Document:

EXHIBIT 4.1

                                                                   David M. Otto
                                                               dotto@ottolaw.com

                                                       July 7, 2004

VIA EMAIL: ghome@iteceg.com

Gary M. DeLaurentiis
President
Itec Environmental Group, Inc.
693 Hi Tec Parkway, Suite 3
Oakdale, California 95361

Re:      Engagement of The Otto Law Group, PLLC

Dear Mr. DeLaurentiis:

This  Engagement  Agreement  confirms  the  principal  terms  under  which  Itec
Environmental  Group,  Inc., a Delaware  corporation (the "Company"),  agrees to
engage The Otto Law Group, PLLC ("Otto Law").  Under this Engagement  Agreement,
Otto Law will  assist  the  Company  with  various  matters  including,  without
limitation, the following:

         1.  Developing  and  executing the  Company's  strategic  financing and
growth plans;

         2. Preparing an offering  memorandum  and/or  prospectus and developing
other materials relevant to the Company's financing and growth strategy;

         3. Providing legal advice in connection with and assisting with certain
securities, corporate finance, blue sky and investor issues; and

         4. Providing legal advice with respect to the Company's capitalization,
corporate organization,  potential corporate transactions,  corporate governance
and other general business matters.

         In connection  with the provision of the foregoing  services,  Otto Law
and the Company agree to the following compensation arrangement:

         1. The Company  shall  engage Otto Law for legal  services  required in
connection with certain corporate  governance,  corporate  finance,  securities,
contractual and other matters related to the Company's operations and financing;

         2. Otto Law shall bill the  Company  for fees,  primarily  on an hourly
basis,  according to Otto Law's usual and customary charges.  Also, Otto Law may
adjust  its  fees  for  factors  such  as the  amount  of work  involved  in the
representation,  unusual time  constraints,  use of prior work product,  overall
value of the services,  and regular periodic firm hourly rate adjustments.  Otto
Law's hourly rates are as follows: David Otto's hourly rate will be $350.00; the
rate for associates  will be between  $195.00 and $270.00 per hour; and the rate
for  non-attorney  members of our staff will be between  $60.00 and  $135.00 per
hour; and

                                       7
<PAGE>

         3.  Otto Law shall  receive a  retainer  in the  amount of Ten  Million
(10,000,000) shares of common stock of the Company (the "Shares"),  the proceeds
of which will be applied against billable hours. Additionally,  the Shares shall
be registered by the Company  pursuant to the  Securities  Act of 1933 on a Form
S-8  registration  statement.  The  Shares  shall be  issued  to David M.  Otto,
Principal of Otto Law.

         We look forward to working together and helping the Company achieve its
financial and business  objectives.  If the proposed terms are acceptable to the
Company,  please  sign  below and  return  the  signed  copy of this  Engagement
Agreement to me.

         If you have any further  questions or concerns,  please do not hesitate
to contact me.

                                                     Sincerely,

                                                     The Otto Law Group, PLLC

                                                     /s/

                                                     David M. Otto

Agreed and accepted this ____ day of July, 2004

ITEC ENVIRONMENTAL GROUP, INC.

/s/
   --------------------------------
Name:  Gary M. DeLaurentiis
Title: President

                                       8EXHIBIT 4.2

                                                                   David M. Otto
                                                               dotto@ottolaw.com

                                                      August 24, 2004

VIA EMAIL: ghome@iteceg.com

Gary M. DeLaurentiis
Chief Executive Officer
Itec Environmental Group, Inc.
693 Hi Tec Parkway, Suite 3
Oakdale, California 95361

     Re:  Amendment No. 1 to Engagement Agreement with The Otto Law Group, PLLC

Dear Gary:

         This Amendment No. 1 to Engagement Agreement ("Amendment") confirms the
amendments to the Engagement  Agreement by and between Itec Environmental Group,
Inc.  ("Itec"  or the  "Company")  and The Otto Law  Group,  PLLC  ("Otto  Law")
executed on or around July 7, 2004 (the  "Engagement  Agreement") and sets forth
the additional terms under which Itec agrees to engage Otto Law.

         NOW,  THEREFORE,  in  consideration  of the  foregoing,  and the mutual
agreements, representations,  warranties and covenants contained herein, and for
other  good  and  valuable   consideration   the  receipt  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

         Sections 3 of the Engagement Agreement shall be deleted in its entirety
and shall read as follows:

         "3. Otto Law shall  receive a retainer  in the amount of Fifty  Million
(50,000,000) shares of common stock of the Company (the "Shares"),  the proceeds
of which will be applied against billable hours. Additionally,  the Shares shall
be registered by the Company  pursuant to the  Securities  Act of 1933 on a Form
S-8  registration  statement.  The  Shares  shall be  issued  to David M.  Otto,
Principal of Otto Law."

         We look  forward to working  together  and  helping  Itec  achieve  its
financial and business objectives. If the proposed terms are acceptable to Itec,
please sign below and return the signed copy of this Amendment to me.

         If you have any further  questions or concerns,  please do not hesitate
to contact me.

                                                     Sincerely,

                                                     THE OTTO LAW GROUP, PLLC

                                                     David M. Otto

Agreed and accepted this ____ day of August, 2004.

ITEC ENVIRONMENTAL GROUP, INC.

By:
    ------------------------------------------------
Name: Gary De Laurentiis
Its: CEO

                                       9DESIGNATIONS, PREFERENCES AND RIGHTS OF
                    THE SERIES A CONVERTIBLE PREFERRED STOCK
                                       OF
                               DENDO GLOBAL CORP.

      Dendo Global Corp. (the "COMPANY"),  a corporation  organized and existing
under the Nevada  Revised  Statutes  (the  "NRS"),  does  hereby  certify  that,
pursuant to  authority  conferred  upon the Board of Directors of the Company by
the Restated Articles of Incorporation, as amended, of the Company, and pursuant
to  Section  78.1955  of the NRS,  the Board of  Directors  of the  Company at a
meeting duly held, adopted resolutions (i) authorizing a series of the Company's
previously  authorized  preferred  stock,  par value  $.001 per share,  and (ii)
providing  for  the  designations,   preferences  and  relative,  participating,
optional or other rights,  and the  qualifications,  limitations or restrictions
thereof,  of Four Million  (4,000,000) shares of Series A Convertible  Preferred
Stock of the Company, as follows:

      RESOLVED, that the Company is authorized to issue Four Million (4,000,000)
shares of Series A Convertible  Preferred  Stock (the "PREFERRED  SHARES"),  par
value $.001 per share,  which  shall have the  following  powers,  designations,
preferences and other special rights:

      (1) (I)  CERTAIN  DEFINED  TERMS.  For  purposes  of this  Certificate  of
Designations, the following terms shall have the following meanings:

            (a) "ADDITIONAL  AMOUNT" means, on a per Preferred Share basis,  the
sum of (A) unpaid Default Interest  through the date of  determination  plus (B)
the product of (x) the result of the following  formula:  (0.05) (N/365) and (y)
$1.00.

            (b) "APPROVED STOCK PLAN" means any employee  benefit plan which has
been  approved by the Board of Directors  of the Company,  pursuant to which the
Company's  securities  may be issued to  employees,  officers or  directors  for
services provided to the Company.

            (c) "BLOOMBERG" means Bloomberg Financial Markets.

            (d)  "BUSINESS  DAY"  means any day other than  Saturday,  Sunday or
other day on which  commercial  banks in The City of New York are  authorized or
required by law to remain closed.

            (e)  "CALENDAR  QUARTER"  means each of the following  periods:  the
period  beginning on and including  January 1 and ending on and including  March
31; the period  beginning on and  including  April 1 and ending on and including
June  30;  the  period  beginning  on and  including  July 1 and  ending  on and
including  September 30; and the period beginning on and including October 1 and
ending on and including December 31.

