Document:

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                                  EXHIBIT 10.12

  Schedule of Directors and Employees Who Executed Form of Employment Agreement
                           Evidenced in Exhibit 10.11

                                 Michael Steele

                                  Cecilia Lanz

                                 Robert Sweetman

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                                  EXHIBIT 10.13

                            DEBT SETTLEMENT AGREEMENT

THIS AGREEMENT is made as of the 14th day of April, 2000.

BETWEEN:

              DELTA CAPITAL TECHNOLOGIES INC., a Delaware company having an
              office at Suite 255 - 999 - 8th Street South West, Calgary,
              Alberta, T2R 1J5

              (the "Company")

                                                               OF THE FIRST PART

AND:

              BONANZA MGMT LTD., a British Columbia company, with an address of
              PO Box 48792 Bentall, Vancouver, British Columbia V2X 1A6

              (the "Creditor")

                                                              OF THE SECOND PART

WHEREAS:

A.     The Company is indebted to the Creditor in the amount of US$410,261.64
       (the "Debt");

B.     The Company has agreed to issued to the Creditor 136,754
       (US$410,261.64/US$3.00 per share) common shares (the "Shares") in total
       satisfaction of the Debt; and

C.     The Creditor has agreed to accept the Shares from the Company in total
       satisfaction of the Debt.

       THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth in this Agreement, the parties agree as follows:

1.00   Debt Settlement

1.01   The Company will pay and satisfy the Debt by issuing the Shares to the
Creditor at a deemed price of US$3.00 per share for an aggregate amount equal
to the Debt payable on April 18, 2000.

1.02   The Creditor acknowledges and agrees that all outstanding accounts have
been rendered by the Creditor to the Company to the date of this Agreement and
upon issuance of the Shares to the Creditor there will be no outstanding
liability of the Company to the Creditor.

2.00   Headings

2.01   The headings and section references in this Agreement are for convenience
of reference only and do not form a part of this Agreement and are not intended
to interpret, define or limit the scope, extent or intent of this Agreement or
any provision thereof.

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3.00   Governing Law

3.01   This Agreement and all matters arising hereunder shall be governed by,
construed and enforced in accordance with the laws of the State of Delaware and
all disputes arising under this Agreement shall be referred to, and the parties
attorn to the jurisdiction of, the courts of appropriate jurisdiction in the
State of Delaware.

4.00   Enurement

4.01   This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.

5.00   Carrying Out Agreement

5.01   Each of the parties hereto hereby covenants and agrees to execute such
further and other documents and instruments and do such other things as may be
necessary to implement and carry out the intent of this Agreement.

6.00   Assignment

6.01   This Agreement shall not be assignable by the Creditor without the
written consent of the Company.

7.00   Counterparts

7.01   This Agreement, or any amendment to it, may be executed in counterparts,
each of which will be deemed an original agreement and all of which will
together constitute one agreement.

8.00   Amendment

8.01   Except as herein otherwise provided, no subsequent alteration, amendment,
change or addition to this Agreement shall be binding upon the parties hereto
unless reduced to writing and signed by the parties.

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       IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first above written.

DELTA CAPITAL TECHNOLOGIES, INC.

Per:

            /s/ Michael E. Horsey
         ----------------------------------------
         Michael E. Horsey, Chairman of the Board

BONANZA MGMT LTD.

Per:

            /s/ Terry Butchart
         ----------------------------------------
         Terry Butchart, President

                                       43EXHIBIT 2

                       COMPUTER OUTSOURCING SERVICES, INC.

                    CERTIFICATE OF DESIGNATION OF THE POWERS,
                PREFERENCES AND OTHER SPECIAL RIGHTS OF SERIES A
              CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK

          Series A Cumulative Convertible Participating Preferred Stock due 2007

          Computer Outsourcing Services,  Inc., a company organized and existing
under the  General  Corporation  Law of the State of Delaware  (the  "Company"),
certifies  that  pursuant  to the  authority  contained  in its  Certificate  of
Incorporation  (the  "Certificate  of  Incorporation")   and  its  By-Laws  (the
"By-Laws"), and in accordance with Section 151 of the General Corporation Law of
the State of  Delaware,  the board of  directors  of the Company  (the "Board of
Directors")  at a meeting duly called and held on April 5, 2000,  duly  approved
and adopted the following resolution, which resolution remains in full force and
effect on the date hereof:

          RESOLVED,  that  pursuant  to the  authority  vested  in the  Board of
Directors  by the  Certificate  of  Incorporation  and  By-Laws,  the  Board  of
Directors does hereby create, authorize and provide for the issue of a series of
Preferred Stock having the following designation, voting powers, preferences and
relative, participating, optional and other special rights:

          Capitalized terms used herein are defined in Section 17.

          1.  Number  and  Designation.  The  Company  shall  have a  series  of
Preferred  Stock,   which  shall  be  designated  as  its  Series  A  Cumulative
Convertible  Participating  Preferred  Stock due 2007 (the  "Series A  Preferred
Stock"),  par value $0.01 per share,  with 300,000 shares  initially  authorized
and,  subject to the  limitations  set forth  herein,  such number of additional
shares  as are  authorized  from  time to time by  resolution  of the  Board  of
Directors for payment of dividends  (including Special Payments) on the Series A
Preferred  Stock  in  accordance  with  Section  11  hereof.   Unless  otherwise
specified,  references  herein  to any  "Section"  refer to the  Section  number
specified in this Certificate of Designation.

          2.  Issuance.  The Company may issue up to 157,377  shares of Series A
Preferred Stock in accordance  with the Purchase  Agreement dated April 7, 2000,
and may issue additional  shares of Series A Preferred Stock as dividends on the
Series A Preferred  Stock as may be determined from time to time by the Board of
Directors, in accordance with the terms of this Certificate of Designation.

          3. Registered Form; Liquidation  Preference;  Registrar.  Certificates
for shares of Series A  Preferred  Stock shall be  issuable  only in  registered
form,  with a liquidation  preference  equal to the Issuance  Price per share of
Series A Preferred Stock (the "Liquidation Preference"). The Company shall serve
as initial  Registrar  and  Transfer  Agent (the  "Registrar")  for the Series A
Preferred Stock.

          4. Registration; Transfer. Shares of the Series A Preferred Stock have
not  been  registered  under  the  Securities  Act  of  1933,  as  amended  (the
"Securities Act"), and may not be resold, pledged or otherwise transferred prior
to the date when they may be resold  pursuant  to Rule 144 under the  Securities
Act  other  than  (i)  to  the  Company,  (ii)  pursuant  to an  exemption  from
registration  under  the  Securities  Act  or  (iii)  pursuant  to an  effective
registration statement under the Securities Act, in each case in accordance with
any applicable  securities  laws of any state of the United  States.  Until such
time as it is no longer required  pursuant to the Securities  Act,  certificates
evidencing the Series A Preferred Stock shall contain a legend (the  "Restricted
Shares Legend") evidencing the foregoing  restrictions in substantially the form
set forth on the form of Series A Preferred Stock attached hereto as Exhibit A.

          5. Paying Agent and Conversion  Agent.  (a) The Company shall maintain
(i) an  office  or  agency  where  shares  of  Series A  Preferred  Stock may be
presented  for payment (the  "Paying  Agent") and (ii) an office or agency where
shares  of  Series A  Preferred  Stock  may be  presented  for  conversion  (the
"Conversion Agent"). The Company may appoint the Registrar, the Paying Agent and
the Conversion  Agent and may appoint one or more  additional  paying agents and
one or more  additional  conversion  agents in such other  locations as it shall
determine. The term "Paying Agent" includes any additional paying agent, and the
term "Conversion  Agent" includes any additional  conversion  agent. The Company
may change any Paying  Agent or  Conversion  Agent  without  prior notice to any
Holder.  The Company  shall notify the  Registrar of the name and address of any
Paying Agent or Conversion Agent appointed by the Company.  If the Company fails
to appoint or maintain  another entity as Paying Agent or Conversion  Agent, the
Registrar shall act as such.  Notwithstanding the foregoing,  the Company or any
of its Affiliates may act as Paying Agent, Registrar, co-registrar or Conversion
Agent  and the  Company  shall  be the  initial  Paying  Agent  and the  initial
Conversion Agent.

          (b) Neither the Company  nor the  Registrar  shall be required  (A) to
issue, countersign or register the transfer of or exchange any share of Series A
Preferred  Stock  during a period  beginning  at the opening of business 15 days
before  any  Redemption  Date  and  ending  at the  close  of  business  on such
Redemption  Date or (B) to register  the  transfer  of or exchange  any share of
Series A Preferred Stock so selected for redemption in whole or in part,  except
the unredeemed  portion of any share of Series A Preferred  Stock being redeemed
in part.

          (c) If  shares  of  Series  A  Preferred  Stock  are  issued  upon the
transfer,  exchange or replacement of shares of Series A Preferred Stock bearing
the Restricted  Shares Legend, or if a request is made to remove such Restricted
Shares  Legend on shares of Series A  Preferred  Stock,  the  shares of Series A
Preferred  Stock so issued  shall  bear the  Restricted  Shares  Legend,  or the
Restricted  Shares  Legend shall not be removed,  as the case may be, unless the
Holders of such  shares  shall  request  that the  Restricted  Shares  Legend be
removed,  and outside  counsel for such Holders  reasonably  determines that the
transfer of such shares is no longer restricted by the Securities Act.

          (d) If any payment due on the shares of Series A Preferred Stock is in
cash,  it shall be  payable  by United  States  dollar  check  drawn on, or wire
transfer  (provided that appropriate wire instructions have been received by the
Registrar at least two Business Days prior to the applicable date of payment) to
a United States dollar account  maintained by the Holder with, a bank located in
New York City;  provided that at the option of the Company  payment of dividends
in cash  may be made by check  mailed  to the  address  of the  Person  entitled
thereto as such address  shall appear in the books and records of the  Registrar
maintained with respect to the Series A Preferred Stock.

