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                                                                     Exhibit 4.3

                           INNOVATIVE COMPANIES, INC.

                   CERTIFICATE OF DESIGNATION OF PREFERENCES,
                             RIGHTS AND LIMITATIONS
                                       OF
                      SERIES B CONVERTIBLE PREFERRED STOCK

                       PURSUANT TO SECTION 607.0602 OF THE
                         FLORIDA GENERAL CORPORATION LAW

     The undersigned, Carol Dore-Falcone , do hereby certify that:

          1. She is the Chief Financial Officer and Vice President, of
INNOVATIVE COMPANIES, INC., a Florida corporation (the "Corporation").

          2. The Corporation is authorized to issue 6,000,000 shares of
preferred stock, 5,200,000 of which have been issued.

          3. The following resolutions were duly adopted by the Board of
Directors:

     WHEREAS, the Certificate of Incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, comprised of 6,000,000
shares, $0.01 par value, issuable from time to time in one or more series;

     WHEREAS, the Board of Directors of the Corporation is authorized to fix the
dividend rights, dividend rate, voting rights, conversion rights, rights and
terms of redemption and liquidation preferences of any wholly unissued series of
preferred stock and the number of shares constituting any Series and the
designation thereof, of any of them; and

     WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the preferred stock,
which shall consist of, except as otherwise set forth in the Purchase Agreement,
up to 5,000 shares of the preferred stock which the corporation has the
authority to issue, as follows:

     NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or exchange of
other securities, rights or property and does hereby fix and determine the
rights, preferences, restrictions and other matters relating to such series of
preferred stock as follows:

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                            TERMS OF PREFERRED STOCK

     Section 1. Designation, Amount and Par Value. The series of preferred stock
shall be designated as its Series B Convertible Preferred Stock (the "Preferred
Stock") and the number of shares so designated shall be 5,000 (which shall not
be subject to increase without the consent of all of the holders of the
Preferred Stock (each, a "Holder" and collectively, the "Holders")). Each share
of Preferred Stock shall have a par value of $0.01 per share and a stated value
equal to $1,000 (the "Stated Value"). Capitalized terms not otherwise defined
herein shall have the meaning given such terms in Section 8 hereof.

     Section 2. Dividends.

          (a) Holders shall be entitled to receive and the Corporation shall
     pay, cumulative dividends at the rate per share (as a percentage of the
     Stated Value per share) of 6% per annum until the third anniversary of the
     Original Issue Date, 8% per annum from the third anniversary of the
     Original Issue Date until the fourth anniversary of the Original Issue
     Date, 11% from the fourth anniversary of the Original Issue Date until the
     fifth anniversary of the Original Issue Date and 14% thereafter, payable
     quarterly on March 1, June 1, September 1 and December 1, beginning with
     June 1, 2004 and on any Conversion Date or redemption date pursuant to the
     terms hereunder (except that, if such date is not a Trading Day, the
     payment date shall be the next succeeding Trading Day)("Dividend Payment
     Date"). The form of dividend payments to each Holder shall be made in the
     following order: (i) if funds are legally available for the payment of
     dividends and the Equity Conditions have not been met, in cash only, (ii)
     if funds are legally available for the payment of dividends and the Equity
     Conditions have been met, at the sole election of the Corporation, in cash
     or shares of Common Stock which shall be valued solely for such purpose at
     95% of the average of the 20 VWAPs immediately prior to the Dividend
     Payment Date; (iii) if funds are not legally available for the payment of
     dividends and the Equity Conditions have been met, in shares of Common
     Stock which shall be valued at 95% of the average of the 20 VWAPs
     immediately prior to the Dividend Payment Date; (iv) if funds are not
     legally available for the payment of dividends and the Equity Conditions
     have been waived by such Holder, as to such Holder only, in shares of
     Common Stock which shall be valued at 95% of the average of the 20 VWAPs
     immediately prior to the Dividend Payment Date; and (v) if funds are not
     legally available for the payment of dividends and the Equity Conditions
     have not been met, then, at the election of such Holder, such dividends
     shall accrue to the next Dividend Payment Date or shall be accreted to the
     outstanding Stated Value. The Holders shall have the same rights and
     remedies with respect to the delivery of any such shares as if such shares
     were being issued pursuant to Section 5. On the Closing Date the
     Corporation shall have notified the Holders whether or not it may lawfully
     pay cash dividends. The Corporation shall promptly notify the Holders at
     any time the Corporation shall become able or unable, as the case may be,
     to lawfully pay cash dividends. If at any time the Corporation has the
     right to pay dividends in cash or Common Stock, the

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     Corporation must provide the Holder with at least 20 Trading Days' notice
     of its election to pay a regularly scheduled dividend in Common Stock.
     Dividends on the Preferred Stock shall be calculated on the basis of a
     360-day year, shall accrue daily commencing on the Original Issue Date, and
     shall be deemed to accrue from such date whether or not earned or declared
     and whether or not there are profits, surplus or other funds of the
     Corporation legally available for the payment of dividends. Except as
     otherwise provided herein, if at any time the Corporation pays dividends
     partially in cash and partially in shares, then such payment shall be
     distributed ratably among the Holders based upon the number of shares of
     Preferred Stock held by each Holder. Any dividends, whether paid in cash or
     shares, that are not paid within three Trading Days following a Dividend
     Payment Date shall continue to accrue and shall entail a late fee, which
     must be paid in cash, at the rate of 18% per annum or the lesser rate
     permitted by applicable law (such fees to accrue daily, from the Dividend
     Payment Date through and including the date of payment).

          (b) So long as any Preferred Stock shall remain outstanding, neither
     the Corporation nor any subsidiary thereof shall redeem, purchase or
     otherwise acquire directly or indirectly any Junior Securities. So long as
     any Preferred Stock shall remain outstanding, neither the Corporation nor
     any subsidiary thereof shall directly or indirectly pay or declare any
     dividend or make any distribution (other than a dividend or distribution
     described in Section 5 or dividends due and paid in the ordinary course on
     preferred stock of the Corporation at such times when the Corporation is in
     compliance with its payment and other obligations hereunder) upon, nor
     shall any distribution be made in respect of, any Junior Securities so long
     as any dividends due on the Preferred Stock remain unpaid, nor shall any
     monies be set aside for or applied to the purchase or redemption (through a
     sinking fund or otherwise) of any Junior Securities or shares pari passu
     with the Preferred Stock.

          (c) The Corporation acknowledges and agrees that the capital of the
     Corporation (as such term is used in Section B of the General Corporation
     Law of Florida) in respect of the Preferred Stock and any future issuances
     of the Corporation's capital stock shall be equal to the aggregate par
     value of such Preferred Stock or capital stock, as the case may be, and
     that, on or after the date of the Purchase Agreement, it shall not increase
     the capital of the Corporation with respect to any shares of the
     Corporation's capital stock issued and outstanding on such date. The
     Corporation also acknowledges and agrees that it shall not create any
     special reserves under the General Corporation Law of Florida without the
     prior written consent of each Holder.

     Section 3. Voting Rights. Except as otherwise provided herein and as
otherwise required by law, the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote of the Holders of the shares
of the Preferred Stock then outstanding, (a) alter or change adversely the
powers, preferences or rights given to the Preferred Stock or alter or amend
this Certificate of Designation, (b) authorize or create any class of stock
ranking as to dividends, redemption or distribution of assets upon a Liquidation
(as defined in Section 4)

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senior to or otherwise pari passu with the Preferred Stock, (c) amend its
certificate of incorporation or other charter documents so as to affect
adversely any rights of the Holders, (d) increase the authorized number of
shares of Preferred Stock, or (e) enter into any agreement with respect to the
foregoing.

     Section 4. Liquidation. Upon any liquidation, dissolution or winding-up of
the Corporation, whether voluntary or involuntary (a "Liquidation"), the Holders
shall be entitled to receive out of the assets of the Corporation, whether such
assets are capital or surplus, for each share of Preferred Stock an amount equal
to the Stated Value per share plus any accrued and unpaid dividends thereon and
any other fees or liquidated damages owing thereon before any distribution or
payment shall be made to the holders of any Junior Securities, and if the assets
of the Corporation shall be insufficient to pay in full such amounts, then the
entire assets to be distributed to the Holders shall be distributed among the
Holders ratably in accordance with the respective amounts that would be payable
on such shares if all amounts payable thereon were paid in full. A Fundamental
Transaction or Change of Control Transaction shall not be treated as a
Liquidation. The Corporation shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated therein, to each record
Holder.