<PAGE>

            (f)  "CLOSING  BID PRICE" and "CLOSING  SALE PRICE"  means,  for any
security  as of any date,  the last  closing  bid price and last  closing  trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or, if the Principal  Market begins to operate on an extended  hours
basis and does not  designate  the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade  price,  respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal  securities exchange or trading
market  for such  security,  the last  closing  bid price or last  trade  price,
respectively,  of such security on the principal  securities exchange or trading
market where such security is listed or traded as reported by  Bloomberg,  or if
the  foregoing  do not apply,  the last  closing bid price or last trade  price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade  price,  respectively,  is  reported  for such  security  by
Bloomberg,  the average of the bid prices, or the ask prices,  respectively,  of
any market  makers for such  security as  reported in the "pink  sheets" by Pink
Sheets LLC (formerly the National  Quotation  Bureau,  Inc.). If the Closing Bid
Price or the  Closing  Sale  Price  cannot be  calculated  for a  security  on a
particular  date on any of the  foregoing  bases,  the  Closing Bid Price or the
Closing Sale Price,  as the case may be, of such  security on such date shall be
the fair market  value as mutually  determined  by the Company and the  Required
Holders.  If the Company and the  Required  Holders are unable to agree upon the
fair market value of such security, then such dispute shall be resolved pursuant
to Section 2(c)(iii).  All such determinations to be appropriately  adjusted for
any stock dividend,  stock split, stock combination or other similar transaction
during the applicable calculation period.

            (g)  "CONVERSION  PRICE"  means  $0.50,  subject  to  adjustment  as
provided herein.

            (h) "CONVERTIBLE  SECURITIES"  means any stock or securities  (other
than  Options)  directly  or  indirectly  convertible  into or  exchangeable  or
exercisable for Common Stock.

            (i) "DIVIDEND CALCULATION PRICE" means, with respect to any Dividend
Date, that price which shall be computed as 90% of the arithmetic average of the
Weighted  Average Prices of the Common Stock on each of the five (5) consecutive
trading days immediately  preceding the second trading day immediately preceding
such Dividend  Date, as  appropriately  adjusted for any stock  dividend,  stock
split,  stock  combination  or other  similar  transaction  during such five (5)
trading day period.

            (j) "EBITDA" means,  for the most recent calendar  quarter,  the net
income  (or  net  loss)  of  the  Company  and  its  consolidated  subsidiaries,
determined  in  accordance  with United  States  generally  accepted  accounting
principles,  consistently  applied,  plus  (i) any  provision  for (or  less any
benefit from) income taxes,  (ii) any  deduction  for interest  expense,  net of
interest  income,   and  (iii)  depreciation  and  amortization   expense.   All
determinations  of the  components of EBITDA shall be derived from the Company's
then most recently filed Annual Report on Form 10-K or 10-KSB, as applicable, or
Quarterly Report on Form 10-Q or 10QSB, as applicable.

<PAGE>

            (k)  "EQUITY  CONDITIONS"  means:  (i) on each day during the period
beginning  six (6) months  prior to the  applicable  date of  determination  and
ending on and  including  the  applicable  date of  determination  (the  "EQUITY
CONDITIONS  MEASURING  PERIOD"),  either (x) the  Registration  Statement  filed
pursuant to the  Registration  Rights Agreement shall be effective and available
for the  resale of all  remaining  Registrable  Securities  (as  defined  in the
Registration  Rights Agreement) in accordance with the terms of the Registration
Rights  Agreement and there shall not have been any Grace Periods (as defined in
the  Registration  Rights  Agreement) or (y) all shares of Common Stock issuable
upon conversion of the Preferred  Shares or as Dividend Shares shall be eligible
for sale without  restriction  and without the need for  registration  under any
applicable  federal or state  securities  laws;  (ii) the Company  shall have no
knowledge of any fact that would cause (x) the Registration  Statements required
pursuant to the Registration  Rights Agreement not to be effective and available
for the resale of all remaining  Registrable  Securities in accordance  with the
terms of the  Registration  Rights  Agreement  or (y) any shares of Common Stock
issuable upon conversion of the Preferred Shares or as Dividend Shares not to be
eligible for sale without restriction pursuant to Rule 144(k) and any applicable
state securities laws; (iii) on each day during the Equity Conditions  Measuring
Period, the shares of Common Stock are designated for quotation on the Principal
Market and shall not have been suspended from trading on such exchange or market
(other than  suspensions  of not more than two days and  occurring  prior to the
applicable date of determination  due to business  announcements by the Company)
nor shall  delisting or suspension by such exchange or market been threatened or
pending either (A) in writing by such exchange or market or (B) by falling below
the minimum listing  maintenance  requirements of such exchange or market;  (iv)
during the Equity Conditions  Measuring Period, the Company shall have delivered
Conversion  Shares and  Warrant  Shares (as defined in the  Securities  Purchase
Agreement)  and other shares of Common Stock  issuable  upon  conversion  of the
Preferred  Shares and exercise of the Warrants to the holders on a timely basis;
(v) any  applicable  shares of Common Stock to be issued in connection  with the
event requiring  determination may be issued in full without violating Section 4
hereof and any other rules or regulations of the Principal  Market;  (vi) during
the Equity Conditions Measuring Period, there shall not have occurred the public
announcement of a pending,  proposed or intended  Fundamental  Transaction which
has not been  abandoned,  terminated  or  consummated;  and  (vii)  the  Company
otherwise  shall  have  been in  material  compliance  with and  shall  not have
materially breached any provision,  covenant,  representation or warranty of any
Transaction Document (as defined in the Securities Purchase Agreement).

            (l) "ELIGIBLE MARKET" means the Principal Market, The New York Stock
Exchange, Inc., the Nasdaq National Market or The Nasdaq SmallCap Market.

            (m)  "EXCLUDED  SECURITIES"  means  shares of Common Stock issued or
deemed to be issued in accordance  with Section 2(e) hereof by the Company:  (i)
pursuant to an Approved Stock Plan;  (ii) upon issuance of the Preferred  Shares
or upon  conversion of the Preferred  Shares or as Dividend  Shares;  (iii) upon
exercise  of  the  Warrants;  and  (iv)  issued  upon  exercise  of  Options  or
Convertible  Securities which are outstanding on the date immediately  preceding
the Issuance  Date,  provided  that such issuance of shares of Common Stock upon
exercise of such Options or Convertible Securities is made pursuant to the terms
of such  Options or  Convertible  Securities  in effect on the date  immediately
preceding the Issuance Date and such Options or  Convertible  Securities are not
amended after the date immediately preceding the Issuance Date.

<PAGE>

            (n) "FUNDAMENTAL TRANSACTION" means that the Company shall, directly
or indirectly,  in one or more related  transactions,  (i)  consolidate or merge
with or into (whether or not the Company is the surviving  corporation)  another
Person, or (ii) sell,  assign,  transfer,  convey or otherwise dispose of all or
substantially  all of the properties or assets of the Company to another Person,
or (iii) allow another Person to make a purchase,  tender or exchange offer that
is  accepted by the  holders of more than the 50% of the  outstanding  shares of
Common  Stock (not  including  any shares of Common  Stock held by the Person or
Persons making or party to, or associated or affiliated  with the Persons making
or party to, such  purchase,  tender or exchange  offer),  or (iv)  consummate a
stock  purchase  agreement or other  business  combination  (including,  without
limitation,   a   reorganization,   recapitalization,   spin-off  or  scheme  of
arrangement)  with another Person  whereby such other Person  acquires more than
the 50% of the  outstanding  shares of Common Stock (not including any shares of
Common  Stock held by the other Person or other  Persons  making or party to, or
associated or affiliated  with the other Persons  making or party to, such stock
purchase   agreement  or  other  business   combination),   or  (v)  reorganize,
recapitalize or reclassify its Common Stock.