          6. Dividend Rights.  (a) The Company shall pay, and the Holders of the
shares of Series A Preferred  Stock shall be entitled to receive,  when, as, and
if authorized by the Board of Directors (or any authorized  committee  thereof),
(i)  cumulative  dividends  from the date of initial  issuance of such shares of
Series A  Preferred  Stock at a rate of 8% per  annum on the  amount of the then
effective  Liquidation  Preference  of the  shares of Series A  Preferred  Stock
("Coupon  Dividends") and (ii)  distributions in an amount per share of Series A
Preferred  Stock  equal to the  product of the number of shares of Common  Stock
into which such  shares of Series A  Preferred  Stock  could then be  converted,
multiplied  by the per share  dividend  (whether in cash or  property),  if any,
declared on the Company's Outstanding Common Stock.

          (b) Coupon  Dividends  will be computed on the basis of a 360 day year
of twelve 30 day months and will be payable  (to the extent not  accumulated  in
accordance with the terms hereof) in cash;  provided that Coupon Dividends shall
not be paid in cash (but instead shall accumulate) until the thirteenth Dividend
Payment  Date  after  the  issuance  of the  Series A  Preferred  Stock.  Coupon
Dividends will be paid or accrued  quarterly in arrears on each Dividend Payment
Date,  commencing  June 1, 2000, for so long as the shares of Series A Preferred
Stock are Outstanding. The Company may elect not to declare dividend payments on
any Dividend Payment Date; provided, however, that Coupon Dividends on shares of
the Series A Preferred Stock will accrue whether or not the Company has earnings
or profits,  whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared.  Coupon Dividends will
accumulate to the extent they are not paid on the Dividend  Payment Date for the
period to which they relate. Arrearages of unpaid Coupon Dividends ("Accumulated
Dividends") will cumulate and compound quarterly at the rate of 8% per annum and
such cumulated and compounded dividends shall thereafter constitute  Accumulated
Dividends.  The Company will take all actions  required or  permitted  under the
General  Corporation  Law of the State of  Delaware  to permit  the  payment  of
dividends on the shares of Series A Preferred Stock.

          7.  Payment  of  Dividend;   Mechanics  of  Payment;  Dividend  Rights
Preserved.  (a) Coupon  Dividends on any share of Series A Preferred  Stock that
are  payable,  and are  punctually  paid or duly  provided  for, on any Dividend
Payment  Date shall be paid in arrears to the Person in whose name such share of
Series  A  Preferred  Stock  (or one or more  predecessor  shares  of  Series  A
Preferred  Stock) is registered  at the close of business on the next  preceding
May 15, August 15,  November 15 and February 15 (each,  together with any record
date  established for the payment of Accumulated  Dividends,  a "Dividend Record
Date").  Dividends  payable pursuant to Section 6(a)(ii) shall be payable on the
date set for payment  thereof to Holders of shares of Series A  Preferred  Stock
Outstanding on the record date established with respect to such dividends

          (b) Unless full  cumulative  dividends  on all  Outstanding  shares of
Series A Preferred Stock for all past dividend  periods shall have been declared
and paid,  or declared and a sufficient  sum for the payment  thereof set apart,
then:

               (i) no dividend (other than (A), with respect to Junior Shares or
     Parity  Shares,  a dividend  payable  solely in any Junior Shares or Parity
     Shares,  respectively,  or (B) with  respect  to Parity  Shares,  a partial
     dividend  paid pro rata on such  Parity  Shares  and the shares of Series A
     Preferred  Stock) shall be declared or paid upon,  or any sum set apart for
     the  payment  of  dividends  upon,  any  Junior  Shares or  Parity  Shares,
     respectively;

               (ii) no other distribution shall be declared or made upon, or any
     sum set apart for the payment of any distribution,  upon, any Junior Shares
     or Parity  Shares,  other than a distribution  consisting  solely of Junior
     Shares or Parity Shares, respectively;

               (iii) no Junior Shares or Parity Shares or any warrants,  rights,
     calls or options  (other than any  cashless  exercises of options or option
     buybacks)  exercisable  for or convertible  into any Parity Share or Junior
     Share shall be  purchased,  redeemed or  otherwise  acquired or retired for
     value  (other than in exchange for other  Junior  Shares or Parity  Shares,
     respectively  and  other  than any  Series A Common  Stock  Warrant  of the
     Company  held by any Holder of Series A Preferred  Stock) by the Company or
     any of its subsidiaries; and

               (iv) no monies shall be paid into or set apart or made  available
     for a sinking  or other  like fund for the  purchase,  redemption  or other
     acquisition of any Junior Shares or Parity Shares or any warrants,  rights,
     calls or options  exercisable for or convertible  into any Parity Shares or
     Junior  Shares by the  Company or any of its  subsidiaries  (other than any
     cashless exercises of options or option buybacks).

          (c)  The  Company  will  notify  the   Registrar  and  make  a  public
announcement no later than the close of business on the tenth Business Day prior
to the record  date for each  dividend  as to whether it will pay such  dividend
and, if so, the form of consideration it will use to make such payment.

          (d) Any Accumulated Dividends on any share of Series A Preferred Stock
may be paid,  subject to Section 6, by the Company in any lawful  manner  (which
shall include the  establishment of a record date not more than 45 days prior to
the payment  thereof) not  inconsistent  with the requirements of any securities
exchange on which the shares of Series A Preferred Stock may be listed, and upon
such notice (which shall precede the record date by at least ten Business  Days)
as may be required by such  exchange,  if,  after notice given by the Company to
the Registrar of the proposed  payment  pursuant to this clause (d), such manner
of payment shall be deemed practicable by the Registrar.

          (e) Subject to the foregoing  provisions of this Section 7, each share
of Series A Preferred Stock delivered under this Certificate of Designation upon
registration  of transfer of or in exchange for or in lieu of any other share of
Series A Preferred Stock shall carry the rights to unpaid Accumulated Dividends,
that were carried by such other shares of Series A Preferred Stock.

          (f) The Holder of record of a share of Series A Preferred Stock at the
close of  business  on a Dividend  Record  Date with  respect to the  payment of
dividends on the shares of Series A Preferred  Stock will be entitled to receive
such  dividends  with  respect to such share of Series A Preferred  Stock on the
corresponding  Dividend  Payment Date,  notwithstanding  the  conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date.

          8.  Voting  Rights.  (a) The  Holders  of record of shares of Series A
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 8 or as otherwise provided by law.

          (b) The Holders of record of shares of Series A Preferred  Stock shall
be  entitled to vote on all matters  that the  Holders of the  Company's  Common
Stock are entitled to vote upon on, with each share of Series A Preferred  Stock
having a number of votes  equal to the  number of  shares of Common  Stock  into
which such share  could be  converted  as of the record  date for such vote,  in
accordance with Section 12 of this Certificate of Designation.

          (c) The  approval  of the  Holders  of at least two thirds of the then
Outstanding shares of Series A Preferred Stock voting or consenting, as the case
may be, as one class, will be required for the Company to:

               (i) amend the Certificate of  Incorporation,  this Certificate of
     Designation  or the  By-Laws  so as to (A)  affect  adversely  the  rights,
     preferences  (including,   without  limitation,   liquidation  preferences,
     conversion  price,  dividend  rate  and  Optional  Redemption  provisions),
     privileges  or voting rights of Holders of the shares of Series A Preferred
     Stock,  or (B)  increase or  decrease  the number of  authorized  shares of
     Series A Preferred Stock;

               (ii) in a single  transaction or series of related  transactions,
     consolidate or merge with or into, or sell, assign, transfer, lease, convey
     or  otherwise  dispose  of all or  substantially  all of its assets to, any
     Person,  agree to any plan of  recapitalization,  consent  to,  approve  or
     recommend any tender offer for any class or series of the Company's Capital
     Stock or consent  to,  approve or  recommend  any Change of Control  of, or
     action  which is  expected to result in a Change of Control of, the Company
     or adopt a plan of  liquidation or make any payments in liquidation or with
     respect to the winding up of the Company;

               (iii)  enter  into,  or permit any of its  subsidiaries  to enter
     into,  any  agreement  that  would  impose  material  restrictions  on  the
     Company's ability to honor the exercise of any rights of the Holders of the
     Series A Preferred Stock;

               (iv) issue or sell any equity  securities  of the  Company  which
     ranks senior to, or pari passu with, the Series A Preferred  Stock in right
     of  distribution  or dividend or right of  liquidation or issue or sell any
     class or series of equity  securities which are convertible or exchangeable
     into or  exercisable  for any equity  securities  of the Company which rank
     senior to, or pari passu  with,  the Series A  Preferred  Stock in right of
     distribution, dividend or right of liquidation;

               (v)  subdivide,  consolidate,  convert,  reclassify or modify any
     Outstanding  shares of the Company to the extent it would  impair or reduce
     the rights of Holders of the Series A Preferred Stock; and

               (vi) pay any  dividends  on any  class of stock  (other  than the
     Series A Preferred  Stock) or redeem,  purchase or  repurchase or set aside
     any funds for the  redemption,  purchase  or  repurchase  of, any shares of
     Capital Stock or other equity securities of the Company or any Subsidiary.

          (d) In exercising  the voting  rights set forth in Section 8(b),  each
share of Series A Preferred  Stock shall be entitled to vote on an  as-converted
basis with the Holders of the Company's  Common Stock.  In exercising  the other
voting  rights set forth in this  Section  8, each  share of Series A  Preferred
Stock entitled to vote shall have one vote per share, except that when any other
series  of  preferred  stock  shall  have the  right to vote  with the  Series A
Preferred  Stock as a single  class on any  matter,  then the Series A Preferred
Stock shall have with  respect to such matters one vote per $381.25 (or fraction
thereof) of the aggregate Liquidation Preference plus all Accumulated Dividends.

          (e) Except as  otherwise  required by  applicable  law or as set forth
herein,  the shares of Series A  Preferred  Stock  shall not have any  relative,
participating,  optional  or other  special  voting  rights  and  powers and the
consent  of the  Holders  thereof  shall not be  required  for the taking of any
corporate action.