     Section 5. Conversion.

          (a)  (i) Conversions at Option of Holder. Each share of Preferred
          Stock shall be convertible into that number of shares of Common Stock
          (subject to the limitations set forth in Sections 5(a)(ii) and (iii))
          determined by dividing the Stated Value of such share of Preferred
          Stock by the Set Price, at the option of the Holder, at any time and
          from time to time from and after the Original Issue Date. Holders
          shall effect conversions by providing the Corporation with the form of
          conversion notice attached hereto as Annex A (a "Conversion Notice").
          Each Conversion Notice shall specify the number of shares of Preferred
          Stock to be converted, the number of shares of Preferred Stock owned
          prior to the conversion at issue, the number of shares of Preferred
          Stock owned subsequent to the conversion at issue and the date on
          which such conversion is to be effected, which date may not be prior
          to the date the Holder delivers such Conversion Notice to the
          Corporation by facsimile (the "Conversion Date"). If no Conversion
          Date is specified in a Conversion Notice, the Conversion Date shall be
          the date that such Conversion Notice to the Corporation is deemed
          delivered hereunder. The calculations and entries set forth in the
          Conversion Notice shall control in the absence of manifest or
          mathematical error.

               (ii) Beneficial Ownership Limitation. The Corporation shall not
          effect any conversion of the Preferred Stock, and the Holder shall not
          have the right to convert any portion of the Preferred Stock to the
          extent that after giving effect to such conversion, the Holder
          (together with the Holder's affiliates), as set forth on the
          applicable Conversion Notice, would beneficially own in excess of
          4.99% of the number of shares of the Common

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          Stock outstanding immediately after giving effect to such conversion.
          For purposes of the foregoing sentence, the number of shares of Common
          Stock beneficially owned by the Holder and its affiliates shall
          include the number of shares of Common Stock issuable upon conversion
          of the Preferred Stock with respect to which the determination of such
          sentence is being made, but shall exclude the number of shares of
          Common Stock which would be issuable upon (A) conversion of the
          remaining, nonconverted Stated Value of Preferred Stock beneficially
          owned by the Holder or any of its affiliates and (B) exercise or
          conversion of the unexercised or nonconverted portion of any other
          securities of the Corporation (including the Warrants) subject to a
          limitation on conversion or exercise analogous to the limitation
          contained herein beneficially owned by the Holder or any of its
          affiliates. Except as set forth in the preceding sentence, for
          purposes of this Section 5(a)(ii), beneficial ownership shall be
          calculated in accordance with Section 13(d) of the Exchange Act. To
          the extent that the limitation contained in this Section 5(a)(ii)
          applies, the determination of whether the Preferred Stock is
          convertible (in relation to other securities owned by the Holder
          together with any affiliates) and of which shares of Preferred Stock
          is convertible shall be in the sole discretion of such Holder, and the
          submission of a Conversion Notice shall be deemed to be such Holder's
          determination of whether the shares of Preferred Stock may be
          converted (in relation to other securities owned by such Holder) and
          which shares of the Preferred Stock is convertible, in each case
          subject to such aggregate percentage limitations. To ensure compliance
          with this restriction, the Holder will be deemed to represent to the
          Corporation each time it delivers a Conversion Notice that such
          Conversion Notice has not violated the restrictions set forth in this
          paragraph and the Corporation shall have no obligation to verify or
          confirm the accuracy of such determination. For purposes of this
          Section 5(a)(ii), in determining the number of outstanding shares of
          Common Stock, the Holder may rely on the number of outstanding shares
          of Common Stock as reflected in the most recent of the following: (A)
          the Corporation's most recent Form 10-Q or Form 10-K, as the case may
          be, (B) a more recent public announcement by the Corporation or (C)
          any other notice by the Corporation or the Corporation's transfer
          agent setting forth the number of shares of Common Stock outstanding.
          Upon the written or oral request of the Holder, the Corporation shall
          within two Trading Days confirm orally and in writing to the Holder
          the number of shares of Common Stock then outstanding. In any case,
          the number of outstanding shares of Common Stock shall be determined
          after giving effect to the conversion or exercise of securities of the
          Corporation, including the Preferred Stock, by the Holder or its
          affiliates since the date as of which such number of outstanding
          shares of Common Stock was reported.

               (iii) Limitation on Number of Shares Issuable. Notwithstanding
          anything herein to the contrary, the Corporation shall not issue to
          any Holder any shares of Common Stock, including pursuant to any
          rights

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          herein, including, without limitation, any conversion rights or right
          to issue shares of Common Stock in payment of dividends, to the extent
          such shares, when added to the number of shares of Common Stock issued
          or issuable (A) upon conversion of any shares of Preferred Stock
          pursuant to Section 5(a)(i) and (B) upon exercise of those certain
          warrants issued pursuant to that certain Securities Purchase Agreement
          would exceed 19.999% of the Corporation's outstanding Common Stock
          immediately prior to the Closing Date (the "Maximum Aggregate Share
          Amount"), unless the Corporation first obtains shareholder approval
          permitting such issuances in accordance with the Principal Market
          rules ("Shareholder Approval"). On any given date, each Holder shall
          be entitled to a portion of the Maximum Aggregate Share Amount equal
          to the product of (y) the fraction determined by dividing the number
          of shares of Preferred Stock then held by such Holder as of such date
          by the aggregate number of shares held by all Holders as of such date
          and (z) the difference between the Maximum Aggregate Share Amount and
          the number of shares of Common Stock issued, in the aggregate among
          all Holders, pursuant to any conversions of Preferred Stock or
          exercises of Warrants prior to such date. If at any time the number of
          shares of Common Stock which could, notwithstanding the limitation set
          forth herein, be issuable and sold to all Holders during the following
          12 months (assuming all dividends are paid in shares of Common Stock
          during such period of determination based upon the VWAP at the time of
          any such determination) equals or exceeds the Maximum Aggregate Share
          Amount, then the Corporation shall, subject to any requirements in the
          Purchase Agreement to act sooner, obtain the Shareholder Approval
          applicable to such issuance as soon as is possible, but in any event
          not later than the 75/th/ day after the date in which the Corporation
          determines (or is notified by any Holder) that the Maximum Aggregate
          Share Amount could be exceeded and shall continue to seek to obtain
          Shareholder Approval every 75 days until such Shareholder Approval is
          obtained. If the Corporation shall have failed to obtain the
          Shareholder Approval on or prior to the initial 75/th/ day after the
          date in which the Corporation determines (or is notified by a Holder)
          that the Maximum Aggregate Share Amount would be exceeded, then the
          dividend on the Preferred Stock shall thereafter be 15% per annum
          until such Shareholder Approval is obtained.

               (iv) Notwithstanding anything herein to the contrary, if after
          the Effective Date the VWAP for each of any 10 consecutive Trading
          Days ("Threshold Period"), which 10 consecutive Trading Day period
          shall have commenced only after the Effective Date, exceeds 250% of
          the then effective Set Price (defined below), the Company may, within
          3 Trading Days after any such Threshold Period, deliver a notice to
          all Holders (a "Forced Conversion Notice" and the date such notice is
          received by the Holders, the "Forced Conversion Notice Date") to cause
          the Holders to immediately convert all or part of the then outstanding
          shares of Preferred Stock pursuant to Section 5 and the Holders shall
          surrender (if all Preferred

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          Stock is converted) their respective shares of Preferred Stock to the
          Company for conversion within 5 Trading Days of the Forced Conversion
          Notice Date. The Company may only effect a Forced Conversion Notice if
          all of the Equity Conditions have been met during the Threshold Period
          through the Forced Conversion Notice Date. Any Forced Conversion
          Notices shall be applied ratably to all of the Holders in proportion
          to each Holders initial purchases of Preferred Stock hereunder.