            (o) "ISSUANCE DATE" means the first date on which  Preferred  Shares
are issued pursuant to the Securities Purchase Agreement.

            (p) "N"  means the  number of days  from,  but  excluding,  the last
Dividend Date with respect to which dividends,  along with any Default Interest,
have been paid by the Company on the applicable Preferred Share, or the Issuance
Date if no  Dividend  Date  has  occurred,  through  and  including  the date of
determination  for such Preferred  Share for which such  determination  is being
made.

            (q) "OPTIONS" means any rights, warrants or options to subscribe for
or purchase Common Stock or Convertible Securities.

            (r) "PARENT  ENTITY" of a Person means an entity  that,  directly or
indirectly,  controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market,  or, if there is more
than one such  Person or Parent  Entity,  the Person or Parent  Entity  with the
largest  public  market  capitalization  as of the date of  consummation  of the
Fundamental Transaction.

            (s) "PERSON" means an individual,  a limited  liability  company,  a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization and a government or any department or agency thereof.

            (t)  "PRINCIPAL  MARKET" means the  principal  exchange or market on
which the Common Stock is listed and trades, which initially is the OTC Bulletin
Board.

PAGE>

            (u) "REGISTRATION  RIGHTS AGREEMENT" means that certain registration
rights  agreement  by and among  the  Company  and the  initial  holders  of the
Preferred Shares relating to the filing of a Registration  Statement (as defined
in such  agreement)  covering the resale of the shares of Common Stock  issuable
upon conversion of and as Dividend  Shares on the Preferred  Shares and exercise
of the Warrants,  as such agreement may be amended from time to time as provided
in such agreement.

            (v) "REQUIRED  HOLDERS"  means the holders of the  Preferred  Shares
representing  at least a majority of the shares of Common Stock  underlying  the
Preferred Shares then outstanding.

            (w) "SECURITIES  PURCHASE  AGREEMENT" means that certain  securities
purchase  agreement  by and among the  Company  and the  initial  holders of the
Preferred Shares, as such agreement may be amended from time to time as provided
in such agreement.

            (X) "STATED VALUE" means $1.00.

            (y) "SUCCESSOR  ENTITY" means the Person,  which may be the Company,
formed by, resulting from or surviving any Fundamental Transaction or the Person
with which such Fundamental  Transaction shall have been made,  provided that if
such Person is not a publicly  traded  entity whose  common stock or  equivalent
equity security is quoted or listed for trading on an Eligible Market, Successor
Entity shall mean such Person's Parent Entity.

            (z) "WARRANTS" means the warrants to purchase shares of Common Stock
issued by the Company pursuant to the Securities Purchase Agreement.

            (aa)  "WEIGHTED  AVERAGE  PRICE"  means,  for any security as of any
date,  the  dollar  volume-weighted  average  price  for  such  security  on the
Principal  Market during the period beginning at 9:30:01 a.m., New York Time (or
such other time as the Principal Market publicly  announces is the official open
of trading),  and ending at 4:00:00  p.m.,  New York Time (or such other time as
the Principal  Market  publicly  announces is the official  close of trading) as
reported  by  Bloomberg  through  its  "Volume at Price"  functions,  or, if the
foregoing  does not apply,  the  dollar  volume-weighted  average  price of such
security in the  over-the-counter  market on the  electronic  bulletin board for
such security  during the period  beginning at 9:30:01  a.m.,  New York Time (or
such  other time as such  market  publicly  announces  is the  official  open of
trading),  and ending at 4:00:00 p.m., New York Time (or such other time as such
market  publicly  announces  is the  official  close of  trading) as reported by
Bloomberg,  or, if no dollar volume-weighted  average price is reported for such
security by  Bloomberg  for such hours,  the average of the highest  closing bid
price and the  lowest  closing  ask price of any of the  market  makers for such
security  as  reported in the "pink  sheets" by Pink  Sheets LLC  (formerly  the
National  Quotation  Bureau,  Inc.).  If the  Weighted  Average  Price cannot be
calculated  for a security on a particular  date on any of the foregoing  bases,
the  Weighted  Average  Price of such  security  on such date  shall be the fair
market  value as mutually  determined  by the  Company  and the  Holder.  If the
Company  and the Holder are unable to agree upon the fair  market  value of such
security, then such dispute shall be resolved pursuant to Section 2(c)(iii). All
such determinations to be appropriately  adjusted for any stock dividend,  stock
split,  stock  combination  or other similar  transaction  during the applicable
calculation period.

PAGE>

      (II) DIVIDENDS.  The holders of the Preferred  Shares shall be entitled to
receive  dividends  ("DIVIDENDS")  at a rate of 5.0% per  annum  (the  "DIVIDEND
RATE"),  which shall be cumulative,  accumulate daily from the Issuance Date and
be due and payable  beginning on October 1, 2004 (the "FIRST DIVIDEND DATE") and
on the first day of each Calendar  Quarter after the First  Dividend Date (each,
including the First Dividend Date, a "DIVIDEND DATE"). If a Dividend Date is not
a Business Day,  then the Dividend  shall be due and payable on the Business Day
immediately  following such Dividend Date.  Dividends  shall be payable in cash,
or, at the option of the Company, in shares of Common Stock ("DIVIDEND SHARES"),
provided that the Dividends which accumulated during any period shall be payable
as Dividend Shares only if the Company provides written notice to each holder of
Preferred Shares at least ten (10) Business Days prior to the Dividend Date (the
"DIVIDEND  NOTICE DATE").  Dividends to be paid in Dividend Shares shall be paid
in a number of fully paid and  nonassessable  shares  (rounded up to the nearest
whole share) of Common Stock equal to the quotient of (a) the Additional  Amount
divided by (b) the Dividend  Calculation Price. If any Dividend Shares are to be
paid on a Dividend Date,  then the Company shall (X) provided that the Company's
transfer agent (the "TRANSFER  AGENT") is  participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program,  upon the request of
such  holder,  credit such  aggregate  number of  Dividend  Shares to which such
holder shall be entitled to such holder's or its designee's balance account with
DTC through its Deposit  Withdrawal  Agent Commission  system,  or (Y) issue and
deliver on the applicable  Dividend Date, to each holder of Preferred  Shares at
such  address as specified by such holder in writing to the Company at least two
Business Days prior to the applicable  Dividend Date, a certificate,  registered
in the name of such holder or its designee, for the number of Dividend Shares to
which such holder shall be entitled.  Notwithstanding the foregoing, the Company
shall not be entitled to pay  Dividends  in shares of Common  Stock and shall be
required  to pay  such  Dividends  in  cash  if the  Equity  Conditions  are not
satisfied (or waived by the Holder) from and including the Dividend  Notice Date
through and including the applicable  Dividend Date. Any  accumulated and unpaid
cash Dividend  Payments which are not paid within five (5) Business Days of such
accumulated and unpaid Dividends'  Dividend Date shall bear interest at the rate
of 15.0% per annum from such  Dividend  Date until the same is paid in full (the
"DEFAULT INTEREST").  Notwithstanding any other provision in this Certificate of
Designations  to the contrary,  no Dividends shall be required to be paid by the
Company  subsequent to the first fiscal  quarter in which the Company has EBITDA
of One Million Dollars ($1,000,000) or more.

      (2) CONVERSION OF PREFERRED SHARES.  Preferred Shares shall be convertible
into  shares of the  Company's  Common  Stock,  par value  $.001 per share  (the
"COMMON STOCK"), on the terms and conditions set forth in this Section 2.