          9.  Ranking.  (a) The shares of Series A Preferred  Stock  will,  with
respect  to  dividend   rights  and  rights  on   liquidation,   winding-up  and
dissolution,  rank (i) senior to all shares of Common Stock  (whether  issued in
one or more  classes)  and to each  other  class of  Capital  Stock or series of
Preferred Stock of the Company, the terms of which do not expressly provide that
it ranks on a parity with, or senior to, the shares of Series A Preferred  Stock
as to dividend rights and rights on  liquidation,  winding-up and dissolution of
the Company (collectively  referred to, together with all shares of Common Stock
(whether  issued in one or more  classes) of the Company,  as "Junior  Shares");
(ii) on a parity with  additional  shares of Series A Preferred  Stock issued by
the Company and each other class of Capital  Stock or series of Preferred  Stock
of the Company issued by the Company in compliance  with the terms of Section 8,
the terms of which  expressly  provide  that such class or series will rank on a
parity  with the shares of Series A Preferred  Stock as to  dividend  rights and
rights on liquidation,  winding-up and dissolution of the Company  (collectively
referred to as "Parity Shares"); and (iii) junior to each class of Capital Stock
or series of Preferred  Stock of the Company issued by the Company in compliance
with Section 8, the terms of which  expressly  provide that such class or series
will rank senior to the shares of Series A Preferred Stock as to dividend rights
and  rights  upon  liquidation,   winding-up  and  dissolution  of  the  Company
(collectively referred to as "Senior Shares").

          (b) In the event of any liquidation,  dissolution or winding-up of the
Company, whether voluntary or involuntary, the Holders of the shares of Series A
Preferred  Stock then  Outstanding  shall be entitled  to receive,  prior and in
preference  to any  distribution  of any of the  assets  of the  Company  to the
Holders of shares of Common Stock or Junior Shares by reason of their  ownership
thereof,  the greater of (i) an amount equal to the then  effective  Liquidation
Preference,  plus all Accumulated Dividends, if any, plus an amount equal to all
dividends  accrued and unpaid from the last  Dividend  Payment  Date to the date
fixed for liquidation,  dissolution or winding-up (the "Liquidation Amount") and
(ii) an amount  equal to (x) the amount  which would be payable  with respect to
one share of Common Stock (assuming the conversion of all Outstanding  shares of
Series A Preferred Stock immediately  prior to such liquidation,  dissolution or
winding-up)  multiplied  by (y) the number of shares of Common  Stock into which
(x) all issued and  Outstanding  shares of Series A Preferred Stock plus (y) all
Accumulated  Dividends,  if any,  in respect  thereof,  plus (z) all accrued and
unpaid  dividends in respect thereof from the last Dividend  Payment Date to the
date  of  such  liquidation,  conversion  or  winding  up,  could  be  converted
immediately  prior to such liquidation,  dissolution or winding-up.  If upon the
occurrence  of such event the assets of the  Company  shall be  insufficient  to
permit the payment to such Holders of the full preferential  amount described in
the immediately  preceding  sentence and all liquidating  payments on all Parity
Securities,  the entire assets of the Company legally available for distribution
shall be distributed among the Holders of the shares of Series A Preferred Stock
and the Holders of all Parity Shares  ratably in accordance  with the respective
amounts that would be payable on such shares of Series A Preferred Stock and any
such Parity Securities if all amounts payable thereon were paid in full.

          10.  Redemption.  (a) The  shares of Series A  Preferred  Stock may be
redeemed at any time  commencing on or after June 1, 2005, in whole or from time
to time in part, at the election of the Company (the "Optional Redemption"),  at
a redemption price per share (the "Optional  Redemption Price") in cash equal to
the greater of (i) 100% of the then effective  Liquidation  Amount applicable to
such share (treating the applicable date of redemption (the "Optional Redemption
Date") as the date of  liquidation  dissolution  or winding-up for such purpose)
and (ii) the  product of (A) the  Current  Market  Value  multiplied  by (B) the
number of shares of Common  Stock into  which  such share of Series A  Preferred
Stock (assuming for this purpose that all Accumulated Dividends, if any, and all
accrued  and  unpaid  dividends  from  the  last  Dividend  Payment  Date to the
applicable  Optional  Redemption  Date with  respect  to such  share of Series A
Preferred Stock had been paid immediately prior to such Optional Redemption Date
through the  issuance of shares of Series A Preferred  Stock with a  Liquidation
Preference  equal to the amount of such  Accumulated  Dividends  and accrued and
unpaid dividends) could be converted on the applicable Optional Redemption Date.

          (b) If on June 1,  2007,  the  Current  Market  Value of one  share of
Common  Stock is less than or equal to an  amount  equal to (x) 110% of the then
current Liquidation Amount with respect to one share of Series A Preferred Stock
(determined  as if June 1,  2007,  is the date of  liquidation,  dissolution  or
winding-up)  divided  by (y) a number  equal to the  number  of shares of Common
Stock  into  which  (i) one  share of Series A  Preferred  Stock,  plus (ii) all
Accumulated Dividends,  if any, attributable to such share of Series A Preferred
Stock,  plus (iii) all accrued and unpaid  dividends  in respect of one share of
Series A Preferred  Stock from the last  Dividend  Payment Date to June 1, 2007,
could be converted in accordance  with the terms hereof,  then, for the one year
period  immediately  following  June 1, 2007,  each Holder of Series A Preferred
Stock shall have the right,  but not the  obligation,  to require the Company to
purchase all or any part of the shares of Series A Preferred  Stock held by such
Holder on a date (which shall be a Business  Day)  specified by such Holder (the
"Holders'  Redemption  Date") in a written notice to the Company  specifying the
applicable  Holders'  Redemption  Date and the  number  of  shares  of  Series A
Preferred  to be  redeemed  on such date at a  redemption  price per share  (the
"Holders'  Redemption  Price")  in cash  equal  to 100%  of the  then  effective
Liquidation Amount (determined as if the applicable  Holders' Redemption Date is
the date of  liquidation,  dissolution or winding up) with respect to such share
of Series A Preferred Stock.

          (c) In the  event of a  redemption  of fewer  than all the  shares  of
Series A  Preferred  Stock  pursuant  to Section  10(a),  the shares of Series A
Preferred  Stock  will be  chosen  for  redemption  by the  Registrar  from  the
Outstanding  shares  of  Series A  Preferred  Stock not  previously  called  for
redemption,  pro rata or by lot or by such other method as the  Registrar  shall
deem fair and  appropriate,  provided  that the Company may redeem (an  "Odd-lot
Redemption")  all  shares  held by  Holders of fewer than 100 shares of Series A
Preferred Stock (or by Holders that would hold fewer than 100 shares of Series A
Preferred  Stock  following  such  redemption)  prior to its redemption of other
shares of Series A  Preferred  Stock.  If fewer  than all the shares of Series A
Preferred Stock represented by any share certificate are so to be redeemed,  (i)
the Company shall issue a new  certificate  for the shares not redeemed and (ii)
if any shares  represented  thereby  are  converted  before  termination  of the
conversion  right with respect to such shares,  such  converted  shares shall be
deemed (so far as may be) to be the shares represented by such share certificate
that was selected for  redemption.  Shares of Series A Preferred Stock that have
been  converted  during a selection of shares of Series A Preferred  Stock to be
redeemed  shall be treated by the  Registrar as  Outstanding  for the purpose of
such  selection but not for the purpose of the payment of the  Redemption  Price
and,  for the  avoidance  of doubt,  any shares of Common  Stock issued upon the
conversion  prior to the  Redemption  Date of any  shares of Series A  Preferred
Stock which are called for  redemption  shall not be redeemed  and shall  remain
Outstanding.

          (d) In the event the Company elects to effect an Optional  Redemption,
the Company shall (i) make a public announcement of the redemption and (ii) give
a redemption  notice (the "Redemption  Notice") to the Holders not fewer than 30
days nor more than 60 days  before  the  applicable  Optional  Redemption  Date.
Whenever a Redemption  Notice is required to be  delivered to the Holders,  such
Notice shall provide the information set forth below and be given by first class
mail, postage prepaid to each Holder of shares of Series A Preferred Stock to be
redeemed,  at such Holder's  address  appearing in the Series A Preferred  Stock
Share  Register.  All  Redemption  Notices shall identify the shares of Series A
Preferred Stock to be redeemed (including CUSIP number) and shall state:

               (i) the Redemption Date;

               (ii) the Redemption Price;

               (iii)  if fewer  than  all the  Outstanding  shares  of  Series A
     Preferred Stock are to be redeemed, the identification (and, in the case of
     partial  redemption,  the  certificate  number,  the total number of shares
     represented  thereby  and the number of such shares  being  redeemed on the
     Redemption Date) of the particular shares of Series A Preferred Stock to be
     redeemed;

               (iv) that, on the  Redemption  Date,  the  Redemption  Price will
     become due and payable upon each such share of Series A Preferred  Stock to
     be redeemed  and that  dividends  thereon will cease to accrue on and after
     said date;

               (v) the  conversion  price  and the  date on which  the  right to
     convert  shares of Series A Preferred  Stock to be redeemed will  terminate
     and the place or places  where such shares of Series A Preferred  Stock may
     be surrendered for conversion; and

               (vi) the place or places  where such shares of Series A Preferred
     Stock are to be surrendered for payment of the Redemption Price.

          The  Redemption  Notice  shall  be  given by the  Company  or,  at the
Company's  request,  by the  Registrar  in the  name and at the  expense  of the
Company;  provided  that if the  Company  so  requests,  it  shall  provide  the
Registrar adequate time, as reasonably  determined by the Registrar,  to deliver
such notices in a timely fashion.

          (e) Prior to any  Redemption  Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the Redemption  Price of all the shares of Series A Preferred  Stock that are to
be redeemed on that date.  If any share of Series A Preferred  Stock  called for
redemption is converted,  any consideration deposited with the Registrar or with
any Paying Agent or so segregated  and held in trust for the  redemption of such
share of Series A Preferred Stock shall be paid or delivered to the Company upon
Company  Order or, if then held by the Company,  shall be  discharged  from such
trust.