          (b)  (i) Not later than three Trading Days after each Conversion
          Date (the "Share Delivery Date"), the Corporation shall deliver to the
          Holder (A) a certificate or certificates which, after the Effective
          Date, shall be free of restrictive legends and trading restrictions
          (other than those required by Section 4.1 of the Purchase Agreement)
          representing the number of shares of Common Stock being acquired upon
          the conversion of shares of Preferred Stock, and (B) a bank check in
          the amount of accrued and unpaid dividends (if the Corporation has
          elected or is required to pay accrued dividends in cash). After the
          Effective Date, the Corporation shall, upon request of the Holder,
          deliver any certificate or certificates required to be delivered by
          the Corporation under this Section electronically through the
          Depository Trust Corporation or another established clearing
          corporation performing similar functions. If in the case of any
          Conversion Notice such certificate or certificates are not delivered
          to or as directed by the applicable Holder by the third Trading Day
          after the Conversion Date, the Holder shall be entitled to elect by
          written notice to the Corporation at any time on or before its receipt
          of such certificate or certificates thereafter, to rescind such
          conversion, in which event the Corporation shall immediately return
          the certificates representing the shares of Preferred Stock tendered
          for conversion.

               (ii) The Corporation's obligations to issue and deliver the
          Conversion Shares upon conversion and redemption of Preferred Stock in
          accordance with the terms hereof are absolute and unconditional,
          irrespective of any action or inaction by the Holder to enforce the
          same, any waiver or consent with respect to any provision hereof, the
          recovery of any judgment against any Person or any action to enforce
          the same, or any setoff, counterclaim, recoupment, limitation or
          termination, or any breach or alleged breach by the Holder or any
          other Person of any obligation to the Corporation or any violation or
          alleged violation of law by the Holder or any other person, and
          irrespective of any other circumstance which might otherwise limit
          such obligation of the Corporation to the Holder in connection with
          the issuance of such Conversion Shares. If the Corporation fails to
          deliver to the Holder such certificate or certificates pursuant to
          Section 5(b)(i) by the Share Delivery Date applicable to such
          conversion, the Corporation shall pay to such Holder, in cash, as
          liquidated damages and not as a penalty, for each $5,000 of Stated
          Value of Preferred Stock being converted, $50 per Trading Day
          (increasing to $100 per Trading Day after 3

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          Trading Days and increasing to $200 per Trading Day 6 Trading Days
          after such damages begin to accrue) for each Trading Day after the
          Share Delivery Date until such certificates are delivered. Nothing
          herein shall limit a Holder's right to pursue actual damages for the
          Corporation's failure to deliver certificates representing shares of
          Common Stock upon conversion within the period specified herein and
          such Holder shall have the right to pursue all remedies available to
          it hereunder, at law or in equity including, without limitation, a
          decree of specific performance and/or injunctive relief.

               (iii) If the Corporation fails to deliver to the Holder such
          certificate or certificates pursuant to Section 5(b)(i) by a Share
          Delivery Date, and if after such Share Delivery Date the Holder
          purchases (in an open market transaction or otherwise) Common Stock to
          deliver in satisfaction of a sale by such Holder of the Conversion
          Shares which the Holder was entitled to receive upon the conversion
          relating to such Share Delivery Date (a "Buy-In"), then the
          Corporation shall pay in cash to the Holder the amount by which (x)
          the Holder's total purchase price (including brokerage commissions, if
          any) for the Common Stock so purchased exceeds (y) the product of (1)
          the aggregate number of shares of Common Stock that such Holder was
          entitled to receive from the conversion at issue multiplied by (2) the
          price at which the sell order giving rise to such purchase obligation
          was executed. For example, if the Holder purchases Common Stock having
          a total purchase price of $11,000 to cover a Buy-In with respect to an
          attempted conversion of shares of Preferred Stock with respect to
          which the aggregate sale price giving rise to such purchase obligation
          is $10,000, under clause (A) of the immediately preceding sentence the
          Corporation shall be required to pay the Holder $1,000. The Holder
          shall provide the Corporation written notice indicating the amounts
          payable to the Holder in respect of the Buy-In, together with
          applicable confirmations and other evidence reasonably requested by
          the Corporation. Nothing herein shall limit a Holder's right to pursue
          any other remedies available to it hereunder, at law or in equity
          including, without limitation, a decree of specific performance and/or
          injunctive relief with respect to the Corporation's failure to timely
          deliver certificates representing shares of Common Stock upon
          conversion of the shares of Preferred Stock as required pursuant to
          the terms hereof.

          (c)  (i) The conversion price for each share of Preferred Stock
          shall equal $6.00 (the "Set Price"), subject to adjustment below.

               (ii) if the Corporation, at any time while the Preferred Stock
          is outstanding: (A) shall pay a stock dividend or otherwise make a
          distribution or distributions on shares of its Common Stock or any
          other equity or equity equivalent securities payable in shares of
          Common Stock, other than interest and dividends issued in lieu of cash
          payments to Laurus Master Fund, Ltd. pursuant to the 6% Secured
          Convertible Term Note due January 29, 2007

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          and the Series A Preferred Stock, provided the terms of such issuance
          of interest or dividends, as the case may be, is not amended after the
          Original Issue Date to an effective conversion price less than the
          then Set Price, (B) subdivide outstanding shares of Common Stock into
          a larger number of shares, (C) combine (including by way of reverse
          stock split) outstanding shares of Common Stock into a smaller number
          of shares, or (D) issue by reclassification of shares of the Common
          Stock any shares of capital stock of the Corporation, then the Set
          Price shall be multiplied by a fraction of which the numerator shall
          be the number of shares of Common Stock Outstanding before such event
          and of which the denominator shall be the number of shares of Common
          Stock Outstanding after such event. Any adjustment made pursuant to
          this Section shall become effective immediately after the record date
          for the determination of stockholders entitled to receive such
          dividend or distribution and shall become effective immediately after
          the effective date in the case of a subdivision, combination or
          reclassification.

               (iii) if the Corporation, at any time while the Preferred Stock
          is outstanding, shall issue rights, options or warrants to all holders
          of Common Stock (and not to Holders) entitling them to subscribe for
          or purchase shares of Common Stock at a price per share less than the
          VWAP at the record date mentioned below, then the Set Price shall be
          multiplied by a fraction, of which the denominator shall be the number
          of shares of the Common Stock Outstanding on the date of issuance of
          such rights or warrants plus the number of additional shares of Common
          Stock offered for subscription or purchase, and of which the numerator
          shall be the number of shares of the Common Stock Outstanding on the
          date of issuance of such rights or warrants plus the number of shares
          which the aggregate offering price of the total number of shares so
          offered (assuming receipt by the Corporation in full of all
          consideration payable upon exercise of such rights, options or
          warrants) would purchase at such VWAP. Such adjustment shall be made
          whenever such rights or warrants are issued, and shall become
          effective immediately after the record date for the determination of
          stockholders entitled to receive such rights, options or warrants.

               (iv) if the Corporation or any subsidiary thereof at any time
          while any of the Preferred Stock is outstanding, shall offer, sell,
          grant any option or warrant to purchase or offer, sell or grant any
          right to reprice its securities, or otherwise dispose of or issue any
          Common Stock or any equity or equity equivalent securities (including
          any equity, debt or other instrument that is at any time over the life
          thereof convertible into or exchangeable for Common Stock)
          (collectively, "Common Stock Equivalents") entitling any Person to
          acquire shares of Common Stock, at an effective price per share less
          than the Set Price (a "Dilutive Issuance"), as adjusted hereunder (if
          the holder of the Common Stock or Common Stock Equivalent so issued
          shall at any time, whether by operation of purchase

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          price adjustments, reset provisions, floating conversion, exercise or
          exchange prices or otherwise, or due to warrants, options or rights
          per share which are issued in connection with such issuance, be
          entitled to receive shares of Common Stock at a price per share which
          is less than the Set Price, such issuance shall be deemed to have
          occurred for less than the Set Price), then the Set Price shall be
          reduced to equal the effective conversion, exchange or purchase price
          for such Common Stock or Common Stock Equivalents (including any reset
          provisions thereof) at issue. Such adjustment shall be made whenever
          such Common Stock or Common Stock Equivalents are issued. The
          Corporation shall notify the Holder in writing, no later than the
          third business day following the issuance of any Common Stock or
          Common Stock Equivalent subject to this section, indicating therein
          the applicable issuance price, or of applicable reset price, exchange
          price, conversion price and other pricing terms.