            (a) HOLDER'S CONVERSION RIGHT.  Subject to the provisions of Section
4, at any time or times on or after the Issuance  Date,  any holder of Preferred
Shares shall be entitled to convert any whole or fractional  number of Preferred
Shares into fully paid and  nonassessable  shares of Common Stock in  accordance
with Section 2(c) at the Conversion Rate (as defined  below).  The Company shall
not issue any  fraction  of a share of Common  Stock  upon any  conversion.  All
shares of Common Stock (including fractions thereof) issuable upon conversion of
more  than one  Preferred  Share by a holder  thereof  shall be  aggregated  for
purposes of determining whether the conversion would result in the issuance of a
fraction of a share of Common Stock. If, after the  aforementioned  aggregation,
the  issuance  would  result in the  issuance of a fraction of a share of Common
Stock,  the Company  shall round such  fraction of a share of Common Stock up to
the nearest whole share.

PAGE>

            (b)  CONVERSION.  The number of shares of Common Stock issuable upon
conversion  of each  Preferred  Share  pursuant to Section 2 shall be determined
according to the following formula (the "CONVERSION RATE"):

                                  STATED VALUE

                                Conversion Price

            (c) MECHANICS OF  CONVERSION.  The  conversion  of Preferred  Shares
shall be conducted in the following manner:

                  (i)  HOLDER'S  DELIVERY  REQUIREMENTS.  To  convert  Preferred
Shares  into shares of Common  Stock on any date (the  "CONVERSION  DATE"),  the
holder  thereof  shall (A) transmit by facsimile  (or  otherwise  deliver),  for
receipt on or prior to 11:59 p.m.,  New York City Time,  on such date, a copy of
an executed  notice of conversion in the form attached  hereto as EXHIBIT I (the
"CONVERSION  NOTICE") to the Company and the Transfer  Agent and (B) if required
by Section 2(c)(vii),  surrender to a common carrier for delivery to the Company
as  soon  as  practicable   following   such  date  the  original   certificates
representing  the  Preferred  Shares  being  converted  (or  an  indemnification
undertaking  with  respect to such  shares in the case of their  loss,  theft or
destruction) (the "PREFERRED STOCK CERTIFICATES").

                  (ii) COMPANY'S RESPONSE. Upon receipt by the Company of a copy
of a Conversion Notice, the Company shall (A) as soon as practicable, but in any
event within one (1) Business  Day,  send,  via  facsimile,  a  confirmation  of
receipt of such Conversion  Notice to such holder and the Transfer Agent,  which
confirmation  shall  constitute an  instruction to the Transfer Agent to process
such Conversion  Notice in accordance with the terms herein and (B) on or before
the second (2nd)  Business Day  following  the date of receipt by the Company of
such Conversion Notice (the "SHARE DELIVERY DATE"), (I) if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer program, the Company
shall cause the Transfer  Agent to promptly  electronically  transmit the Common
Stock  issuable  upon  conversion  to the holder by crediting the account of the
holder or its nominee with DTC through its Deposit  Withdrawal  Agent Commission
system or (II) issue and deliver to the address as specified  in the  Conversion
Notice, a certificate, 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.  If
the number of Preferred Shares represented by the Preferred Stock Certificate(s)
submitted for conversion,  as may be required pursuant to Section 2(c)(vii),  is
greater than the number of Preferred  Shares 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)  (the  "PREFERRED  STOCK
DELIVERY  DATE") and at its own  expense,  issue and deliver to the holder a new
Preferred  Stock  Certificate  representing  the number of Preferred  Shares not
converted.

<PAGE>

                  (iii) DISPUTE  RESOLUTION.  In the case of a dispute as to the
determination  of the  Conversion  Price or the  arithmetic  calculation  of the
Conversion  Rate,  the Company shall instruct the Transfer Agent to issue to the
holder  the  number of shares of Common  Stock  that is not  disputed  and shall
transmit  an   explanation   of  the  disputed   determinations   or  arithmetic
calculations  to the holder via facsimile (the "DISPUTE  NOTICE") within one (1)
Business  Day of receipt  of such  holder's  Conversion  Notice or other date of
determination.  If such  holder  and the  Company  are  unable to agree upon the
determination  of  the  Conversion  Price  or  arithmetic   calculation  of  the
Conversion  Rate within two (2) Business Days of such Dispute  Notice,  then the
Company  shall within one (1) Business Day submit via facsimile (A) the disputed
determination  of the Conversion Price to an independent,  reputable  investment
bank  selected by the Company and  approved by the  Required  Holders or (B) the
disputed  arithmetic  calculation  of  the  Conversion  Rate  to  the  Company's
independent,  outside  accountant.  The Company  shall cause,  at the  Company's
expense,  the investment bank or the accountant,  as the case may be, to perform
the  determinations or calculations and notify the Company and the holder of the
results  no later  than two (2)  Business  Days  from the time it  receives  the
disputed determinations or calculations.  Such investment bank's or accountant's
determination  or  calculation,  as the case may be,  shall be binding  upon all
parties absent manifest error.

                  (iv) RECORD HOLDER.  The Person or Persons entitled to receive
the shares of Common Stock issuable upon a conversion of Preferred  Shares 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.

<PAGE>

                  (A) CASH  DAMAGES.  Subject to Section 4, if the Company shall
fail for any reason or for no reason to issue within five  Business  Days of the
Conversion Date, a certificate for the number of shares of Common Stock to which
the holder is entitled or to credit the  holder's  balance  account with DTC for
such number of shares of Common  Stock to which the holder is entitled  upon the
holder's conversion of the Preferred Shares, the Company shall pay as damages in
cash to such holder on each day after such fifth  Business Day that the issuance
of such  Common  Stock is not  timely  effected  an amount  equal to 1.0% of the
product of (A) the sum of the number of shares of Common Stock not issued to the
holder on a timely basis and to which the holder is entitled and (B) the Closing
Sale Price of the Common Stock on the trading day immediately preceding the last
possible  date which the Company  could have  issued  such  Common  Stock to the
holder without violating Section 2(c). In addition to any other rights available
to a holder and the  foregoing  provisions,  if the Company  fails to deliver or
cause to be  delivered to the holder a  certificate  for the number of shares of
Common Stock to which the holder is entitled or to credit the  holder's  balance
account  with DTC for such number of shares of Common  Stock to which the holder
is entitled upon the holder's conversion of the Preferred Shares by the Business
Day after the date on which delivery of such certificate is required hereby, and
if on or  after  such  Business  Day the  holder  purchases  (in an open  market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the holder of the shares that the holder anticipated  receiving from the
Company (a "BUY-IN"),  then the Company shall,  within three Business Days after
the holder's request and in the holder's discretion,  either (i) pay cash to the
holder  in an amount  equal to the  holder's  total  purchase  price  (including
brokerage commissions,  if any) for the shares of Common Stock so purchased,  at
which point the Company's  obligation to deliver such  certificate (and to issue
such  shares  of Common  Stock)  shall  terminate,  or (ii)  promptly  honor its
obligation to deliver to the holder a certificate or  certificates  representing
such shares of Common Stock (the "BUY-IN  SHARES") and pay cash to the holder in
an amount equal to the product of (A) the number of Buy-In Shares, times (B) the
excess (if any) of the  Closing  Sale  Price on the date of the Buy-In  over the
Closing Sale Price on the date of delivery of the Buy-In Shares.

                  (B) VOID CONVERSION NOTICE. If for any reason a holder has not
received  all of the  shares of Common  Stock to which such  holder is  entitled
prior to the tenth  (10th)  Business  Day after  the  Share  Delivery  Date with
respect to a  conversion  of  Preferred  Shares,  then the holder,  upon written
notice  to the  Company,  with a  copy  to the  Transfer  Agent,  may  void  its
Conversion Notice with respect to, and retain or have returned,  as the case may
be, any Preferred Shares that have not been converted  pursuant to such holder's
Conversion  Notice;  provided that the voiding of a holder's  Conversion  Notice
shall not affect  the  Company's  obligations  to make any  payments  which have
accrued  prior to the date of such  notice  pursuant  to Section  2(c)(v)(A)  or
otherwise.