          (f) Notice of redemption having been given as aforesaid, the shares of
Series A Preferred Stock so to be redeemed shall, on the Redemption Date, become
due and payable at the applicable Redemption Price, and from and after such date
(unless the Company  shall default in the payment of the  applicable  Redemption
Price)  dividends  on such  shares of Series A  Preferred  Stock  shall cease to
accrue and such  shares  shall  cease to be  convertible  into  shares of Common
Stock.  Upon  surrender  of any such  shares  of  Series A  Preferred  Stock for
redemption  in  accordance  with said notice,  such shares of Series A Preferred
Stock shall be redeemed by the Company at the applicable  Redemption  Price.  If
any share of Series A Preferred Stock called for redemption shall not be so paid
upon surrender thereof for redemption, the Redemption Price thereof shall, until
paid, bear interest from the Redemption Date at the dividend rate payable on the
shares of Series A Preferred Stock.

          (g) Any  certificate  that  represents more than one share of Series A
Preferred  Stock and is to be redeemed only in part shall be  surrendered at any
office  or agency of the  Company  designated  for that  purpose  (with,  if the
Company  or  the  Registrar  so  requires,  due  endorsement  by,  or a  written
instrument  of transfer in form  satisfactory  to the Company and the  Registrar
duly  executed  by,  the Holder  thereof  or his  attorney  duly  authorized  in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver to the Holder of such share of Series A Preferred  Stock without service
charge, a new Series A Preferred Stock certificate or certificates, representing
any number of shares of Series A Preferred Stock as requested by such Holder, in
aggregate  amount equal to and in exchange for the number of shares not redeemed
and represented by the Series A Preferred Stock certificate so surrendered.

          (h) If a share of Series A Preferred Stock is redeemed subsequent to a
Dividend  Record Date with respect to any Dividend  Payment Date specified above
and on or prior to such Dividend  Payment Date,  then any accumulated but unpaid
dividends  will be paid to the  Person  in whose  name  such  share of  Series A
Preferred  Stock is registered at the close of business on such Dividend  Record
Date.

          11.  Method of Payments.  The Company  shall make any Coupon  Dividend
payments (to the extent not accumulated in accordance with terms hereof) in cash
when, and if, declared.  Dividends payable pursuant to Section 6(a)(ii) shall be
payable in the same form as the related common stock dividends.

          12. Conversion. (a) Subject to and upon compliance with the provisions
of this  Certificate of Designation,  at the option of the Holder  thereof,  any
share of Series A Preferred Stock may be converted at any time, into that number
of fully paid and  nonassessable  shares of Common Stock  (calculated as to each
conversion to the nearest 1/100 of a share) equal to (i) the sum of (x) the then
effective Liquidation  Preference thereof, plus (y) all Accumulated Dividends in
respect  thereof,  if any, plus (z) all accrued and unpaid  dividends in respect
thereof from the last Dividend  Payment Date to the date of conversion,  divided
by (ii) the Conversion Price,  determined as hereinafter  provided, in effect at
the time of  conversion.  In case a share of Series A Preferred  Stock is called
for redemption,  such  conversion  right in respect of the share so called shall
expire  at the  close  of  business  on the  Business  Day  next  preceding  the
Redemption  Date,  unless the  Company  defaults  in making the payment due upon
redemption.

          The price at which  shares of Common  Stock  shall be  delivered  upon
conversion  (herein called the  "Conversion  Price") shall initially be equal to
$38.125. The Conversion Price shall be adjusted in certain instances as provided
in Section 12(d) and Section 12(e).

          (b) In order to exercise the conversion  privilege,  the Holder of any
share  of  Series  A  Preferred  Stock  to  be  converted  shall  surrender  the
certificate  for such  share,  duly  endorsed  or  assigned to the Company or in
blank,  at any  office or agency of the  Company  maintained  for that  purpose,
accompanied  by written  notice to the Company at such office or agency that the
Holder elects to convert such share or, if fewer than all the shares of Series A
Preferred Stock  represented by a single share  certificate are to be converted,
the number of shares represented thereby to be converted.

          Shares  of  Series A  Preferred  Stock  shall be  deemed  to have been
converted  immediately prior to the close of business on the day of surrender of
such shares for conversion in accordance with the foregoing  provisions,  and at
such time the rights of the Holders of such shares as Holders  shall cease,  and
the Person or Persons  entitled to receive the shares of Common  Stock  issuable
upon  conversion  shall be treated  for all  purposes  as the  record  Holder or
Holders of such shares of Common Stock at such time. As promptly as  practicable
on or after the  conversion  date,  the Company shall issue and shall deliver at
such  office or agency a  certificate  or  certificates  for the  number of full
shares of Common Stock issuable upon  conversion,  together with payment in lieu
of any fraction of a share, as provided in Section 12(c).

          In the case of any conversion of fewer than all the shares of Series A
Preferred  Stock  evidenced by a certificate,  upon such  conversion the Company
shall  execute and the  Registrar  shall  countersign  and deliver to the Holder
thereof,  at the  expense of the  Company,  a new  certificate  or  certificates
representing the number of unconverted shares of Series A Preferred Stock.

          (c) No  fractional  shares of Common  Stock  shall be issued  upon the
conversion  of a share of Series A  Preferred  Stock.  If more than one share of
Series A Preferred  Stock shall be surrendered for conversion at one time by the
same  Holder,  the number of full shares of Common Stock which shall be issuable
upon conversion  thereof shall be computed on the basis of the aggregate  number
of shares of Series A Preferred Stock so surrendered.  Instead of any fractional
shares of Common Stock which would  otherwise be issuable upon conversion of any
share of Series A Preferred  Stock,  the Company shall pay a cash  adjustment in
respect of such  fraction in an amount equal to the same fraction of the closing
price (as defined in Section 12(d)(v)) per Common Share at the close of business
on the Business Day prior to the day of conversion.

          (d) The  Conversion  Price shall be adjusted  from time to time by the
Company as follows:

               (i) If the  Company  shall  hereafter  pay a  dividend  or make a
     distribution  to Holders of the  Outstanding  shares of Common Stock (other
     than a  dividend  or  distribution  in which the  Holders  of the  Series A
     Preferred  Stock  participate in accordance with Section 6(a)) in shares of
     Common Stock,  the Conversion Price in effect at the opening of business on
     the date  following the date fixed for the  determination  of  shareholders
     entitled to receive such dividend or other distribution shall be reduced by
     multiplying  such  Conversion  Price by a fraction  of which the  numerator
     shall be the number of shares of Common Stock  Outstanding  at the close of
     business on the Common Stock  Record Date (as defined in Section  12(d)(v))
     fixed for such  determination  and the denominator shall be the sum of such
     number of shares and the total number of shares  constituting such dividend
     or other distribution, such reduction to become effective immediately after
     the opening of business on the day  following the Common Stock Record Date.
     If any  dividend or  distribution  of the type  described  in this  Section
     12(d)(i) is declared but not so paid or made,  the  Conversion  Price shall
     again be adjusted to the Conversion  Price which would then be in effect if
     such dividend or distribution had not been declared;

               (ii) If the Company shall issue, sell or distribute any shares of
     Common Stock (including,  without limitation, any ETG Earnout Shares, which
     such ETG Earnout  Shares shall,  for purposes of this Section  12(d)(ii) be
     deemed issued for no additional consideration) or issue, sell or distribute
     options,  rights or warrants to any Person  entitling them to subscribe for
     or purchase shares of Common Stock or issue, sell or distribute convertible
     or exchangeable securities which are convertible or exchangeable for shares
     of Common Stock,  in each case, at a price per share less than $14.61,  the
     Conversion  Price  shall be adjusted so that the same shall equal the price
     determined by multiplying the Conversion  Price in effect at the opening of
     business  on  the  date  immediately  prior  to  such  sale,   issuance  or
     distribution  of shares,  options,  rights,  warrants  or  exchangeable  or
     convertible  securities by a fraction of which the  numerator  shall be the
     number of shares of Common  Stock  Outstanding  at the close of business on
     such date plus the  number of shares of Common  Stock  which the  aggregate
     offering  price of the total number of shares of Common Stock to be issued,
     sold or  distributed  or  subject  to such  options,  rights,  warrants  or
     exchangeable or convertible  securities would purchase at a price of $14.61
     per  share and of which the  denominator  shall be the  number of shares of
     Common  Stock  Outstanding  at the close of  business on such date plus the
     total number of  additional  shares of Common  Stock to be issued,  sold or
     distributed or subject to such options, rights, warrants or exchangeable or
     convertible securities for subscription or purchase.  Such adjustment shall
     become  effective  immediately  after the  opening of  business  on the day
     following  the  issuance,  sale or  distribution  of such shares,  options,
     rights, warrants or exchangeable or convertible  securities.  To the extent
     that shares of Common  Stock are not  delivered  pursuant to such  options,
     rights,  warrants  or  exchangeable  or  convertible  securities,  upon the
     expiration or termination of such options, rights, warrants or exchangeable
     or convertible  securities the Conversion  Price shall again be adjusted to
     be the Conversion  Price which would then be in effect had the  adjustments
     made upon the issuance of such options, rights, warrants or exchangeable or
     convertible  securities  been  made on the  basis of  delivery  of only the
     number of  shares  of Common  Stock  actually  delivered.  If such  shares,
     options, rights, warrants or exchangeable or convertible securities are not
     so  issued,  the  Conversion  Price  shall  again  be  adjusted  to be  the
     Conversion  Price  which would then be in effect if such date fixed for the
     determination  of  shareholders  entitled to receive such shares,  options,
     rights,  warrants or  exchangeable  or convertible  securities had not been
     fixed.  In determining  whether any shares,  options,  rights,  warrants or
     exchangeable or convertible securities entitle the Holders to subscribe for
     or purchase  shares of Common  Stock at less than $14.61 per share,  and in
     determining  the aggregate  offering  price of such shares of Common Stock,
     there  shall be taken into  account  any  consideration  received  for such
     options,  rights, warrants or exchangeable or convertible securities,  with
     the value of such  consideration,  if other than cash,  to be determined in
     good faith by the Board of Directors  and the amount of any exercise  price
     or  subscription  price  required to be paid upon exercise of such options,
     rights, warrants or exchangeable or convertible securities ;

               (iii)  If  the  Outstanding  shares  of  Common  Stock  shall  be
     subdivided or reclassified into a greater number of shares of Common Stock,
     the  Conversion  Price in  effect at the  opening  of  business  on the day
     following the day upon which such  subdivision  becomes  effective shall be
     proportionately  reduced,  and,  conversely,  if the Outstanding  shares of
     Common  Stock shall be combined  into a smaller  number of shares of Common
     Stock, the Conversion Price in effect at the opening of business on the day
     following the day upon which such  combination  becomes  effective shall be
     proportionately  increased, such reduction or increase, as the case may be,
     to become  effective  immediately  after the opening of business on the day
     following  the day upon  which  such  subdivision  or  combination  becomes
     effective;

               (iv) If any event occurs as to which the foregoing  provisions of
     this Section 12(d) are not strictly applicable or, if strictly  applicable,
     would not, in the good faith judgment of the Board of Directors, fairly and
     adequately  protect the conversion rights of the Holders in accordance with
     the essential intent and principles of such  provisions,  then the Board of
     Directors   shall  make  such   adjustments  in  the  application  of  such
     provisions,  in accordance with such essential  intent and  principles,  as
     shall be reasonably  necessary,  in the good faith opinion of such Board of
     Directors,  to protect such purchase  rights as aforesaid,  but in no event
     shall any such  adjustment  have the effect of  increasing  the  Conversion
     Price or decreasing  the number of shares of Common Stock issuable upon the
     conversion of the Series A Preferred Stock.