               (v) if the Corporation, at any time while the Preferred Stock
          is outstanding, shall distribute to all holders of Common Stock (and
          not to Holders) evidences of its indebtedness or assets or rights or
          warrants to subscribe for or purchase any security other than the
          Common Stock (which shall be subject to Section 5(c)(iii), then in
          each such case the Set Price shall be adjusted by multiplying the Set
          Price in effect immediately prior to the record date fixed for
          determination of stockholders entitled to receive such distribution by
          a fraction of which the denominator shall be the VWAP determined as of
          the record date mentioned above, and of which the numerator shall be
          such VWAP on such record date less the then per share fair market
          value at such record date of the portion of such assets or evidence of
          indebtedness so distributed applicable to one outstanding share of the
          Common Stock as determined by the Board of Directors in good faith. In
          either case the adjustments shall be described in a statement provided
          to the Holders of the portion of assets or evidences of indebtedness
          so distributed or such subscription rights applicable to one share of
          Common Stock. Such adjustment shall be made whenever any such
          distribution is made and shall become effective immediately after the
          record date mentioned above.

               (vi) All calculations under this Section 5(c) shall be made to
          the nearest cent or the nearest 1/100th of a share, as the case may
          be. The number of shares of Common Stock outstanding at any given time
          shall not include shares owned or held by or for the account of the
          Corporation, and the disposition of any such shares shall be
          considered an issue or sale of Common Stock. For purposes of this
          Section 5(c), the number of shares of Common Stock deemed to be
          outstanding (the "Common Stock Outstanding") as of a given date shall
          be the sum of the number of shares of Common Stock (excluding treasury
          shares, if any) issued and outstanding.

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               (vii) Notwithstanding anything to the contrary herein, no
          adjustment shall be made hereunder in connection with the following
          (a) the granting or issuance of shares of Common Stock or options to
          employees, officers and directors of the Corporation pursuant to any
          stock option plan or employee incentive plan or agreement duly adopted
          or approved by a majority of the non-employee members of the Board of
          Directors of the Corporation or a majority of the members of a
          committee of non-employee directors established for such purpose, (b)
          the conversion or exercise of any Preferred Stock or any other
          security issued by the Corporation in connection with the offer and
          sale of this Corporation's securities pursuant to the Purchase
          Agreement, or (c) the exercise of or conversion of any convertible
          securities, options or warrants issued and outstanding on the date
          hereof, provided that such securities have not been amended since the
          date hereof.

               (viii) Whenever the Set Price is adjusted pursuant to this
          Section the Corporation shall promptly mail to each Holder, a notice
          setting forth the Set Price after such adjustment and setting forth a
          brief statement of the facts requiring such adjustment.

     Section 6. Redemption.

          (a) Optional Redemption. Subject to the provisions of this Section 5,
     the Corporation may, at any time after the third anniversary of the date of
     the Purchase Agreement, deliver a notice to the Holders (an "Optional
     Redemption Notice" and the date such notice is deemed delivered hereunder,
     the "Optional Redemption Notice Date") of its irrevocable election to
     redeem, all or in part, the then outstanding Preferred Stock, for an
     amount, in cash, equal to the Optional Redemption Amount on the 5/th/
     Trading Day following the Optional Redemption Notice Date (such date, the
     "Optional Redemption Date" and such redemption, the "Optional Redemption").
     The Optional Redemption Amount is due in full on the Optional Redemption
     Date. The Corporation may only effect an Optional Redemption if from the
     Optional Redemption Notice Date through to the Optional Redemption Date,
     all of the Equity Conditions are fulfilled. The Holders may elect to
     convert their shares of Preferred Stock pursuant to Section 5 prior to the
     Optional Redemption Date by fax delivery of a Notice of Conversion to the
     Corporation.

          (b) Redemption Procedure. The payment of cash pursuant to an Optional
     Redemption shall be made on the Optional Redemption Date. If any portion of
     the cash payment for an Optional Redemption shall not be paid by the
     Corporation by the respective due date, interest shall accrue thereon at
     the rate of 18% per annum (or the maximum rate permitted by applicable law,
     whichever is less) until the payment of the Optional Redemption Amount,
     plus all amounts owing thereon is paid in full. In addition, if any portion
     of the Optional Redemption Amount remains unpaid after such date, the
     Holders subject to such redemption may elect, by written notice to the
     Corporation given at any time

                                       11

<PAGE>

     thereafter, to invalidate ab initio such redemption, notwithstanding
     anything herein contained to the contrary. Notwithstanding anything to the
     contrary in this Section 6, the Corporation's determination to redeem in
     cash shall be applied ratably among the Holders based upon the value of the
     Preferred Stock initially purchased by each Holder, adjusted upward ratably
     in the event all of the shares of Preferred Stock of any Holder are no
     longer outstanding.

     Section 7. Redemption Upon Triggering Events.

          (a) Upon the occurrence of a Triggering Event, each Holder shall (in
     addition to all other rights it may have hereunder or under applicable law)
     have the right, exercisable at the sole option of such Holder, to require
     the Corporation to, (i) with respect to the Triggering Events set forth in
     Sections 7(b)(iii), (v), (vii), (ix), (x)(as to voluntary filings only) and
     (xii)), redeem all of the Preferred Stock then held by such Holder for a
     redemption price, in cash, equal to the Triggering Redemption Amount; or,
     (ii) at the option of the Holder and with respect to the Triggering Events
     set forth in Sections 7(b)(i), (ii), (iv), (vi), (viii), (x)(as to
     involuntary filings only) and (xi), either (A) redeem all of the Preferred
     Stock then held by such Holder for a redemption price, in shares of Common
     Stock, equal to a number of shares of Common Stock equal to the Triggering
     Redemption Amount divided by 75% of the average of the 10 VWAPs immediately
     prior to the date of election hereunder or (B) increase the dividend on all
     of the outstanding Preferred Stock held by such Holder to equal 18% per
     annum thereafter. The Triggering Redemption Amount, in cash or in shares,
     if the Corporation elects clauses (i) or (ii)(B) above, shall be due and
     payable or issuable, as the case may be, within 5 Trading Days of the date
     on which the notice for the payment therefor is provided by a Holder (the
     "Triggering Redemption Payment Date"). If the Corporation fails to pay the
     Triggering Redemption Amount hereunder in full pursuant to this Section on
     the date such amount is due in accordance with this Section (whether in
     cash or shares of Common Stock), the Corporation will pay interest thereon
     at a rate of 18% per annum (or such lesser amount permitted by applicable
     law), accruing daily from such date until the Triggering Redemption Amount,
     plus all such interest thereon, is paid in full. For purposes of this
     Section, a share of Preferred Stock is outstanding until such date as the
     Holder shall have received Conversion Shares upon a conversion (or
     attempted conversion) thereof that meets the requirements hereof or has
     been paid the Triggering Redemption Amount plus all accrued but unpaid
     dividends and all accrued but unpaid liquidated damages in cash.

          (b) "Triggering Event" means any one or more of the following events
     (whatever the reason and whether it shall be voluntary or involuntary or
     effected by operation of law or pursuant to any judgment, decree or order
     of any court, or any order, rule or regulation of any administrative or
     governmental body):

               (i) the failure of a Conversion Shares Registration Statement
          to be declared effective by the Commission on or prior to the 180/th/
          day after the Original Issue Date;

                                       12

<PAGE>

               (ii) if, during the Effectiveness Period, the effectiveness of
          the Conversion Shares Registration Statement lapses for any reason for
          more than an aggregate of 25 calendar days (which need not be
          consecutive days) during any 12 month period, or the Holder shall not
          be permitted to resell Registrable Securities under the Conversion
          Shares Registration Statement for more than an aggregate of 25
          calendar days (which need not be consecutive days) during any 12 month
          period;

               (iii) the Corporation shall fail to deliver certificates
          representing Conversion Shares issuable upon a conversion hereunder
          that comply with the provisions hereof prior to the 5/th/ Trading Day
          after such shares are required to be delivered hereunder, or the
          Corporation shall provide written notice to any Holder, including by
          way of public announcement, at any time, of its intention not to
          comply with requests for conversion of any shares of Preferred Stock
          in accordance with the terms hereof;

               (iv) one of the Events (as defined in the Registration Rights
          Agreement) described in subsections (i), (ii) or (iii) of Section 2(c)
          of the Registration Rights Agreement shall not have been cured to the
          satisfaction of the Holders prior to the expiration of 30 days from
          the Event Date (as defined in the Registration Rights Agreement)
          relating thereto (other than an Event resulting from a failure of a
          Conversion Shares Registration Statement to be declared effective by
          the Commission on or prior to the 180th day after the Original Issue
          Date, which shall be covered by Section 7(b)(i));

