stock;

                  (ii) if the Company's inability to fully convert Series B
Preferred Stock is pursuant to Section 9(a)(y) above, require the Company to
issue restricted shares of Common Stock in accordance with such holder's
Conversion Notice and pursuant to Section 5(b)(ii) above;

                  (iii) void its Conversion Notice and retain or have returned,
as the case may be, the shares of Series B Preferred Stock that were to be
converted pursuant to such holder's Conversion Notice (provided that a holder's
voiding its Conversion Notice shall not

                                       21
<PAGE>

effect the Company's obligations to make any payments which have accrued prior
to the date of such notice).

            (b) Mechanics of Fulfilling Holder's Election. The Company shall
immediately send via facsimile to a holder of Series B Preferred Stock, upon
receipt of a facsimile copy of a Conversion Notice from such holder which cannot
be fully satisfied as described in Section 9(a) above, a notice of the Company's
inability to fully satisfy such holder's Conversion Notice (the "Inability to
Fully Convert Notice"). Such Inability to Fully Convert Notice shall indicate
(i) the reason why the Company is unable to fully satisfy such holder's
Conversion Notice, (ii) the number of Series B Preferred Stock which cannot be
converted and (iii) the applicable Mandatory Redemption Price. Such holder shall
notify the Company of its election pursuant to Section 9(a) above by delivering
written notice via facsimile to the Company ("Notice in Response to Inability to
Convert").

            (c) Payment of Redemption Price. If such holder shall elect to have
its shares redeemed pursuant to Section 9(a)(i) above, the Company shall pay the
Mandatory Redemption Price to such holder within thirty (30) days of the
Company's receipt of the holder's Notice in Response to Inability to Convert,
provided that prior to the Company's receipt of the holder's Notice in Response
to Inability to Convert the Company has not delivered a notice to such holder
stating, to the satisfaction of the holder, that the event or condition
resulting in the Mandatory Redemption has been cured and all Conversion Shares
issuable to such holder can and will be delivered to the holder in accordance
with the terms of Section 2(g). If the Company shall fail to pay the applicable
Mandatory Redemption Price to such holder on a timely basis as described in this
Section 9(c) (other than pursuant to a dispute as to the determination of the
arithmetic calculation of the Redemption Price), in addition to any remedy such
holder of Series B Preferred Stock may have under this Certificate of
Designation and the Purchase Agreement, such unpaid amount shall bear interest
at the rate of 2.0% per month (prorated for partial months) until paid in full.
Until the full Mandatory Redemption Price is paid in full to such holder, such
holder may (i) void the Mandatory Redemption with respect to those Series B
Preferred Stock for which the full Mandatory Redemption Price has not been paid,
(ii) receive back such Series B Preferred Stock, and (iii) require that the
Conversion Price of such returned Series B Preferred Stock be adjusted to the
lesser of (A) the Conversion Price and (B) the lowest Closing Bid Price during
the period beginning on the Conversion Date and ending on the date the holder
voided the Mandatory Redemption.

            (d) Pro-rata Conversion and Redemption. In the event the Company
receives a Conversion Notice from more than one holder of Series B Preferred
Stock on the same day and the Company can convert and redeem some, but not all,
of the Series B Preferred Stock pursuant to this Section 9, the Company shall
convert and redeem from each holder of Series B Preferred Stock electing to have
Series B Preferred Stock converted and redeemed at such time an amount equal to
such holder's pro-rata amount (based on the number shares of Series B Preferred
Stock held by such holder relative to the number shares of Series B Preferred
Stock outstanding) of all shares of Series B Preferred Stock being converted and
redeemed at such time.

                                       22
<PAGE>

      10. Vote to Change the Terms of or Issue Preferred Stock. The affirmative
vote at a meeting duly called for such purpose or the written consent without a
meeting, of the holders of not less than seventy-five percent (75%) of the then
outstanding shares of Series B Preferred Stock, shall be required (a) for any
change to this Certificate of Designation or the Company's Certificate of
Incorporation which would amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Series B Preferred Stock or (b) for
the issuance of shares of Series B Preferred Stock other than pursuant to the
Purchase Agreement.

      11. Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing the shares of Series B Preferred
Stock, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company
shall execute and deliver new preferred stock certificate(s) of like tenor and
date; provided, however, the Company shall not be obligated to re-issue
Preferred Stock Certificates if the holder contemporaneously requests the
Company to convert such shares of Series B Preferred Stock into Common Stock.

      12. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designation
shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of the Series B Preferred
Stock and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holders of the 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.

      13. Specific Shall Not Limit General; Construction. No specific provision
contained in this Certificate of Designation shall limit or modify any more
general provision contained herein. This Certificate of Designation shall be
deemed to be jointly drafted by the Company and all initial purchasers of the
Series B Preferred Stock and shall not be construed against any person as the
drafter hereof.

      14. Failure or Indulgence Not Waiver. No failure or delay on the part of a
holder of Series B Preferred Stock in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

                                       23
<PAGE>

      IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this 18'th day of February,
2005.

                                        BOUNDLESS MOTOR SPORTS RACING, INC.

                                        By: /s/ Brian Carter
                                            Name:  Brian Carter
                                            Title: Chief Financial Officer
                                                   and Vice President

                                       24
<PAGE>

                                                                       EXHIBIT I

                       BOUNDLESS MOTOR SPORTS RACING, INC.
                                CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series B Preferred Stock of Boundless Motor Sports Racing,
Inc. (the "Certificate of Designation"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series B Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of Boundless Motor Sports Racing, Inc., a Colorado corporation (the
"Company"), indicated below into shares of Common Stock, par value $.0001 per
share (the "Common Stock"), of the Company, by tendering the stock
certificate(s) representing the share(s) of Preferred Shares specified below as
of the date specified below.

      Date of Conversion:_______________________________________________________

      Number of Preferred Shares to be converted:_______________________________

      Stock certificate no(s). of Preferred Shares to be converted:_____________

      The Common Stock have been sold pursuant to the Registration Statement (as
defined in the Purchase Agreement): YES ____    NO____

Please confirm the following information:

      Conversion Price:                 ________________________________________

      Number of shares of Common Stock
      to be issued:                     ________________________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion: ___________________________

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

      Issue to:                         ________________________________________

                                        ________________________________________

      Facsimile Number:                 ________________________________________

      Authorization:                    ________________________________________

                                        By:_____________________________________

                                        Title:__________________________________

      Dated:

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