               (v) For purposes of this Section 12(d), the following terms shall
     have the meaning indicated:

               "closing  price" with respect to any  securities on any day means
     the closing  price on such day or, if no such sale takes place on such day,
     the average of the  reported  high and low prices on such day, in each case
     on  the  Nasdaq  National  Market  or  the  New  York  Stock  Exchange,  as
     applicable,  or, if such  security  is not listed or admitted to trading on
     such  national  market or exchange,  on the principal  national  securities
     exchange or quotation system in the United States on which such security is
     quoted or listed or  admitted  to  trading,  or, if not quoted or listed or
     admitted to trading on any national securities exchange or quotation system
     in the  United  States,  the  average  of the high and low  prices  of such
     security on the over-the-counter  market on the day in question as reported
     by the  National  Quotation  Bureau  Incorporated  or a  similar  generally
     accepted  reporting service in the United States,  or, if not so available,
     in such  manner as  furnished  by any New York Stock  Exchange  member firm
     selected from time to time by the Board of Directors for that purpose, or a
     price   determined  in  good  faith  by  the  Board  of  Directors,   whose
     determination  shall be  conclusive  and  described in a resolution  of the
     Board of Directors.

               "Common  Stock  Record  Date"  shall  mean  with  respect  to any
     dividend,  distribution or other  transaction or event in which the Holders
     of Common  Stock have the right to receive  any cash,  securities  or other
     property or in which the Common  Stock (or other  applicable  security)  is
     exchanged  for or converted  into any  combination  of cash,  securities or
     other property,  the date fixed for determination of shareholders  entitled
     to receive such cash,  securities or other  property  (whether such date is
     fixed by the Board of Directors or by statute, contract or otherwise).

               (vi) No  adjustment  in the  Conversion  Price  shall be required
     unless such adjustment would require an increase or decrease of at least 1%
     in such price;  provided,  however, that any adjustments which by reason of
     this Section 12(d)(vi) are not required to be made shall be carried forward
     and taken into account in any subsequent adjustment. All calculations under
     this  Section  12 shall  be made by the  Company  and  shall be made to the
     nearest cent.  No adjustment  need be made for a change in the par value or
     no par value of the Common Stock.

               (vii)  Whenever  the  Conversion  Price  is  adjusted  as  herein
     provided,  the Company shall  promptly file with the Registrar an Officers'
     Certificate  setting forth the Conversion  Price after such  adjustment and
     setting forth a brief  statement of the facts  requiring  such  adjustment.
     Promptly  after delivery of such  certificate,  the Company shall prepare a
     notice  of such  adjustment  of the  Conversion  Price  setting  forth  the
     adjusted  Conversion  Price and the date on which each  adjustment  becomes
     effective and shall mail such notice of such  adjustment of the  Conversion
     Price to each Holder of shares of Series A Preferred Stock at such Holder's
     last  address  appearing  on the  register of Holders  maintained  for that
     purpose within 20 days of the effective date of such adjustment. Failure to
     deliver  such notice  shall not affect the legality or validity of any such
     adjustment.

               (viii) In any case in which this Section  12(d)  provides that an
     adjustment shall become effective  immediately  after a Common Stock Record
     Date for an event, the Company may defer until the occurrence of such event
     issuing to the Holder of any share of Series A  Preferred  Stock  converted
     after such Common Stock Record Date and before the occurrence of such event
     the  additional  shares of Common Stock  issuable  upon such  conversion by
     reason of the  adjustment  required by such event over and above the shares
     of Common Stock issuable upon such conversion  before giving effect to such
     adjustment.

               (ix) For purposes of this Section 12(d),  the number of shares of
     Common Stock at any time  Outstanding  shall not include shares held in the
     treasury of the Company. The Company shall not pay any dividend or make any
     distribution on shares of Common Stock held in the treasury of the Company.

               (x)  Notwithstanding  anything to the contrary set forth  herein,
     this Section 12 shall not apply,  and no adjustment to the Conversion Price
     shall be made with respect to (A)  compensatory  or incentive stock options
     (or any shares of Common  Stock issued upon the  exercise  thereof)  issued
     pursuant  to employee  stock  option  plans of the Company  which have been
     approved by the Board of Directors of the Company,  (B) issuances of Common
     Stock to employees,  officers,  directors and  consultants  of the Company,
     pursuant to employee  benefit  plans  approved by the Board of Directors of
     the Company,  (C) shares of Common Stock issued upon the  conversion of the
     Series A  Preferred  Stock,  or (D)  shares of  Common  Stock  issued  upon
     exercise of the Warrants.

               (xi)  Notwithstanding  anything to the contrary set forth herein,
     for  federal  income tax  purposes  (but not for any other  purpose of this
     Certificate of  Designation),  any adjustments to the Conversion Price made
     in respect of any ETG Earnout  Shares shall be treated as an  adjustment to
     the purchase price of the Series A Preferred.

          (e) Subject to Section 13, in case of any consolidation of the Company
with, or merger of the Company into,  any other  corporation,  or in case of any
merger of another  corporation  into the Company  (other than a merger that does
not result in any  reclassification,  conversion,  exchange or  cancellation  of
Outstanding  shares of  Common  Stock of the  Company),  or in case of any sale,
conveyance  or transfer of all or  substantially  all the assets of the Company,
the  Holder  of each  share of Series A  Preferred  Stock  shall  have the right
thereafter,  during the period such share of Series A  Preferred  Stock shall be
convertible  as  specified in Section  12(a),  to convert such share of Series A
Preferred Stock into the kind and amount of securities,  cash and other property
receivable upon such consolidation,  merger,  conveyance or transfer by a Holder
of the number of shares of shares of Common Stock of the Company into which such
share of Series A Preferred Stock might have been converted immediately prior to
such  consolidation,  merger,  conveyance  or transfer,  assuming such Holder of
shares of Common Stock of the Company failed to exercise his rights of election,
if any,  as to the  kind or  amount  of  securities,  cash  and  other  property
receivable upon such  consolidation,  merger,  conveyance or transfer  (provided
that, if the kind or amount of securities,  cash and other  property  receivable
upon such consolidation, merger, conveyance or transfer is not the same for each
Common  Share of the Company in respect of which such  rights of election  shall
not have been  exercised  ("nonelecting  share"),  then for the  purpose of this
Section 12 the kind and amount of securities, cash and other property receivable
upon such  consolidation,  merger,  conveyance  or transfer by each  nonelecting
share  shall be deemed to be the kind and  amount so  receivable  per share by a
plurality  of  the  nonelecting  shares).  Such  securities  shall  provide  for
adjustments which, for events subsequent to the effective date of the triggering
event,  shall be as nearly  equivalent as may be practicable to the  adjustments
provided for in this Section 12. The above  provisions  of this Section 12 shall
similarly apply to successive consolidations, mergers, conveyances or transfers.

          (f) If the Company  shall take any action  requiring an  adjustment to
the Conversion Price pursuant to Section 12(d) or 12(e),  then the Company shall
cause to be filed with the Registrar and at each office or agency maintained for
the purpose of conversion of shares of Series A Preferred Stock, and shall cause
to be mailed to all Holders at their last  addresses as they shall appear in the
shares of Series A Preferred  Stock  Register,  at least 20 Business Days (or 10
Business  Days in any case  specified  in clause (i) or (ii) above) prior to the
applicable date hereinafter  specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,  rights or
warrants,  or, if a record is not to be taken,  the date as of which the Holders
of  shares  of  Common  Stock  of  record  to  be  entitled  to  such  dividend,
distribution,  rights or warrants are to be  determined or (y) the date on which
such  reclassification,  consolidation,  merger,  sale,  transfer,  dissolution,
liquidation  or winding-up is expected to become  effective,  and the date as of
which it is expected  that  Holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities,  cash or other
property deliverable upon such  reclassification,  consolidation,  merger, sale,
transfer,  dissolution,  liquidation or  winding-up.  Failure to give the notice
required  by this  Section  12(f) or any  defect  therein  shall not  affect the
legality  or   validity  of  any   dividend,   distribution,   right,   warrant,
reclassification, consolidation, merger, sale transfer, dissolution, liquidation
or winding-up, or the vote upon any such action.

          (g) The Company  shall at all times reserve and keep  available,  free
from  preemptive  rights,  out of its authorized  but unissued  shares of Common
Stock,  for the  purpose  of  effecting  the  conversion  of  shares of Series A
Preferred  Stock,  the full number of shares of Common Stock then  issuable upon
the conversion of all Outstanding shares of Series A Preferred Stock.

          (h) The  Company  will pay any and all taxes  that may be  payable  in
respect of the issue or  delivery  of shares of Common  Stock on  conversion  of
shares of Series A Preferred Stock pursuant hereto.