               (v) the Corporation shall fail for any reason to pay in full
          the amount of cash due pursuant to a Buy-In within 5 days after notice
          therefor is delivered hereunder or shall fail to pay all amounts owed
          on account of an Event within five days of the date due;

               (vi) the Corporation shall fail to have available a sufficient
          number of authorized and unreserved shares of Common Stock to issue to
          such Holder upon a conversion hereunder;

               (vii) the Corporation shall fail to observe or perform any other
          covenant, agreement or warranty contained in, or otherwise commit any
          breach of the Transaction Documents, and such failure or breach shall
          not, if subject to the possibility of a cure by the Corporation, have
          been remedied within 30 calendar days after the date on which written
          notice of such failure or breach shall have been given;

               (viii) any breach of the agreements delivered to the initial
          Holders at the Closing pursuant to Section 2.2(a)(vi) of the Purchase
          Agreement;

                                       13

<PAGE>

               (ix) the Corporation shall redeem more than a de minimis number
          of Junior Securities;

               (x) there shall have occurred a Bankruptcy Event;

               (xi) the Common Stock shall fail to be listed or quoted for
          trading on a Principal Market for more than 5 Trading Days, which need
          not be consecutive Trading Days; or

               (xii) the failure of the Corporation to submit an application to
          list the Common Stock on an alternative Principal Market within 7
          Trading Days of the occurrence of a Triggering Event pursuant to
          clause (xi) of this Section 7(b) or the failure of the Corporation to
          use its best efforts to obtain such listing after the application is
          filed with an alternative Principal Market.

     Section 8. Definitions. For the purposes hereof, the following terms shall
have the following meanings:

          "Bankruptcy Event" means any of the following events: (a) the
     Corporation or any Significant Subsidiary (as such term is defined in Rule
     1.02(s) of Regulation S-X) thereof commences a case or other proceeding
     under any bankruptcy, reorganization, arrangement, adjustment of debt,
     relief of debtors, dissolution, insolvency or liquidation or similar law of
     any jurisdiction relating to the Corporation or any Significant Subsidiary
     thereof; (b) there is commenced against the Corporation or any Significant
     Subsidiary thereof any such case or proceeding that is not dismissed within
     60 days after commencement; (c) the Corporation or any Significant
     Subsidiary thereof is adjudicated insolvent or bankrupt or any order of
     relief or other order approving any such case or proceeding is entered; (d)
     the Corporation or any Significant Subsidiary thereof suffers any
     appointment of any custodian or the like for it or any substantial part of
     its property that is not discharged or stayed within 60 days; (e) the
     Corporation or any Significant Subsidiary thereof makes a general
     assignment for the benefit of creditors; (f) the Corporation or any
     Significant Subsidiary thereof calls a meeting of its creditors with a view
     to arranging a composition, adjustment or restructuring of its debts; or
     (g) the Corporation or any Significant Subsidiary thereof, by any act or
     failure to act, expressly indicates its consent to, approval of or
     acquiescence in any of the foregoing or takes any corporate or other action
     for the purpose of effecting any of the foregoing.

          "Change of Control Transaction" means the occurrence after the date
     hereof of any of (a) an acquisition after the date hereof by an individual
     or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated
     under the Exchange Act) of effective control (whether through legal or
     beneficial ownership of capital stock of the Corporation, by contract or
     otherwise) of in excess of 33% of the voting securities of the Corporation,
     or (b) a replacement at one time or within a one year period of more than
     one-half of the members of the Corporation's board of directors

                                       14

<PAGE>

     which is not approved by a majority of those individuals who are members of
     the board of directors on the date hereof (or by those individuals who are
     serving as members of the board of directors on any date whose nomination
     to the board of directors was approved by a majority of the members of the
     board of directors who are members on the date hereof), or (c) the
     execution by the Corporation of an agreement to which the Corporation is a
     party or by which it is bound, providing for any of the events set forth
     above in (a) or (b).

          "Closing" means closing of the purchase and sale of the Preferred
     Stock.

          "Commission" means the Securities and Exchange Commission.

          "Common Stock" means the Corporation's common stock, par value $0.01
     per share, and stock of any other class into which such shares may
     hereafter have been reclassified or changed.

          "Common Stock Outstanding" shall have the meaning set forth in Section
     5(c)(vi).

          "Conversion Amount" means the sum of the Stated Value at issue.

          "Conversion Date" shall have the meaning set forth in Section 5(b)(i).

          "Conversion Shares" means, collectively, the shares of Common Stock
     into which the shares of Preferred Stock are convertible in accordance with
     the terms hereof.

          "Conversion Shares Registration Statement" means a registration
     statement that meets the requirements of the Registration Rights Agreement
     and registers the resale of all Conversion Shares by the Holder, who shall
     be named as a "selling stockholder" thereunder, all as provided in the
     Registration Rights Agreement.

          "Dividend Payment Date" shall have the meaning set forth in Section
     2(a).

          "Effective Date" means the date that the Conversion Shares
     Registration Statement is declared effective by the Commission.

          "Equity Conditions" Unless waived by a Holder as to a particular event
     (which waiver shall apply only to such Holder), as of such event date, the
     following conditions have been met: (i) the Corporation shall have duly
     honored all conversions and redemptions scheduled to occur or occurring
     prior to such date, (ii) there is an effective Conversion Shares
     Registration Statement pursuant to which the Holders are permitted to
     utilize the prospectus thereunder to resell all of the Conversion Shares
     issued to the Holders and all of the Conversion Shares as are issuable to
     the Holders upon conversion in full of the Preferred Stock (and the
     Corporation believes, in good faith, that such effectiveness will continue
     uninterrupted for the foreseeable future), (iii) the Common Stock is listed
     for

                                       15

<PAGE>

     trading on the Principal Market (and the Corporation believes, in good
     faith, that trading of the Common Stock on the Principal Market will
     continue uninterrupted for the foreseeable future), (iv) all liquidated
     damages and other amounts owing in respect of the Preferred Stock shall
     have been paid or will, concurrently with the issuance of the Conversion
     Shares, be paid in cash; (v) there is a sufficient number of authorized but
     unissued and otherwise unreserved shares of Common Stock for the issuance
     of all the Conversion Shares as are issuable to the Holder upon conversion
     in full of the Preferred Stock; (vi) no Triggering Event has occurred and
     is continuing; (vii) all of the Conversion Shares issuable to the Holder
     upon conversion in full of the Preferred Stock will not violate the
     limitations set forth in Sections 5(a)(ii) and (iii); and (viii) no public
     announcement of a pending or proposed Fundamental Transaction or Change of
     Control Transaction has occurred that has not been consummated.

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

          "Fundamental Transaction" means the occurrence after the date hereof
     of any of (a) the Corporation effects any merger or consolidation of the
     Corporation with or into another Person, (b) the Corporation effects any
     sale of all or substantially all of its assets in one or a series of
     related transactions, (c) any tender offer or exchange offer (whether by
     the Corporation or another Person) is completed pursuant to which holders
     of Common Stock are permitted to tender or exchange their shares for other
     securities, cash or property, or (d) the Corporation effects any
     reclassification of the Common Stock or any compulsory share exchange
     pursuant to which the Common Stock is effectively converted into or
     exchanged for other securities, cash or property.

          "Holder" shall have the meaning given such term in Section 1 hereof.

          "Junior Securities" means the Common Stock and all other equity or
     equity equivalent securities of the Corporation other than those securities
     that are (a) outstanding on the Original Issue Date and (b) which are
     explicitly senior in rights or liquidation preference to the Preferred
     Stock.

          "Optional Redemption Amount" shall mean the sum of (i) (a) for any
     Optional Redemption Date between the third and fourth anniversary of the
     Original Issue Date, 120% of the Stated Value of the Preferred Stock then
     outstanding, (b) for any Optional Redemption Date between the fourth and
     fifth anniversary of the Original Issue Date, 110% of the Stated Value of
     the Preferred Stock then outstanding and (c) for any Optional Redemption
     Date after the fifth anniversary of the Original Issue Date, 105% of the
     Stated Value of the Preferred Stock then outstanding, (ii) accrued but
     unpaid dividends and (iii) all liquidated damages and other amounts due in
     respect of the Preferred Stock.

          "Optional Redemption Date" shall have the meaning set forth in Section
     6(a).

                                       16

<PAGE>

          "Original Issue Date" shall mean the date of the first issuance of any
     shares of the Preferred Stock regardless of the number of transfers of any
     particular shares of Preferred Stock and regardless of the number of
     certificates which may be issued to evidence such Preferred Stock.