                  (vi) PRO RATA  CONVERSION.  Subject  to Section  4(b),  in the
event the  Company  receives a  Conversion  Notice  from more than one holder of
Preferred  Shares for the same Conversion Date and the Company can convert some,
but not all, of such  Preferred  Shares,  the Company  shall  convert  from each
holder of Preferred  Shares electing to have Preferred  Shares converted at such
time  a pro  rata  amount  of  such  holder's  Preferred  Shares  submitted  for
conversion  based on the number of Preferred  Shares submitted for conversion on
such date by such holder  relative to the number of Preferred  Shares  submitted
for conversion on such date.

<PAGE>

                  (vii) BOOK-ENTRY. Notwithstanding anything to the contrary set
forth herein,  upon conversion of Preferred  Shares in accordance with the terms
hereof,  the holder  thereof shall not be required to  physically  surrender the
certificate  representing the Preferred Shares to the Company unless the full or
remaining  number of Preferred  Shares  represented by the certificate are being
converted.  The holder and the Company shall maintain records showing the number
of Preferred  Shares so converted and the dates of such conversions or shall use
such other method,  reasonably satisfactory to the holder and the Company, so as
not to require physical surrender of the certificate  representing the Preferred
Shares upon each such  conversion.  In the event of any dispute or  discrepancy,
such records of the Company establishing the number of Preferred Shares to which
the record holder is entitled  shall be  controlling  and  determinative  in the
absence of manifest error.  Notwithstanding  the foregoing,  if Preferred Shares
represented  by a certificate  are  converted as  aforesaid,  the holder may not
transfer the  certificate  representing  the Preferred  Shares unless the holder
first physically surrenders the certificate representing the Preferred Shares to
the Company,  whereupon  the Company will  forthwith  issue and deliver upon the
order of the holder a new  certificate  of like tenor,  registered as the holder
may request,  representing  in the aggregate  the remaining  number of Preferred
Shares  represented  by  such  certificate.  The  holder  and any  assignee,  by
acceptance  of a  certificate,  acknowledge  and  agree  that,  by reason of the
provisions of this paragraph,  following conversion of any Preferred Shares, the
number of Preferred Shares  represented by such certificate may be less than the
number of Preferred  Shares stated on the face  thereof.  Each  certificate  for
Preferred Shares shall bear the following legend:

            ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS
            OF  THE  COMPANY'S  CERTIFICATE  OF  DESIGNATIONS  RELATING  TO  THE
            PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE,  INCLUDING SECTION
            2(c)(vii)  THEREOF.  THE NUMBER OF PREFERRED  SHARES  REPRESENTED BY
            THIS  CERTIFICATE  MAY BE LESS THAN THE NUMBER OF  PREFERRED  SHARES
            STATED ON THE FACE  HEREOF  PURSUANT  TO  SECTION  2(c)(vii)  OF THE
            CERTIFICATE  OF  DESIGNATIONS   RELATING  TO  THE  PREFERRED  SHARES
            REPRESENTED BY THIS CERTIFICATE.

            (d) TAXES.  The Company  shall pay any and all  documentary,  stamp,
transfer  and other  similar  taxes  that may be  payable  with  respect  to the
issuance and delivery of Common Stock upon the conversion of Preferred Shares.

            (e) ADJUSTMENTS TO CONVERSION  PRICE.  The Conversion  Price will be
subject to adjustment from time to time as provided in this Section 2(e).

                  (i)  ADJUSTMENT  OF  CONVERSION  PRICE UPON ISSUANCE OF COMMON
STOCK.  If and  whenever on or after the Issuance  Date and while any  Preferred
Shares are outstanding,  the Company issues or sells, or in accordance with this
Section  2(e) is  deemed  to have  issued or sold,  any  shares of Common  Stock
(including  the  issuance or sale of shares of Common  Stock owned or held by or
for  the  account  of the  Company  but  excluding  Excluded  Securities)  for a
consideration per share (the "NEW SECURITIES  ISSUANCE PRICE") less than a price
equal to the  Conversion  Price in  effect  immediately  prior to such time (the
"APPLICABLE  PRICE") (the foregoing,  a "DILUTIVE  ISSUANCE"),  then immediately
after such issue or sale, the  Conversion  Price then in effect shall be reduced
to an  amount  equal to the New  Securities  Issuance  Price.  For  purposes  of
determining  the  adjusted  Conversion  Price under this  Section  2(e)(i),  the
following shall be applicable:

<PAGE>

                  (A) ISSUANCE OF OPTIONS.  If the Company in any manner  grants
or sells any Options (not including  Excluded  Securities)  and the lowest price
per share for which one share of Common  Stock is issuable  upon the exercise of
any such Option or upon  conversion,  exchange  or  exercise of any  Convertible
Securities  issuable  upon  exercise of such Option is less than the  Applicable
Price,  then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the  granting or sale of
such Option for such price per share.  For purposes of this Section  2(e)(i)(A),
the "lowest price per share for which one share of Common Stock is issuable upon
the exercise of any such Option or upon conversion,  exchange or exercise of any
Convertible  Securities issuable upon exercise of such Option" shall be equal to
the sum of the lowest amounts of  consideration  (if any) received or receivable
by the Company with  respect to any one share of Common  Stock upon  granting or
sale of the Option, upon exercise of the Option and upon conversion, exchange or
exercise of any Convertible  Security  issuable upon exercise of such Option. No
further  adjustment  of the  Conversion  Price  shall be made  upon  the  actual
issuance  of such  Common  Stock  or of such  Convertible  Securities  upon  the
exercise of such  Options or upon the actual  issuance of such Common Stock upon
conversion, exchange or exercise of such Convertible Securities.

                  (B) ISSUANCE OF CONVERTIBLE SECURITIES.  If the Company in any
manner  issues or sells  any  Convertible  Securities  (not  including  Excluded
Securities)  and the lowest  price per share for which one share of Common Stock
is issuable upon such conversion,  exchange or exercise thereof is less than the
Applicable  Price,  then  such  share of  Common  Stock  shall be  deemed  to be
outstanding  and to have been  issued and sold by the Company at the time of the
issuance of sale of such  Convertible  Securities for such price per share.  For
the purposes of this Section  2(e)(i)(B),  the "lowest price per share for which
one  share of  Common  Stock is  issuable  upon  such  conversion,  exchange  or
exercise" shall be equal to the sum of the lowest amounts of  consideration  (if
any)  received or  receivable  by the Company  with  respect to any one share of
Common Stock upon the issuance or sale of the Convertible  Security and upon the
conversion,  exchange  or  exercise  of such  Convertible  Security.  No further
adjustment  of the  Conversion  Price shall be made upon the actual  issuance of
such Common  Stock upon  conversion,  exchange  or exercise of such  Convertible
Securities, and if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for which  adjustment of the  Conversion  Price had
been or are to be made pursuant to other provisions of this Section 2(e)(i),  no
further adjustment of the Conversion Price shall be made by reason of such issue
or sale.