          13. Change of Control.  (a) If a Change of Control shall have occurred
(the date of such  occurrence  being a "Change of Control  Date"),  the  Company
shall  cause to be  filed  with  the  Registrar  and at each  office  or  agency
maintained for the purpose of conversion of shares of Series A Preferred  Stock,
and shall  cause to be mailed to all  Holders  at their last  addresses  as they
shall  appear in the Series A Preferred  Stock  Register,  in any case within 10
days  after the  Change of  Control  Date,  a notice  stating  (1) the Change of
Control  Date,  (2) the fact that Holders  shall,  if the Change of Control Date
occurs prior to the third  anniversary of the Closing Date,  receive the Special
Payment on such  shares,  (3) the fact that  Holders  of the Series A  Preferred
Stock shall have the right to require the Company to purchase all or any part of
its Outstanding shares of Series A Preferred Stock (including any and all shares
received as part of the Special  Payment) at a price equal to 101% of the sum of
(x) the  aggregate  Liquidation  Preference  thereof  plus  (y) all  Accumulated
Dividends  in respect of such shares  plus (z) all accrued and unpaid  dividends
thereon from the last Dividend Payment Date, (4) the relevant  circumstances and
facts regarding such Change of Control and (5) the instructions that such Holder
must follow in order to exercise the rights identified above.

          (b) Upon the  occurrence  of a Change  of  Control,  if the  Change of
Control  Date occurs prior to the third  anniversary  of the Closing  Date,  the
Holders of the Series A  Preferred  Stock shall  become  entitled to receive the
Special Payment with respect to such shares, and the Company shall pay, and each
Holder  shall be entitled to receive for each share of Series A Preferred  Stock
held (or  deemed  to be held) by such  Holder  on the  Change  of  Control  Date
(without  giving  effect to any  conversion  or redemption of shares of Series A
Preferred Stock on the Change of Control Date and assuming for this purpose that
all Accumulated Dividends, if any, and all accrued and unpaid dividends from the
last Dividend  Payment Date to the Change of Control Date,  with respect to such
shares of Series A Preferred Stock had been paid immediately prior to the Change
of Control Date through the issuance of shares of Series A Preferred  Stock with
a Liquidation  Preference equal to the amount of such Accumulated  Dividends and
accrued  and  unpaid  dividends),  shares of Series A  Preferred  Stock,  with a
Liquidation Preference equal to the product of (x) the Share Factor with respect
to such  share  and (y) the  Aggregate  Special  Payment  Amount  (the  "Special
Payment").  Such Special  Payment  shall accrue as of the Change of Control Date
whether or not the  Company has  earnings  or profits,  whether or not there are
funds legally available for the payment of such dividend and whether or not such
dividend  is  declared  and  shall be in all  respects  identical  to any  other
dividend  declared or accrued on the Series A Preferred Stock and all provisions
of this  Certificate of Designation  applicable to dividends shall apply to such
Special Payment (except as set forth above).

          (c) Each Holder of Series A Preferred Stock shall have the right,  but
not the  obligation,  at any time and from time to time during the 60 day period
after the receipt by such Holder of the notice  specified in Section  13(a),  to
sell to the Company (the "put") any or all of such  Holder's  shares of Series A
Preferred  Stock  (including any and all shares  received as part of the Special
Payment) for a price equal to 101% of the sum of (x) the  aggregate  Liquidation
Preference of such shares of Series A Preferred  Stock plus (y) all  Accumulated
Dividends,  if any,  related to such  shares,  plus (z) all  accrued  and unpaid
dividends related to such shares from the last Dividend Payment Date through the
date such shares are purchased by the Company (the "Put Price").

          Each  Holder  of Series A  Preferred  Stock  may  exercise  the put by
delivering to the Company a written  notice  specifying (i) the number of shares
of Series A  Preferred  Stock  that are  subject to the put and (ii) the date on
which the put shall be exercised (the "Put Exercise Date").

          On the Put Exercise Date, (i) such Holder shall deliver to the Company
the  certificates  representing the number of shares of Series A Preferred Stock
subject  to the put and  (ii) the  Company  shall  deliver  to such  Holder,  in
immediately available funds, the applicable Put Price for each share of Series A
Preferred Stock subject to the put.

          14. Consolidation, Merger, Conveyance or Transfer. Without the vote or
consent of the Holders of the Series A  Preferred  Stock as set forth in Section
8(c), the Company may not  consolidate  or merge with or into, or sell,  assign,
transfer,  lease, convey or otherwise dispose of all or substantially all of its
assets to, any Person.

          15. SEC Reports, Reports by Company. So long as any shares of Series A
Preferred Stock are Outstanding, the Company shall file with the SEC and, within
15 days after it files them with the SEC, with the Registrar  and, if requested,
furnish  to each  Holder of shares of Series A  Preferred  Stock all  annual and
quarterly  reports and the  information,  documents,  and other reports that the
Company is required to file with the SEC  pursuant to Section  13(a) or 15(d) of
the  Exchange Act ("SEC  Reports").  In the event the Company is not required or
shall cease to be required to file SEC Reports  pursuant to the Exchange Act the
Company  will  nevertheless  file such reports with the SEC (unless the SEC will
not accept such a filing).  Whether or not  required by the Exchange Act to file
SEC Reports with the SEC, so long as any shares of Series A Preferred  Stock are
Outstanding, the Company will furnish or cause to be furnished copies of the SEC
Reports  to the  Holders of shares of Series A  Preferred  Stock at the time the
Company is required to make such  information  available to the Registrar and to
prospective investors who request it in writing.

          16. Rights to Purchase. (a) The Company shall not sell or issue (other
than in an  underwritten  public  offering)  any shares of Capital  Stock of the
Company, or other securities  convertible into or exchangeable for Capital Stock
of the Company,  or options,  warrants or rights carrying any rights to purchase
Capital  Stock of the Company,  unless the Company first submits a written offer
to the Holders of Series A Preferred Stock identifying the terms of the proposed
sale (including  price,  number or aggregate  principal amount of securities and
all  other  material  terms),  and  offer  to each of the  Holders  of  Series A
Preferred  Stock  the  opportunity  to  purchase  its  Pro  Rata  Allotment  (as
hereinafter  defined)  of the  securities  so offered  on terms and  conditions,
including  price, not less favorable than those on which the Company proposes to
sell such securities.

          (b) The Company's  offer pursuant to this Section 16 shall remain open
and  irrevocable  for a period of 30 days, and the recipients of such offer (the
"Purchasers")  shall elect to purchase by giving  written  notice thereof to the
Company  within  such 30-day  period,  including  therein the maximum  number of
shares or other  securities  which the Purchasers  would purchase (not to exceed
their Pro Rata  Allotment),  with the rights of electing  Purchasers to purchase
such  additional  shares to be based upon the relative  holdings of Common Stock
(including shares of Common Stock issuable upon conversion of Series A Preferred
Stock and upon the exercise of Series B Common  Stock  Warrants) of the electing
Purchasers in the case of over-subscription.

          (c) For the purpose of this  Section 16,  each  Purchaser's  "Pro Rata
Allotment"  of such  securities  shall be based on the  ratio of the  shares  of
Common Stock based on such  Holders'  ownership of Series A Preferred  Stock and
Series A Common  Stock  Warrants  (in each  case on an  as-converted  and/or  as
exercised basis) held by he, she or it on an as-converted basis bears to all the
issued and  Outstanding  shares of Common  Stock  held by all of the  Purchasers
calculated  on  a  fully-diluted  basis  giving  effect  to  the  conversion  of
convertible  securities and the exercise of all Outstanding options and warrants
as of the date of such written offer.

          (d) Any securities  offered  pursuant to this Section 16 which are not
purchased  pursuant  to such  offer may be sold by the  Company  but only on the
terms and conditions set forth in the initial offer,  at any time within 90 days
following the termination of the  above-referenced  30-day period but may not be
sold to any other Person or on terms and conditions,  including price,  that are
more favorable to the purchaser than those set forth in such offer or after such
90-day period without renewed compliance with this Section 16.

          (e) Notwithstanding the foregoing, the right to purchase granted under
this Section 16 shall be  inapplicable  with respect to any issuance or proposed
issuance  by the  Company  of (i)  securities  issued  in  connection  with  the
acquisition of another corporation by the Company,  whether by merger,  purchase
of all or  substantially  all of the assets of such  corporation,  or otherwise,
(ii)  securities  issued  as a  result  of  any  stock  split,  stock  dividend,
reclassification  or  reorganization  of the Company's  stock,  (iii) securities
issued  upon  exercise  or  conversion  of any  option,  warrant or  convertible
security  approved by the Board of  Directors,  (iv)  compensatory  or incentive
stock  options (or any shares of Common Stock issued upon the exercise  thereof)
issued  pursuant to employee  stock option plans of the Company  which have been
approved by the Board of Directors of the Company;  and (v)  issuances of Common
Stock to employees, officers, directors and consultants of the Company, pursuant
to employee benefit plans approved by the Board of Directors of the Company.

          (f) The  rights  of the  Holders  of  Series  A  Preferred  Stock  are
transferable to each transferee of Series A Preferred Stock or Common Stock held
by such Holders.

          17. Definitions.  For purposes of this Certificate of Designation, the
following terms shall have the meaning set forth below:

          "Accumulated Dividends" has the meaning set forth in Section 6(b).

          "Affiliate"  means,  with  respect  to any  Person,  any other  Person
directly or indirectly  controlling,  controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with  respect to any Person  means the power to direct the  management
and  policies  of such  Person,  directly  or  indirectly,  whether  through the
ownership  of  voting  securities,  by  contract  or  otherwise;  and the  terms
"controlling" and "controlled" have meanings correlative to the foregoing.

          "Aggregate  Change of Control Date  Accreted  Value" means the product
obtained by multiplying (x) the Change of Control Date Accreted Value by (y) the
number of shares of Series A  Preferred  Stock  Outstanding  as of the Change of
Control Date (without giving effect to any conversion or redemption of shares of
Series A Preferred Stock on the Change of Control Date).

          "Aggregate  Special Payment Amount" means the difference (if positive)
between (x) the Aggregate Three Year Accreted Value and (y) the Aggregate Change
of Control Date Accreted Value.