          "Person" means a corporation, an association, a partnership, an
     organization, a business, an individual, a government or political
     subdivision thereof or a governmental agency.

          "Principal Market" initially means the NASDAQ Small-Cap Market and
     shall also include the American Stock Exchange, the New York Stock
     Exchange, or the NASDAQ National Market, whichever is at the time the
     principal trading exchange or market for the Common Stock, based upon share
     volume.

          "Purchase Agreement" means the Securities Purchase Agreement, dated as
     of the Original Issue Date, to which the Corporation and the original
     Holders are parties, as amended, modified or supplemented from time to time
     in accordance with its terms.

          "Registration Rights Agreement" means the Registration Rights
     Agreement, dated as of the Original Issue Date, to which the Corporation
     and the original Holders are parties, as amended, modified or supplemented
     from time to time in accordance with its terms.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Set Price" shall have the meaning set forth in Section 5(c)(i).

          "Trading Day" shall mean any day during which the Principal Market
     shall be open for business.

          "Transaction Documents" shall mean the Purchase Agreement and all
     agreements entered into in connection therewith, including the Registration
     Rights Agreement and the Warrants.

          "Triggering Event" shall have the meaning set forth in Section 7(b).

          "Triggering Redemption Amount" for each share of Preferred Stock means
     the sum of (i) the greater of (A) 120% of the Stated Value and (B) the
     product of (a) the VWAP on the Trading Day immediately preceding the date
     of the Triggering Event and (b) the Stated Value divided by the then Set
     Price, (ii) all accrued but unpaid dividends thereon and (iii) all
     liquidated damages and other amounts due in respect of the Preferred Stock

          "VWAP" means, for any date, the price determined by the first of the
     following clauses that applies: (a) if the Common Stock is then listed or
     quoted on a

                                       17

<PAGE>

     Principal Market, the daily volume weighted average price of the Common
     Stock for such date (or the nearest preceding date) on the Principal Market
     on which the Common Stock is then listed or quoted as reported by Bloomberg
     Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:02
     p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted on
     a Principal Market and if prices for the Common Stock are then quoted on
     the OTC Bulletin Board, the volume weighted average price of the Common
     Stock for such date (or the nearest preceding date) on the OTC Bulletin
     Board; (c) if the Common Stock is not then listed or quoted on the OTC
     Bulletin Board and if prices for the Common Stock are then reported in the
     "Pink Sheets" published by the National Quotation Bureau Incorporated (or a
     similar organization or agency succeeding to its functions of reporting
     prices), the most recent bid price per share of the Common Stock so
     reported; or (d) in all other cases, the fair market value of a share of
     Common Stock as determined by an independent appraiser selected in good
     faith by the Purchasers and reasonably acceptable to the Corporation.

     Section 9. Fundamental Transactions and Change of Control Transactions. If
a Fundamental Transaction occurs, then upon any subsequent conversion of shares
of Preferred Stock, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion absent such
Fundamental Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of one share of Common Stock (the "Alternate
Consideration"). For purposes of any such conversion, the determination of the
Set Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the
Corporation shall apportion the Set Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any conversion of shares of Preferred Stock following such
Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Corporation or surviving entity in such
Fundamental Transaction shall issue to the Holder new preferred stock consistent
with the foregoing provisions and evidencing the Holder's right to convert such
preferred stock into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this Section 9 and insuring that the Preferred Stock (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction or Change of Control Transaction. In the event of a
Fundamental Transaction or a Change of Control Transaction, then at the request
of the Holder delivered before the 90th day after such Fundamental Transaction,
the Corporation (or any such successor or surviving entity) will purchase the
Preferred Stock from the Holder for a purchase price, payable in cash within
five Trading Days after such request (or, if later, on

                                       18

<PAGE>

the effective date of the Fundamental Transaction), equal to the Triggering
Redemption Amount on such date.

Section 10.  Miscellaneous.

          (a) If (i) the Corporation shall declare a dividend (or any other
     distribution) on the Common Stock, (ii) the Corporation shall declare a
     special nonrecurring cash dividend on or a redemption of the Common Stock,
     (iii) the Corporation shall authorize the granting to all holders of Common
     Stock rights or warrants to subscribe for or purchase any shares of capital
     stock of any class or of any rights, (iv) the approval of any stockholders
     of the Corporation shall be required in connection with any Fundamental
     Transaction or Change of Control Transaction, or (v) the Corporation shall
     authorize the voluntary or involuntary dissolution, liquidation or winding
     up of the affairs of the Corporation; then the Corporation shall file a
     press release or Current Report on Form 8-K to disclose such occurrence and
     notify the Holders at their last addresses as they shall appear upon the
     stock books of the Corporation, at least 20 calendar days prior to the
     applicable record or effective date hereinafter specified, a notice stating
     (x) the date on which a record is to be taken for the purpose of such
     dividend, distribution, redemption, rights or warrants, or if a record is
     not to be taken, the date as of which the holders of Common Stock of record
     to be entitled to such dividend, distributions, redemption, rights or
     warrants are to be determined or (y) the date on which any such Fundamental
     Transaction or Change of Control Transaction is expected to become
     effective or close, and the date as of which it is expected that holders of
     Common Stock of record shall be entitled to exchange their Common Stock for
     securities, cash or other property deliverable upon any such Fundamental
     Transaction or Change of Control Transaction. Holders are entitled to
     convert the Conversion Amount of Preferred Stock during the 20-day period
     commencing the date of such notice to the effective date of the event
     triggering such notice.

          (b) The Corporation covenants that it will at all times reserve and
     keep available out of its authorized and unissued shares of Common Stock
     solely for the purpose of issuance upon conversion of Preferred Stock, each
     as herein provided, free from preemptive rights or any other actual
     contingent purchase rights of persons other than the Holders, not less than
     such number of shares of Common Stock as shall be issuable upon the
     conversion of all outstanding shares of Preferred Stock. The Corporation
     covenants that all shares of Common Stock that shall be so issuable shall,
     upon issue, be duly and validly authorized, issued and fully paid and
     nonassessable.

          (c) Upon a conversion hereunder the Corporation shall not be required
     to issue stock certificates representing fractions of shares of Common
     Stock, but may if otherwise permitted, make a cash payment in respect of
     any final fraction of a share based on the VWAP at such time. If any
     fraction of a Conversion Share would, except for the provisions of this
     Section, be issuable upon a conversion

                                       19

<PAGE>

     hereunder, the Corporation shall pay an amount in cash equal to the VWAP
     immediately prior to the applicable conversion multiplied by such fraction.

          (d) The issuance of certificates for Common Stock on conversion of
     Preferred Stock shall be made without charge to the Holders thereof for any
     documentary stamp or similar taxes that may be payable in respect of the
     issue or delivery of such certificate, provided that the Corporation shall
     not be required to pay any tax that may be payable in respect of any
     transfer involved in the issuance and delivery of any such certificate upon
     conversion in a name other than that of the Holder of such shares of
     Preferred Stock so converted.

          (e) To effect conversions or redemptions, as the case may be, of
     shares of Preferred Stock, a Holder shall not be required to surrender the
     certificate(s) representing such shares of Preferred Stock to the
     Corporation unless all of the shares of Preferred Stock represented thereby
     are so converted, in which case the Holder shall deliver the certificate
     representing such share of Preferred Stock promptly following the
     Conversion Date at issue. Shares of Preferred Stock converted into Common
     Stock or redeemed in accordance with the terms hereof shall be canceled and
     may not be reissued.