<PAGE>

                  (C)  CHANGE  IN  OPTION  PRICE OR RATE OF  CONVERSION.  If the
purchase or exercise price  provided for in any Options (not including  Excluded
Securities),  the  additional  consideration,  if any,  payable  upon the issue,
conversion,  exchange or exercise of any  Convertible  Securities (not including
Excluded  Securities),  or the rate at which  any  Convertible  Securities  (not
including   Excluded   Securities)  are  convertible  into  or  exchangeable  or
exercisable for Common Stock changes at any time, the Conversion Price in effect
at the time of such change shall be adjusted to the Conversion Price which would
have  been in effect at such time had such  Options  or  Convertible  Securities
provided for such changed  purchase price,  additional  consideration or changed
conversion  rate, as the case may be, at the time initially  granted,  issued or
sold.  For  purposes of this Section  2(e)(i)(C),  if the terms of any Option or
Convertible  Security  that was  outstanding  as of the date of  issuance of the
Preferred  Shares  are  changed  in the  manner  described  in  the  immediately
preceding  sentence,  then such Option or  Convertible  Security  and the Common
Stock deemed  issuable upon  exercise,  conversion or exchange  thereof shall be
deemed to have been issued as of the date of such change. No adjustment shall be
made if such adjustment would result in an increase of the Conversion Price then
in effect.

                  (D) CALCULATION OF CONSIDERATION  RECEIVED. In case any Option
is  issued  in  connection  with the  issue or sale of other  securities  of the
Company,  together  comprising one  integrated  transaction in which no specific
consideration is allocated to such Options by the parties  thereto,  the Options
will be deemed to have been issued for a  consideration  of $0.01. If any Common
Stock,  Options or  Convertible  Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the gross amount  received by the Company  therefor.  If any Common Stock,
Options or Convertible  Securities are issued or sold for a consideration  other
than cash,  the amount of the  consideration  other  than cash  received  by the
Company  will  be the  fair  value  of such  consideration,  except  where  such
consideration  consists of  marketable  securities,  in which case the amount of
consideration  received by the  Company  will be the  arithmetic  average of the
Closing Sale Prices of such securities  during the ten (10) consecutive  trading
days  ending on the date of  receipt of such  securities.  The fair value of any
consideration  other than cash or securities  will be determined  jointly by the
Company  and the  holders of at least a majority  of the  Preferred  Shares then
outstanding.  If the  Required  Holders  and the  Company  are  unable  to reach
agreement  within ten days after the occurrence of an event requiring  valuation
(the "VALUATION EVENT"), the fair value of such consideration will be determined
within fifteen  Business Days after the tenth day following the Valuation  Event
by an independent,  reputable  appraiser jointly selected by the Company and the
Required Holders. The determination of such appraiser shall be final and binding
upon all  parties  absent  manifest  error  and the fees  and  expenses  of such
appraiser shall be borne by the Company.

                  (E) RECORD DATE.  If the Company takes a record of the holders
of Common Stock for the purpose of  entitling  them (I) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(II)  to  subscribe  for  or  purchase  Common  Stock,  Options  or  Convertible
Securities,  then such record date will be deemed to be the date of the issue or
sale of the shares of Common  Stock  deemed to have been issued or sold upon the
declaration  of such  dividend or the making of such other  distribution  or the
date of the granting of such right of subscription or purchase,  as the case may
be.

<PAGE>

            (ii) ADJUSTMENT OF CONVERSION  PRICE UPON SUBDIVISION OR COMBINATION
OF COMMON  STOCK.  If the Company at any time  subdivides  (by any stock  split,
stock dividend,  recapitalization or otherwise) its outstanding shares of Common
Stock  into  a  greater  number  of  shares,  the  Conversion  Price  in  effect
immediately prior to such subdivision will be  proportionately  reduced.  If the
Company at any time combines (by combination,  reverse stock split or otherwise)
its  outstanding  shares of Common Stock into a smaller number of shares and the
Conversion  Price  in  effect  immediately  prior  to such  combination  will be
proportionately increased.

            (iii) OTHER EVENTS.  If any event occurs of the type contemplated by
the  provisions  of this  Section  2(e) but not  expressly  provided for by such
provisions,  then the  Company's  Board of  Directors  will make an  appropriate
adjustment in the Conversion Price so as to protect the rights of the holders of
the  Preferred  Shares;  provided  that no such  adjustment  will  increase  the
Conversion Price as otherwise determined pursuant to this Section 2(e).

            (iv) NOTICES.

                  (A)  Immediately  upon any adjustment of the Conversion  Price
pursuant to this Section 2(e),  the Company will give written  notice thereof to
each  holder of  Preferred  Shares,  setting  forth in  reasonable  detail,  and
certifying, the calculation of such adjustment.

                  (B) The  Company  will give  written  notice to each holder of
Preferred  Shares at least ten (10) Business 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  Fundamental  Transaction,  dissolution or liquidation,
provided that such information  shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.

                  (C) The Company will also give  written  notice to each holder
of Preferred  Shares at least ten (10)  Business Days prior to the date on which
any  Fundamental  Transaction,  dissolution  or  liquidation  will  take  place,
provided that such information  shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.

<PAGE>

      (3) OTHER RIGHTS OF HOLDERS.

            (a) FUNDAMENTAL TRANSACTIONS. The Company shall not enter into or be
party to a Fundamental  Transaction  unless (i) the Successor  Entity assumes in
writing  all of the  obligations  of  the  Company  under  this  Certificate  of
Designations  and  the  other  Transaction  Documents  in  accordance  with  the
provisions  of this  Section  3(a)  pursuant to written  agreements  in form and
substance  satisfactory  to the  Required  Holders and  approved by the Required
Holders prior to such Fundamental  Transaction,  including agreements to deliver
to each holder of  Preferred  Shares in  exchange  for such  Preferred  Shares a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to the Preferred  Shares and this  Certificate  of
Designations,  including, without limitation, having a conversion price equal to
the  Conversion  Price  hereunder  and having  similar  ranking to the Preferred
Shares,  and  satisfactory to the Required Holders and (ii) the Successor Entity
(including  its Parent  Entity) is a publicly  traded  corporation  whose common
stock is  quoted  on or listed  for  trading  on an  Eligible  Market.  Upon the
occurrence of any Fundamental  Transaction,  the Successor  Entity shall succeed
to, and be substituted for (so that from and after the date of such  Fundamental
Transaction, the provisions of this Certificate of Designations referring to the
"Company" shall refer instead to the Successor  Entity),  and may exercise every
right and power of the Company and shall  assume all of the  obligations  of the
Company under this  Certificate of Designations  with the same effect as if such
Successor Entity had been named as the Company herein.  Upon consummation of the
Fundamental  Transaction,  the Successor  Entity shall deliver to the holders of
Preferred Shares  confirmation that there shall be issued upon conversion of the
Preferred  Shares  at  any  time  after  the  consummation  of  the  Fundamental
Transaction,  in lieu of the  shares  of the  Company's  Common  Stock (or other
securities,  cash, assets or other property)  purchasable upon the conversion of
the  Preferred  Shares  prior to such  Fundamental  Transaction,  such shares of
stock,  securities,  cash,  assets or any other property  whatsoever  (including
warrants or other purchase or subscription rights) which the holder of Preferred
Shares  would  have  been  entitled  to  receive  upon  the  happening  of  such
Fundamental  Transaction  had the Preferred  Shares been  converted  immediately
prior to such  Fundamental  Transaction.  The  provisions  of this Section shall
apply similarly and equally to successive Fundamental  Transactions and shall be
applied  without  regard to any  limitations  on the conversion of the Preferred
Shares.

            (b) PURCHASE  RIGHTS.  If at any time the Company grants,  issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities  or other  property  pro rata to the  record  holders of any class of
Common Stock (the "PURCHASE RIGHTS"),  then the holders of Preferred Shares will
be entitled to acquire,  upon the terms applicable to such Purchase Rights,  the
aggregate  Purchase  Rights which such holder could have acquired if such holder
had held  the  number  of  shares  of  Common  Stock  acquirable  upon  complete
conversion of the Preferred  Shares (without taking into account any limitations
or  restrictions  on the  convertibility  of the Preferred  Shares)  immediately
before  the date on which a record is taken for the grant,  issuance  or sale of
such Purchase  Rights,  or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.