          "Aggregate  Three Year Accreted  Value" means the product  obtained by
multiplying  (x) the Three  Year  Accreted  Value by (y) the number of shares of
Series A Preferred  Stock  Outstanding  on the Change of Control  Date  (without
giving  effect to any  conversion  or redemption of shares of Series A Preferred
Stock on the Change of Control Date).

          "Board of Directors" has the meaning set forth in the Recitals.

          "Business Day" means any day other than a Saturday, a Sunday, or a day
when banks in The City of New York are authorized to be closed.

          "By-Laws" has the meaning set forth in the Recitals.

          "Capital Stock" means, with respect to any Person, any and all shares,
interests,  participations,  rights in, or other equivalents (however designated
and whether voting and/or  non-voting) of such Person's  capital stock,  whether
Outstanding  on the Closing Date or issued after the Closing  Date,  and any and
all rights  (other  than any  evidence  of  indebtedness),  warrants  or options
exchangeable for or convertible into such capital stock.

          "Certificate  of  Incorporation"  has the  meaning  set  forth  in the
recitals.

          "Change  of  Control"  means the  occurrence  of any of the  following
events:  (a) any  "Person" or "group" (as such terms are used in Sections  13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial  owner" (as defined
in Rule 13d-3 and 13d-5 under the  Exchange  Act,  except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire,  whether such right is  exercisable  immediately or only after
the  passage of time),  directly  or  indirectly,  of more than 50% of the total
Voting  Capital  Stock of the Company or (b) the Company  consolidates  with, or
merges  with or into,  another  Person or sells,  assigns,  conveys,  transfers,
leases or otherwise  disposes of all or  substantially  all of its assets to any
Person, or any Person  consolidates with, or merges with or into the Company, in
any such event pursuant to a transaction in which the Holders of the Outstanding
Voting Capital Stock of the Company  immediately  prior to such transaction hold
less  than 50% of the  Outstanding  Voting  Capital  Stock of the  surviving  or
transferee  company or its parent company  immediately  after the transaction or
immediately  after such  transaction  any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), is the "beneficial owner"
(as  defined in Rules  13d-3 and 13d-5  under the  Exchange  Act,  except that a
person shall be deemed to have  "beneficial  ownership" of all  securities  that
such  person  has the  right to  acquire,  whether  such  right  is  exercisable
immediately or only after the passage of time), directly or indirectly,  of more
than 50% of the  total  Voting  Capital  Stock of the  surviving  or  transferee
company or its parent company immediately after the transaction as applicable or
(c) during any consecutive two-year period,  individuals who at the beginning of
such period constituted the Board of Directors  (together with any new directors
whose election by the Board of Directors or whose nomination for election by the
stockholders  of the  Company  was  approved  by a  vote  of a  majority  of the
directors  then still in office who were either  directors  at the  beginning of
such period or whose  election or  nomination  for  election was  previously  so
approved)  cease  for any  reason  to  constitute  a  majority  of the  Board of
Directors then in office or (d) any transaction  subject to Rule 13e-3 under the
Exchange Act if following  such Rule 13e-3  transaction  a Person owns more than
50% of the total Voting Capital Stock of the Company.

          "Change of Control Date" has the meaning set forth in Section 13(a).

          "Change of Control  Date  Accreted  Value"  means with respect to each
$381.25 of original Liquidation Preference, the value that $381.25 would accrete
to between the Closing Date and the Change of Control Date compounded  quarterly
at an annual rate of 8%.

          "Closing  Date" means any Closing Date under the  Purchase  Agreement.

          "closing  price"  has the  meaning  set  forth  in  Section  12(d)(v).

          "Common  Stock  Record  Date" has the  meaning  set  forth in  Section
12(d)(v).

          "Common  Stock" means the common stock,  par value $.01 per share,  of
the Company.

          "Company" has the meaning set forth in the Recitals.

          "Company Order" means a written request or order signed in the name of
the Company by its Chairman of the Board,  its President or a Vice President and
by  its  Treasurer,  an  Assistant  Treasurer,  its  Secretary  or an  Assistant
Secretary.

          "Conversion Agent" has the meaning set forth in Section 5(a).

          "Conversion Price" has the meaning set forth in Section 12(a).

          "Coupon Dividends" has meaning set forth in Section 6(a).

          "Current Market Value" per share of Common Stock or any other security
at any date means (i) if the security is not registered  under the Exchange Act,
the value of the  security,  determined  in good faith by the Board of Directors
and certified in a board resolution, or (ii) if the security is registered under
the Exchange Act, the average of the daily closing bid prices (or the equivalent
in  an  over-the-counter  market)  for  each  Business  Day  during  the  period
commencing  15  Business  Days  before  such date and ending on the date one day
prior to such date,  or if the security has been  registered  under the Exchange
Act for less than 15 consecutive  Business Days before such date, the average of
the daily closing bid prices (or such  equivalent)  for all of the Business Days
before such date for which daily  closing  bid prices are  available;  provided,
however,  that if the  closing  bid price is not  determinable  for at least ten
Business Days in such period,  the "Current  Market Value" of the security shall
be determined as if the security were not registered under the Exchange Act.

          "Dividend Payment Date" means each June 1, September 1, December 1 and
March 1, provided,  however, that if such date shall not be a Business Day, then
the Dividend Payment Date shall be the next Business Day.

          "Dividend Record Date" has the meaning set forth in Section 7(a).

          "ETG  Earnout  Shares"  shall mean any shares of Common  Stock  issued
subsequent  to April 7,  2000,  pursuant  to the  terms  of the  Asset  Purchase
Agreement  dated as of  December  16,  1998,  by and  among  the  Company,  COSI
Acquisition  Corp.,  Enterprise  Technology  Group,   Incorporated  and  certain
stockholders of Enterprise  Technology Group,  Incorporated as amended from time
to time, (including, without limitation, Sections 3.3 and 3.4 thereof).

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Holder"  means the Person in whose name the Series A Preferred  Stock
is registered.

          "Holders' Redemption Date" has the meaning set forth in Section 10(b).

          "Holders'  Redemption  Price"  has the  meaning  set forth in  Section
10(b).

          "Issuance  Price" of each  share of Series A  Preferred  Stock  means,
$381.25 the original purchase price of such share.

          "Junior Shares" has the meaning set forth in Section 9(a).

          "Liquidation Amount" has the meaning set forth in Section 9(b).

          "Liquidation Preference" has meaning set forth in Section 3.

          "nonelecting  share"  has the  meaning  set  forth in  Section  12(e).

          "Odd-lot Redemption" has the meaning set forth in Section 10(c).

          "Officers'  Certificate"  means a certificate of the Company signed in
the name of the Company by its  Chairman of the Board,  its  President or a Vice
President  and by its  Treasurer,  an Assistant  Treasurer,  its Secretary or an
Assistant Secretary.

          "Optional Redemption" has the meaning set forth in Section 10(a).

          "Optional Redemption Date" has the meaning set forth in Section 10(a).

          "Optional  Redemption  Price"  has the  meaning  set forth in  Section
10(a).

          "Outstanding"  means  when  used  with  respect  to shares of Series A
Preferred  Stock,  as of the  date of  determination,  all  shares  of  Series A
Preferred Stock  theretofore  authenticated and delivered under this Certificate
of  Designation,  except  (a)  shares of Series A  Preferred  Stock  theretofore
converted  into shares of Common Stock in accordance  with Section 12 and shares
of Series A Preferred Stock  theretofore  canceled by the Registrar or delivered
to the Registrar for  cancellation;  (b) shares of Series A Preferred  Stock for
whose payment or redemption  money in the necessary  amount has been theretofore
deposited  with the  Registrar  or any Paying  Agent (other than the Company) in
trust or set aside and  segregated in trust by the Company (if the Company shall
act as its own  Paying  Agent)  for the  Holders  of such  shares  of  Series  A
Preferred  Stock;  provided that, if such shares of Series A Preferred Stock are
to be redeemed,  notice of such  redemption has been duly given pursuant to this
Certificate of Designation or provision  therefor  satisfactory to the Registrar
has  been  made;  and (c)  shares  of  Series  A  Preferred  Stock  (x) that are
mutilated, destroyed, lost or stolen which the Company has decided to pay or (y)
in  exchange  for or in lieu of which other  shares of Series A Preferred  Stock
have  been   authenticated  and  delivered   pursuant  to  this  Certificate  of
Designation;  provided, however, that, in determining whether the Holders of the
shares  of  Series  A   Preferred   Stock  have  given  any   request,   demand,
authorization,  direction,  notice,  consent or waiver or taken any other action
hereunder,  shares of Series A Preferred Stock owned by the Company or any other
obligor  upon the shares of Series A  Preferred  Stock or any  Affiliate  of the
Company  or of such  other  obligor  shall be  disregarded  and deemed not to be
Outstanding,  except  that,  in  determining  whether  the  Registrar  shall  be
protected in relying upon any such request,  demand,  authorization,  direction,
notice, consent, waiver or other action, only shares of Series A Preferred Stock
which  the  Registrar  has  actual  knowledge  of  being  so  owned  shall be so
disregarded. Shares of Series A Preferred Stock so owned which have been pledged
in good faith may be regarded as Outstanding  if the pledgee  establishes to the
satisfaction of the Registrar the pledgee's right so to act with respect to such
shares of Series A  Preferred  Stock and that the  pledgee is not the Company or
any other  obligor upon the shares of Series A Preferred  Stock or any Affiliate
of the Company or of such other obligor.

          "Parity Shares" has the meaning set forth in Section 9(a).

          "Paying Agent" has the meaning set forth in Section 5(a).

          "Person"  means  an  individual,  partnership,   corporation,  limited
liability company,  business trust, joint stock company,  trust,  unincorporated
association,  joint venture,  governmental authority or other entity of whatever
nature.

          "Preferred  Stock"  means,  with  respect to any  Person,  any and all
shares,  interests,  participations  or other equivalents  (however  designated,
whether voting or non-voting)  of such Person's  preferred or preference  stock,
whether now  Outstanding  or issued after the date hereof,  including all series
and classes of such preferred or preference stock.

          "Pro Rata Allotment" has the meaning set forth in Section 16(c).

          "Purchase  Agreement"  means the Securities  Purchase  Agreement dated
April 7, 2000, among the Company and the Purchaser named therein.