          (f). Any and all notices or other communications or deliveries to be
     provided by the Holders of the Preferred Stock hereunder, including,
     without limitation, any Conversion Notice, shall be in writing and
     delivered personally, by facsimile or sent by a nationally recognized
     overnight courier service, addressed to the attention of the Chief
     Financial Officer of the Corporation addressed to Carol Dore-Falcone Fax
     Number: (727) 544-5726 or to such other address or facsimile number as
     shall be specified in writing by the Corporation for such purpose. Any and
     all notices or other communications or deliveries to be provided by the
     Corporation hereunder shall be in writing and delivered personally, by
     facsimile or sent by a nationally recognized overnight courier service,
     addressed to each Holder at the facsimile telephone number or address of
     such Holder appearing on the books of the Corporation, which address shall
     initially be the address of such Holder set forth on the signature pages of
     the Purchase Agreement, or such other address as the Corporation or a
     Holder may designate by ten days advance written notice to the other
     parties hereto. Any notice or other communication or deliveries hereunder
     shall be deemed given and effective on the earliest of (i) the date of
     transmission, if such notice or communication is delivered via facsimile at
     the facsimile telephone number specified in this Section prior to 6:30 p.m.
     (New York City time) (with confirmation of transmission), (ii) the date
     after the date of transmission, if such notice or communication is
     delivered via facsimile at the facsimile telephone number specified in this
     Section later than 6:30 p.m. (New York City time) on any date and earlier
     than 11:59 p.m. (New York City time) on such date (with confirmation of
     transmission), (iii) five days after having been sent by registered or
     certified mail, return receipt requested, postage prepaid, (iv) one day
     after deposit with a nationally recognized overnight courier service,
     specifying next day delivery,

                                       20

<PAGE>

     with written verification of service, or (v) upon actual receipt by the
     party to whom such notice is required to be given.

          (g) For purposes hereof, a share of Preferred Stock is outstanding
     until such date as the Holder shall have received the Conversion Shares or
     redemption amount (as the case may be) issuable or payable to it in
     accordance with this Certificate of Designations.

                                       21

<PAGE>

     RESOLVED, FURTHER, that the Chairman, the president or any vice-president,
and the secretary or any assistant secretary, of the Corporation be and they
hereby are authorized and directed to prepare and file a Certificate of
Designation of Preferences, Rights and Limitations in accordance with the
foregoing resolution and the provisions of Florida law.

     IN WITNESS WHEREOF, the undersigned have executed this Certificate this ___
day of March 2004.

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

                                       22

<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to convert shares of Preferred
Stock)

The undersigned hereby elects to convert the number of shares of Convertible
Preferred Stock indicated below, into shares of common stock, par value $0.01
per share (the "Common Stock"), of Innovative Companies, Inc., a Florida
corporation (the "Corporation"), according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Corporation in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:

     Date to Effect Conversion

     ---------------------------------
     Number of shares of Preferred Stock owned prior to Conversion

     ---------------------------------
     Number of shares of Preferred Stock to be Converted

     ---------------------------------
     Stated Value of shares of Preferred Stock to be Converted

     ---------------------------------
     Number of shares of Common Stock to be Issued

     ---------------------------------
     Applicable Set Price

     ---------------------------------
     Number of shares of Preferred Stock subsequent to Conversion

     ---------------------------------

                                        [HOLDER]

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

                                       23<PAGE>

                                                                     Exhibit 4.4

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                           Innovative Companies, Inc.

          THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES that, for
value received, _____________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date of issuance of this Warrant (the "Initial
Exercise Date") and on or prior to the sixth anniversary of the Initial Exercise
Date (the "Termination Date") but not thereafter, to subscribe for and purchase
from Innovative Companies, Inc., a Florida corporation (the "Company"), up to
____________ shares (the "Warrant Shares") of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be $______, subject
to adjustment hereunder. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in that certain Securities Purchase Agreement
(the "Purchase Agreement"), dated March 5, 2004, among the Company and the
purchasers signatory thereto.

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          1.   Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.

          2.   Authorization of Shares. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).

          3.   Exercise of Warrant.

               (a)   Exercise of the purchase rights represented by this Warrant
     may be made at any time or times on or after the Initial Exercise Date and
     on or before the Termination Date by delivery to the Company of a duly
     executed facsimile copy of the Notice of Exercise Form annexed hereto (or
     such other office or agency of the Company as it may designate by notice in
     writing to the registered Holder at the address of such Holder appearing on
     the books of the Company); provided, however, within 3 Trading Days of the
     date said Notice of Exercise is delivered to the Company, the Holder shall
     have surrendered this Warrant to the Company and the Company shall have
     received payment of the aggregate Exercise Price of the shares thereby
     purchased by wire transfer or cashier's check drawn on a United States
     bank. Certificates for shares purchased hereunder shall be delivered to the
     Holder within 3 Trading Days from the delivery to the Company of the Notice
     of Exercise Form, surrender of this Warrant and payment of the aggregate
     Exercise Price as set forth above ("Warrant Share Delivery Date"). This
     Warrant shall be deemed to have been exercised on the later of the date the
     Notice of Exercise is delivered to the Company by facsimile copy and the
     date the Exercise Price is received by the Company. The Warrant Shares
     shall be deemed to have been issued, and Holder or any other person so
     designated to be named therein shall be deemed to have become a holder of
     record of such shares for all purposes, as of the date the Warrant has been
     exercised by payment to the Company of the Exercise Price and all taxes
     required to be paid by the Holder, if any, pursuant to Section 5 prior to
     the issuance of such shares, have been paid. If the Company fails to
     deliver to the Holder a certificate or certificates representing the
     Warrant Shares pursuant to this Section 3(a) by the Warrant Share Delivery
     Date, then the Holder will have the right to rescind such exercise. In
     addition to any other rights available to the Holder, if the Company fails
     to deliver to the Holder a certificate or certificates representing the
     Warrant Shares pursuant to an exercise by the Warrant Share Delivery Date,
     and if after such day the Holder is required by its broker to purchase (in
     an open market transaction or otherwise) shares of Common Stock to deliver
     in satisfaction of a sale by the Holder of the Warrant Shares which the
     Holder anticipated receiving upon such exercise (a "Buy-In"), then the
     Company shall (1) pay in cash to the

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     Holder the amount by which (x) the Holder's total purchase price (including
     brokerage commissions, if any) for the shares of Common Stock so purchased
     exceeds (y) the amount obtained by multiplying (A) the number of Warrant
     Shares that the Company was required to deliver to the Holder in connection
     with the exercise at issue times (B) the price at which the sell order
     giving rise to such purchase obligation was executed, and (2) at the option
     of the Holder, either reinstate the portion of the Warrant and equivalent
     number of Warrant Shares for which such exercise was not honored or deliver
     to the Holder the number of shares of Common Stock that would have been
     issued had the Company timely complied with its exercise and delivery
     obligations hereunder. For example, if the Holder purchases Common Stock
     having a total purchase price of $11,000 to cover a Buy-In with respect to
     an attempted exercise of shares of Common Stock with an aggregate sale
     price giving rise to such purchase obligation of $10,000, under clause (1)
     of the immediately preceding sentence the Company shall be required to pay
     the Holder $1,000. The Holder shall provide the Company written notice
     indicating the amounts payable to the Holder in respect of the Buy-In,
     together with applicable confirmations and other evidence reasonably
     requested by the Company. Nothing herein shall limit a Holder's right to
     pursue any other remedies available to it hereunder, at law or in equity
     including, without limitation, a decree of specific performance and/or
     injunctive relief with respect to the Company's failure to timely deliver
     certificates representing shares of Common Stock upon exercise of the
     Warrant as required pursuant to the terms hereof.

               (b)   If this Warrant shall have been exercised in part, the
     Company shall, at the time of delivery of the certificate or certificates
     representing Warrant Shares, deliver to Holder a new Warrant evidencing the
     rights of Holder to purchase the unpurchased Warrant Shares called for by
     this Warrant, which new Warrant shall in all other respects be identical
     with this Warrant.