<PAGE>

      (4) LIMITATION ON BENEFICIAL  OWNERSHIP.  The Company shall not effect and
shall have no obligation to effect any  conversion of Preferred  Shares,  and no
holder of Preferred Shares shall have the right to convert any Preferred Shares,
to the extent that after giving effect to such conversion,  the beneficial owner
of such shares  (together  with such Person's  affiliates)  would have acquired,
through conversion of Preferred Shares or otherwise,  beneficial  ownership of a
number of shares of Common Stock that  exceeds  9.99% of the number of shares of
Common Stock outstanding immediately after giving effect to such conversion. For
purposes  of the  foregoing  sentence,  the  number of  shares  of Common  Stock
beneficially  owned by a Person and its  affiliates  shall include the number of
shares of Common Stock  issuable upon  conversion  of the Preferred  Shares with
respect to which the  determination  of such  sentence is being made,  but shall
exclude the number of shares of Common  Stock  which would be issuable  upon (A)
conversion of the remaining, nonconverted Preferred Shares beneficially owned by
such  Person or any of its  affiliates  and (B)  exercise or  conversion  of the
unexercised  or  unconverted  portion  of any other  securities  of the  Company
(including,  without  limitation,  any  warrants)  subject  to a  limitation  on
conversion or exercise analogous to the limitation contained herein beneficially
owned  by such  Person  or any of its  affiliates.  Except  as set  forth in the
preceding  sentence,  for purposes of this Section  4(a),  beneficial  ownership
shall be calculated in accordance with Section 13(d) of the Securities  Exchange
Act of 1934, as amended.  For purposes of this Section 4(a), in determining  the
number of outstanding shares of Common Stock, a holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-Q or 10-QSB, as applicable, Form 10-K or 10-KSB, as applicable, or other
public  filing  with the  SEC,  as the case  may be,  (2) a more  recent  public
announcement  by the  Company,  or (3) any other  notice by the  Company  or its
transfer  agent setting forth the number of shares of Common Stock  outstanding.
Upon the written request of any holder,  the Company shall  promptly,  but in no
event later than one (1)  Business  Day  following  the receipt of such  notice,
confirm in writing to any such holder the number of shares of Common  Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be  determined  after  giving  effect to  conversions  of  Preferred  Shares and
exercise of the Warrants by such holder and its affiliates  since the date as of
which such number of outstanding shares of Common Stock was reported.

      (5) COMPANY'S RIGHT OF MANDATORY CONVERSION.

            (a) MANDATORY CONVERSION. If at any time from and after the Issuance
Date, (i) EBITDA equals or exceeds  $1,000,000  (the "EBITDA  REQUIREMENT")  and
(ii) the Equity Conditions shall have been satisfied or waived in writing by the
Required Holders from and including the Mandatory Conversion Notice Date through
and  including the  Mandatory  Conversion  Date (each,  as defined  below),  the
Company shall have the right to require each holder of the  Preferred  Shares to
convert  all  or any  portion  of  the  Preferred  Shares  then  outstanding  as
designated in the Mandatory  Conversion  Notice into fully paid,  validly issued
and nonassessable  shares of Common Stock in accordance with the terms hereof at
the  Conversion  Rate  as  of  the  Mandatory   Conversion  Date  (a  "MANDATORY
CONVERSION").  The Company may  exercise its right to require  conversion  under
this Section 5(a) by delivering  within not more than two Trading Days following
the satisfaction of the EBITDA Requirement a written notice thereof by facsimile
and overnight courier to all, but not less than all, of the holders of Preferred
Shares and the Transfer Agent (the  "MANDATORY  CONVERSION  NOTICE" and the date
all of the  holders  received  such  notice  is  referred  to as the  "MANDATORY
CONVERSION  NOTICE  DATE").  The Company may  deliver one  Mandatory  Conversion
Notice hereunder and the Mandatory Conversion Notice shall be irrevocable.

<PAGE>

            (b) PRO RATA CONVERSION REQUIREMENT.  If the Company elects to cause
a conversion of all or any portion of the outstanding  Preferred Shares pursuant
to Section 5(a), then it must  simultaneously  take the same action with respect
to all  Preferred  Shares.  If the  Company  elects to cause the  conversion  of
Preferred  Shares  pursuant to Section 5(a) with respect to less than all of the
outstanding  Preferred  Shares,  then the Company  shall  require  conversion of
Preferred  Shares from each of the holders of the Preferred  Shares equal to the
product of (I) the  aggregate  number of Preferred  Shares which the Company has
elected to cause to be converted  pursuant to Section  5(a),  multiplied by (II)
the  fraction,  the  numerator  of which is the sum of the  aggregate  number of
Preferred  Shares  purchased by such holder pursuant to the Securities  Purchase
Agreement and the  denominator  of which is the sum of the  aggregate  number of
Preferred Shares  purchased by all holders  pursuant to the Securities  Purchase
Agreement  (such  fraction  with  respect to each  holder is  referred to as its
"ALLOCATION PERCENTAGE," and such amount with respect to each holder is referred
to as its "PRO RATA CONVERSION AMOUNT"). In the event that the initial holder of
any  Preferred  Shares  shall sell or otherwise  transfer  any of such  holder's
Preferred  Shares,  the transferee shall be allocated a pro rata portion of such
holder's Allocation Percentage.  The Mandatory Conversion Notice shall state (i)
the Business  Day  selected for the  Mandatory  Conversion  in  accordance  with
Section 5(a), which Business Day shall be at least 20 Business Days but not more
than 60  Business  Days  following  the  Mandatory  Conversion  Notice Date (the
"MANDATORY  CONVERSION  DATE"),  (ii) the aggregate  number of Preferred  Shares
which the Company has elected to be subject to mandatory  conversion from all of
the holders of Preferred  Shares pursuant to this Section 5, (iii) each holder's
Pro Rata  Conversion  Amount and (iv) the number of shares of Common Stock to be
issued to such holder as of the Mandatory  Conversion Date. All Preferred Shares
converted by a holder after the  Mandatory  Conversion  Notice Date shall reduce
the  amount of  Preferred  Shares  required  to be  converted  on the  Mandatory
Conversion  Date.  If the  Company  has  elected  a  Mandatory  Conversion,  the
mechanics of  conversion  set forth in Section  2(c) shall apply,  to the extent
applicable,  as if the  Company and the  Transfer  Agent had  received  from the
applicable  holder on the  Mandatory  Conversion  Date a Conversion  Notice with
respect to the  Preferred  Shares  being  converted  pursuant  to the  Mandatory
Conversion.

      (6)  RESERVATION  OF  SHARES.  The  Company  shall,  so long as any of the
Preferred Shares are outstanding,  take all action necessary to reserve and keep
available  out of its  authorized  and  unissued  Common  Stock,  solely for the
purpose of effecting the  conversions  of the Preferred  Shares,  such number of
shares of Common  Stock as shall from time to time be  sufficient  to effect the
conversion of all of the Preferred Shares,  then outstanding;  provided that the
number of shares of Common Stock so reserved  shall at no time be less than 130%
of the number of shares of Common  Stock for which the  Preferred  Shares are at
any time  convertible  (without regard to any limitations on  conversions).  The
initial  number of  shares  of Common  Stock  reserved  for  conversions  of the
Preferred  Shares and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Preferred Shares based on the number
of Preferred Shares held by each holder at the time of issuance of the Preferred
Shares 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  Preferred
Shares,  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  allocated  to any Person  which ceases to hold any
Preferred  Shares  shall be  allocated  to the  remaining  holders of  Preferred
Shares,  pro rata  based on the  number of  Preferred  Shares  then held by such
holders.