          "Purchasers" has the meaning set forth in Section 16(b).

          "put" has the meaning set forth in Section 13(c).

          "Put Exercise Date" has the meaning set forth in Section 13(c).

          "Put Price" has the meaning set forth in Section 13(c).

          "Redemption  Date" means any Optional  Redemption Date or any Holders'
Redemption Date.

          "Redemption Notice" has the meaning set forth in Section 10(d).

          "Redemption Price" means the Optional Redemption Price or the Holders'
Redemption Price as the case may be.

          "Registrar" has the meaning set forth in Section 3.

          "Restricted Shares Legend" has the meaning set forth in Section 4.

          "SEC" means the  Securities and Exchange  Commission,  as from time to
time constituted,  created under the Securities  Exchange Act of 1934, or, if at
any time after the adoption of this  Certificate of Designation  such commission
is not  existing  and  performing  the duties now  assigned to it, then the body
performing such duties at such time.

          "SEC Reports" has the meaning set forth in Section 15.

          "Securities Act" has the meaning set forth in Section 4.

          "Senior Shares" has the meaning set forth in Section 9(a).

          "Series A Preferred Stock" has the meaning set forth in Section 1.

          "Share  Factor" means with respect to each share of Series A Preferred
Stock, a fraction,  the numerator of which is the Liquidation Preference of such
share as of the Change of Control  Date,  without  giving  effect to the Special
Payment, and the denominator of which is the aggregate Liquidation Preference of
all  Outstanding  shares of Series A Preferred Stock as of the Change of Control
Date, without giving effect to the Special Payment.

          "Special Payment" has the meaning set forth in Section 13(b).

          "Three Year  Accreted  Value"  means with  respect to each  $381.25 of
original Liquidation Preference, $483.52.

          "Voting Capital Stock" means with respect to any Person, securities of
any class or classes of Capital  Stock in such Person  ordinarily  entitling the
Holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the election of members of the board of directors or comparable  governing  body
of such Person.

          "Warrants" means the warrants issued pursuant to the Warrant Agreement
dated as of May 10,  2000,  between the  Company and each of the  warrantholders
party thereto.

<PAGE>

          IN WITNESS  WHEREOF,  the  Company  has  caused  this  Certificate  of
Designation to be duly executed by Robert B. Wallach,  President of the Company,
and attested by Nicholas J. Letizia,  Secretary of the Company, this 10th day of
May 2000.

                                 COMPUTER OUTSOURCING SERVICES, INC.

                                 By: /s/Robert B. Wallach
                                    --------------------------------
                                    Name:   Robert B. Wallach
                                    Title:  President

ATTEST:

By /s/ Nicholas J. Letizia
  -------------------------------
     Name:   Nicholas J. Letizia
     Title:  Secretary

<PAGE>

                                                                       EXHIBIT A

                                FACE OF SECURITY

"THE SHARES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS
OF ANY  STATE OF THE  UNITED  STATES.  SUCH  SHARES  MAY NOT BE  OFFERED,  SOLD,
TRANSFERRED,  PLEDGED,  HYPOTHECATED OR OTHERWISE  DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."

                                                                Number of Shares
Number:  __________                                              ________ Shares

                                                   144A CUSIP NO.:  [__________]
                                                     IAI CUSIP NO.: [__________]

          SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK
                                    DUE 2007
                                       OF
                       COMPUTER OUTSOURCING SERVICES, INC.

[TO BE UPDATED TO REFLECT THE FINAL TERMS IN THE CERTIFICATE OF DESIGNATIONS]

          Computer  Outsourcing  Services,  Inc., a company  organized under the
laws  of  Delaware  (the  "Company"),   hereby  certifies  that  [HOLDERS]  (the
"Holders")  is  the  registered   owner  of   [_____________]   fully  paid  and
non-assessable  preference  securities  of the Company  designated  the Series A
Cumulative  Convertible  Participating  Preferred  Stock  due  2007,  par  value
U.S.$0.01 (the  "Preferred  Stock") having a liquidation  value equal the sum of
(x) to the original purchase price per share plus (y) all Accumulated Dividends,
if any, in respect  thereof,  plus (z) all accrued and unpaid dividends from the
last Dividend  Payment Date . The shares of Preferred Stock are  transferable on
the books  and  records  of the  Registrar,  in  person or by a duly  authorized
attorney,  upon surrender of this  certificate  duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Preferred Stock represented  hereby are issued
and shall in all respects be subject to the  provisions  of the  Certificate  of
Designation  of the Company  dated May 10, 2000, as the same may be amended from
time to time in accordance with its terms (the "Preferred  Stock  Certificate of
Designation").  Capitalized  terms used  herein but not  defined  shall have the
meaning  given them in the  Preferred  Stock  Certificate  of  Designation.  The
Company will provide a copy of the Preferred Stock Certificate of Designation to
a Holder  without  charge upon written  request to the Company at its  principal
place of business.

          Reference is hereby made to select  provisions of the Preferred  Stock
set forth on the reverse  hereof,  and to the  Preferred  Stock  Certificate  of
Designation,  which select  provisions  and the Preferred  Stock  Certificate of
Designation  shall for all purposes have the same effect as if set forth at this
place.

          Upon receipt of this certificate, the Holder is bound by the Preferred
Stock Certificate of Designation and is entitled to the benefits thereunder.

          Unless the Transfer Agent's valid countersignature appears hereon, the
shares of Preferred Stock evidenced  hereby shall not be entitled to any benefit
under the Preferred  Stock  Certificate of Designation or be valid or obligatory
for any purpose.

          IN WITNESS  WHEREOF,  the Company has executed this  certificate as of
the date set forth below.

                                            COMPUTER OUTSOURCING SERVICES, INC.

                                               By
                                                 ------------------------------
                                                 Name:
                                                 Title:

[Seal]
                                               By
                                                 ------------------------------
                                                 Name:
                                                 Title:

Dated:

<PAGE>

                               REVERSE OF SECURITY

                       COMPUTER OUTSOURCING SERVICES, INC.

          Series A Cumulative Convertible Preferred Stock due 2007

          Dividends on each share of Preferred  Stock shall be payable at a rate
per annum set forth on the face  hereof or as provided  in the  Preferred  Stock
Certificate of  Designation.  Dividends may be paid, to the extent not cumulated
in accordance with the terms of the Preferred Stock Certificate of Designation.

          The shares of Preferred  Stock shall be  redeemable as provided in the
Preferred Stock Certificate of Designation.  The shares of Convertible Preferred
Stock shall be  convertible  into the  Company's  Common Stock in the manner and
according  to the  terms  set  forth in the  Preferred  Stock  Certification  of
Designation.

          The  Company  shall  furnish to any Holder  upon  request  and without
charge, a full summary statement of the designations, voting rights preferences,
limitations and special rights of the shares of each class or series  authorized
to be issued by the  Company so far as they have been fixed and  determined  and
the authority of the Board of Directors to fix and  determine the  designations,
voting  rights,  preferences,  limitations  and special  rights of the class and
series of shares of the Company.

<PAGE>

                                   ASSIGNMENT

          FOR VALUE RECEIVED,  the undersigned  assigns and transfers the shares
of Preferred Stock evidenced hereby to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints:

agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the Transfer  Agent and Registrar.  The agent may substitute  another to act for
him or her.

Date:

Signature:
(Sign  exactly  as your  name  appears-on  the  other  side of this  Convertible
Preferred Stock Certificate)

Signature Guarantee:  ____________________(1)

---------------------
1     Signature must be guaranteed by an "eligible guarantor institution" (i.e.,
      a bank, stockbroker, savings and loan association or credit union) meeting
      the requirements of the Registrar,  which requirements  include membership
      or  participation  in the Securities  Transfer  Agents  Medallion  Program
      ("STAMP") or such other "signature guarantee program" as may be determined
      by the Registrar in addition to, or in  substitution  for,  STAMP,  all in
      accordance with the Securities Exchange Act of 1934.

<PAGE>

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                    in order to Convert the Preferred Stock)

          The   undersigned   hereby   irrevocably   elects  to   convert   (the
"Conversion") shares of Series A Cumulative Convertible Preferred Stock due 2007
(the "Preferred Stock"), represented by stock certificate No(s). __________ (the
"Preferred Stock Certificates") into shares of common stock, par value U.S. $.01
per  share  ("Common  Stock"),  of  Computer  Outsourcing  Services,  Inc.  (the
"Company")  according  to the  conditions  of  the  Certificate  of  Designation
establishing the terms of the Preferred Stock (the "Preferred Stock  Certificate
of  Designation"),  as of the date written below.  If shares are to be issued in
the name of a person other than the  undersigned,  the undersigned  will pay all
transfer  taxes  payable with respect  thereto and is  delivering  herewith such
certificates. No fee will be charged to the Holder for any conversion. A copy of
each Preferred Stock  Certificate is attached hereto (or evidence of loss, theft
or destruction thereof).(1)

          The  undersigned  represents and warrants that all offers and sales by
the undersigned of the shares of Common Stock issuable to the  undersigned  upon
conversion of the Preferred  Stock shall be made pursuant to registration of the
Common Stock under the  Securities  Act of 1933 (the  "Act"),  or pursuant to an
exemption from registration under the Act.

          Capitalized  terms used but not defined herein shall have the meanings
ascribed  thereto  in  or  pursuant  to  the  Preferred  Stock   Certificate  of
Designation.

Date of Conversion:

Applicable Conversion Price:

Number of shares of Preferred Stock to be Converted:

Number of shares of Common Stock to be Issued:

Signature:

Name:

Address:(2)

Fax No.:

------------------------
(1)   The  Company is not  required  to issue  shares of Common  Stock until the
      original  Preferred Stock  Certificate(s)  (or evidence of loss,  theft or
      destruction  thereof) to be  converted  are received by the Company or its
      Transfer Agent. The Company shall issue and deliver shares of Common Stock
      to an  overnight  courier  not later than three  business  days  following
      receipt of the original Preferred Stock Certificate(s) to be converted.

(2)  Address where shares of Common Stock and any other payments or certificates
     shall be sent by the Company.

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