<PAGE>

      (7) VOTING  RIGHTS.  On any matter  presented to the  stockholders  of the
Company for their action or  consideration at any meeting of stockholders of the
Company (or by written action of stockholders  in lieu of meeting),  each holder
of outstanding  Preferred  Shares shall be entitled to the number of votes equal
to the number of whole  shares of Common Stock into which the  Preferred  Shares
held by such holder are convertible  (subject to the limitations of Section 4(a)
above) as of the record date for  determining  stockholders  entitled to vote on
such matter.  Except as provided by law,  holders of Preferred Shares shall vote
together  with the  holders of Common  Stock,  and with the holders of any other
series of preferred stock the terms of which so provide, as a single class.

      (8) LIQUIDATION, DISSOLUTION, WINDING-UP. In the event of any voluntary or
involuntary  liquidation,  dissolution or winding up of the Company, the holders
of the  Preferred  Shares shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings available for distribution
to its stockholders (the "LIQUIDATION  FUNDS"),  before any amount shall be paid
to the holders of any of the capital stock of the Company of any class junior in
rank to the Preferred  Shares in respect of the preferences as to  distributions
and payments on the liquidation,  dissolution and winding up of the Company,  an
amount per Preferred Share equal to Two Dollars  ($2.00);  provided that, if the
Liquidation  Funds are insufficient to pay the full amount due to the holders of
Preferred  Shares and holders of shares of other  classes or series of preferred
stock of the  Company  that are of equal  rank with the  Preferred  Shares as to
payments of  Liquidation  Funds (the "PARI PASSU  SHARES"),  then each holder of
Preferred  Shares  and Pari  Passu  Shares  shall  receive a  percentage  of the
Liquidation  Funds equal to the full amount of Liquidation Funds payable to such
holder  as  a  liquidation  preference,  in  accordance  with  their  respective
Certificate of Designations, Preferences and Rights, as a percentage of the full
amount of Liquidation  Funds payable to all holders of Preferred Shares and Pari
Passu  Shares.  The purchase or redemption by the Company 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  Company.  Neither  the
consolidation  or merger of the Company with or into any other  Person,  nor the
sale or transfer by the  Company of less than  substantially  all of its assets,
shall,  for the purposes hereof,  be deemed to be a liquidation,  dissolution or
winding up of the Company.

      (9) PREFERRED  RANK. All shares of Common Stock shall be of junior rank to
all Preferred  Shares with respect to the  preferences as to  distributions  and
payments upon the  liquidation,  dissolution and winding up of the Company.  The
rights of the shares of Common  Stock  shall be subject to the  preferences  and
relative  rights of the  Preferred  Shares.  Without the prior  express  written
consent of the Required  Holders,  the Company shall not hereafter  authorize or
make any amendment to the Company's  Certificate of Incorporation or bylaws,  or
file any  resolution of the board of directors of the Company with the Secretary
of State of the State of  Nevada  or enter  into any  agreement  containing  any
provisions,  which  would  adversely  affect or  otherwise  impair the rights or
relative priority of the holders of the Preferred Shares relative to the holders
of the Common Stock or the holders of any other class of capital  stock.  In the
event  of the  merger  or  consolidation  of the  Company  with or into  another
corporation,   the  Preferred  Shares  shall  maintain  their  relative  powers,
designations  and  preferences  provided  for herein and no merger  shall result
inconsistent therewith.

<PAGE>

      (10) PARTICIPATION.  The holders of the Preferred Shares shall, as holders
of Preferred Stock, be entitled to such dividends paid and distributions made to
the holders of Common  Stock to the same extent as if such  holders of Preferred
Shares had converted the Preferred  Shares into Common Stock (without  regard to
any  limitations on conversion  herein or elsewhere) and had held such shares of
Common Stock on the record date for such dividends and  distributions.  Payments
under the preceding  sentence  shall be made  concurrently  with the dividend or
distribution to the holders of Common Stock.

      (11)  VOTE  TO  CHANGE  THE  TERMS  OF  OR  ISSUE  PREFERRED  SHARES.  The
affirmative  vote at a meeting  duly  called  for such  purpose  or the  written
consent without a meeting,  of the Required  Holders,  shall be required for (a)
any change to this  Certificate  of  Designations  or the Company's  Articles of
Incorporation  which  would  amend,  alter,  change or repeal any of the powers,
designations,  preferences  and  rights  of the  Preferred  Shares  and  (b) the
issuance of Preferred  Shares  other than  pursuant to the  Securities  Purchase
Agreement.

      (12) LOST OR STOLEN CERTIFICATES.  Upon receipt by the Company of evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation  of any  Preferred  Stock  Certificates  representing  the  Preferred
Shares,  and, in the case of loss, theft or destruction,  of an  indemnification
undertaking by the holder to the Company in customary form  (accompanied  by the
posting of a standard indemnity bond if so requested by 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  Preferred  Shares into
Common Stock.

      (13)  REMEDIES,   CHARACTERIZATIONS,   OTHER  OBLIGATIONS,   BREACHES  AND
INJUNCTIVE  RELIEF.  The remedies  provided in this  Certificate of Designations
shall be cumulative and in addition to all other remedies  available  under this
Certificate of Designations, 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.
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
Designations.  The Company  covenants  to each holder of  Preferred  Shares that
there shall be no  characterization  concerning  this  instrument  other than as
expressly provided herein. 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
Preferred  Shares  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 Preferred Shares 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.

<PAGE>

      (14) CONSTRUCTION.  This Certificate of Designations shall be deemed to be
jointly  drafted  by the  Company  and all  holders  and shall not be  construed
against any person as the drafter hereof.

      (15) FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of
a holder of Preferred  Shares 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.

      (16)  NOTICE.   Whenever  notice  is  required  to  be  given  under  this
Certificate of Designations, unless otherwise provided herein, such notice shall
be given in accordance with Section 9(f) of the Securities Purchase Agreement.

      (17) TRANSFER OF PREFERRED SHARES. A holder of Preferred Shares may assign
some or all of the Preferred Shares and the  accompanying  rights hereunder held
by such holder without the consent of the Company; PROVIDED that such assignment
is in compliance with applicable securities laws.

      (18) PREFERRED SHARE REGISTER. The Company shall maintain at its principal
executive  offices  (or such  other  office or agency of the  Company  as it may
designate by notice to the holders of the Preferred  Shares), a register for the
Preferred  Shares, in which the Company shall record the name and address of the
persons in whose name the Preferred Shares have been issued, as well as the name
and address of each  transferee.  The Company may treat the person in whose name
any  Preferred  Share is  registered  on the  register  as the owner and  holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all
events recognizing any properly made transfers.

      (19)  STOCKHOLDER  MATTERS.  Any stockholder  action,  approval or consent
required,  desired or otherwise  sought by the Company pursuant to the rules and
regulations of the Principal  Market,  the NRS, this Certificate of Designations
or otherwise  with respect to the Common Stock  issuable upon  conversion of the
Preferred  Shares or the issuance of any Warrants and the Common Stock  issuable
upon  exercise  thereof  may be  effected  by written  consent of the  Company's
stockholders or at a duly called meeting of the Company's  stockholders,  all in
accordance with the applicable rules and regulations of the Principal Market and
the NRS.

                                   * * * * *

<PAGE>

      IN  WITNESS   WHEREOF,   the  Company  has  caused  this   Certificate  of
Designations to be signed by James E. Solomon, its President and Chief Executive
Officer, as of the day of August, 2004.

                               DENDO GLOBAL CORP.

                               By: /s/
                                   ---------------------------------
                                   Name:  James E. Solomon
                                   Title:  President and C.E.O.

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