               (c)   The Holder shall not have the right to exercise any portion
     of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that
     after giving effect to such issuance after exercise, the Holder (together
     with the Holder's affiliates), as set forth on the applicable Notice of
     Exercise, would beneficially own in excess of 4.99% of the number of shares
     of the Common Stock outstanding immediately after giving effect to such
     issuance. For purposes of the foregoing sentence, the number of shares of
     Common Stock beneficially owned by the Holder and its affiliates shall
     include the number of shares of Common Stock issuable upon exercise of this
     Warrant with respect to which the determination of such sentence is being
     made, but shall exclude the number of shares of Common Stock which would be
     issuable upon (A) exercise of the remaining, nonexercised portion of this
     Warrant beneficially owned by the Holder or any of its affiliates and (B)
     exercise or conversion of the unexercised or nonconverted portion of any
     other securities of the Company (including, without limitation, any other
     Warrants or the Preferred Stock) subject to a limitation on conversion or
     exercise analogous to the limitation contained herein beneficially owned by
     the Holder or any of its affiliates. Except as set forth in the preceding
     sentence, for purposes of this Section 3(c), beneficial ownership shall be
     calculated in accordance with Section 13(d) of the Exchange Act, it being
     acknowledge by Holder that the Company is not representing to Holder that
     such calculation is in compliance with Section 13(d) of the Exchange Act
     and Holder is solely

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<PAGE>

     responsible for any schedules required to be filed in accordance therewith.
     To the extent that the limitation contained in this Section 3(c) applies,
     the determination of whether this Warrant is exercisable (in relation to
     other securities owned by the Holder) and of which a portion of this
     Warrant is exercisable shall be in the sole discretion of such Holder, and
     the submission of a Notice of Exercise shall be deemed to be such Holder's
     determination of whether this Warrant is exercisable (in relation to other
     securities owned by such Holder) and of which portion of this Warrant is
     exercisable, in each case subject to such aggregate percentage limitation,
     and the Company shall have no obligation to verify or confirm the accuracy
     of such determination. For purposes of this Section 3(c), in determining
     the number of outstanding shares of Common Stock, the Holder may rely on
     the number of outstanding shares of Common Stock as reflected in (x) the
     Company's most recent Form 10-Q or Form 10-K, as the case may be, (y) a
     more recent public announcement by the Company or (z) any other notice by
     the Company or the Company's Transfer Agent setting forth the number of
     shares of Common Stock outstanding. Upon the written or oral request of the
     Holder, the Company shall within two Trading Days confirm orally and in
     writing to the Holder the number of shares of Common Stock then
     outstanding. In any case, the number of outstanding shares of Common Stock
     shall be determined after giving effect to the conversion or exercise of
     securities of the Company, including this Warrant, by the Holder or its
     affiliates since the date as of which such number of outstanding shares of
     Common Stock was reported.

               (d)   If at any time after one year from the date of issuance of
     this Warrant there is no effective Registration Statement registering the
     resale of the Warrant Shares by the Holder, during any such periods this
     Warrant may also be exercised at such time by means of a "cashless
     exercise" in which the Holder shall be entitled to receive a certificate
     for the number of Warrant Shares equal to the quotient obtained by dividing
     [(A-B) (X)] by (A), where:

          (A) = the VWAP on the Trading Day immediately preceding the date of
                such election;

          (B) = the Exercise Price of this Warrant, as adjusted; and

          (X) = the number of Warrant Shares issuable upon exercise of this
                Warrant in accordance with the terms of this Warrant by means of
                a cash exercise rather than a cashless exercise.

               (e)   If the Company has not obtained Shareholder Approval (as
     defined below) if required, then the Company may not issue upon exercise of
     this Warrant in the aggregate, in excess of 19.999% of the number of shares
     of Common Stock outstanding on the Trading Day immediately preceding the
     Closing Date, less any shares of Common Stock issued upon conversion of or
     upon prior exercise of this or any other Warrant issued pursuant to the
     Purchase Agreement (such number of shares, the "Issuable Maximum"). If on
     any attempted exercise of this Warrant, the issuance of Warrant Shares
     would exceed the Issuable Maximum and the Company shall not have previously
     obtained the vote of shareholders (the "Shareholder Approval"), if any, as
     may be required by the applicable rules and regulations of the Principal
     Market (or any successor

                                        4

<PAGE>

     entity) to approve the issuance of shares of Common Stock in excess of the
     Issuable Maximum pursuant to the terms hereof, then the Company shall issue
     to the Holder requesting a Warrant exercise such number of Warrant Shares
     as may be issued below the Issuable Maximum and, with respect to the
     remainder of the aggregate number of Warrant Shares, this Warrant shall not
     be exercisable until and unless Shareholder Approval has been obtained.

          4.   No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

          5.   Charges, Taxes and Expenses. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

          6.   Closing of Books. The Company will not close its stockholder
books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

          7.   Transfer, Division and Combination.

               (a)   Subject to compliance with any applicable securities laws
     and the conditions set forth in Sections 1 and 7(e) hereof and to the
     provisions of Section 4.1 of the Purchase Agreement, this Warrant and all
     rights hereunder are transferable, in whole or in part, upon surrender of
     this Warrant at the principal office of the Company, together with a
     written assignment of this Warrant substantially in the form attached
     hereto duly executed by the Holder or its agent or attorney and funds
     sufficient to pay any transfer taxes payable upon the making of such
     transfer. Upon such surrender and, if required, such payment, the Company
     shall execute and deliver a new Warrant or Warrants in the name of the
     assignee or assignees and in the denomination or denominations specified in
     such instrument of assignment, and shall issue to the assignor a new
     Warrant evidencing the portion of this Warrant not so assigned, and this
     Warrant shall promptly be cancelled. A Warrant, if properly assigned, may
     be exercised by a new holder for the purchase of Warrant Shares without
     having a new Warrant issued.

               (b)   This Warrant may be divided or combined with other Warrants
     upon presentation hereof at the aforesaid office of the Company, together
     with a written notice specifying the names and denominations in which new
     Warrants are to be issued, signed by the Holder or its agent or attorney.
     Subject to compliance with Section 7(a), as to any

                                        5

<PAGE>

     transfer which may be involved in such division or combination, the Company
     shall execute and deliver a new Warrant or Warrants in exchange for the
     Warrant or Warrants to be divided or combined in accordance with such
     notice.

               (c)   The Company shall prepare, issue and deliver at its own
     expense (other than transfer taxes) the new Warrant or Warrants under this
     Section 7.

               (d)   The Company agrees to maintain, at its aforesaid office,
     books for the registration and the registration of transfer of the
     Warrants.

               (e)   If, at the time of the surrender of this Warrant in
     connection with any transfer of this Warrant, the transfer of this Warrant
     shall not be registered pursuant to an effective registration statement
     under the Securities Act and under applicable state securities or blue sky
     laws, the Company may require, as a condition of allowing such transfer (i)
     that the Holder or transferee of this Warrant, as the case may be, furnish
     to the Company a written opinion of counsel (which opinion shall be in
     form, substance and scope customary for opinions of counsel in comparable
     transactions) to the effect that such transfer may be made without
     registration under the Securities Act and under applicable state securities
     or blue sky laws, (ii) that the holder or transferee execute and deliver to
     the Company an investment letter in form and substance acceptable to the
     Company and (iii) that the transferee be an "accredited investor" as
     defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated
     under the Securities Act or a qualified institutional buyer as defined in
     Rule 144A(a) under the Securities Act.

          8.   No Rights as Shareholder until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.

          9.   Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.

          10.  Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.

          11.  Adjustments of Exercise Price and Number of Warrant Shares.

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<PAGE>

          (a)  Stock Splits, etc. The number and kind of securities purchasable
     upon the exercise of this Warrant and the Exercise Price shall be subject
     to adjustment from time to time upon the happening of any of the following.
     In case the Company shall (i) pay a dividend in shares of Common Stock or
     make a distribution in shares of Common Stock to holders of its outstanding
     Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
     greater number of shares, (iii) combine its outstanding shares of Common
     Stock into a smaller number of shares of Common Stock, or (iv) issue any
     shares of its capital stock in a reclassification of the Common Stock, then
     the number of Warrant Shares purchasable upon exercise of this Warrant
     immediately prior thereto shall be adjusted so that the Holder shall be
     entitled to receive the kind and number of Warrant Shares or other
     securities of the Company which it would have owned or have been entitled
     to receive had such Warrant been exercised in advance thereof. Upon each
     such adjustment of the kind and number of Warrant Shares or other
     securities of the Company which are purchasable hereunder, the Holder shall
     thereafter be entitled to purchase the number of Warrant Shares or other
     securities resulting from such adjustment at an Exercise Price per Warrant
     Share or other security obtained by multiplying the Exercise Price in
     effect immediately prior to such adjustment by the number of Warrant Shares
     purchasable pursuant hereto immediately prior to such adjustment and
     dividing by the number of Warrant Shares or other securities of the Company
     that are purchasable pursuant hereto immediately after such adjustment. An
     adjustment made pursuant to this paragraph shall become effective
     immediately after the effective date of such event retroactive to the
     record date, if any, for such event.

          (b)  Anti-Dilution Provisions. During the Exercise Period, the
     Exercise Price shall be subject to adjustment from time to time as provided
     in this Section 11(b). In the event that any adjustment of the Exercise
     Price as required herein results in a fraction of a cent, such Exercise
     Price shall be rounded up or down to the nearest cent.

               (i)   Adjustment of Exercise Price. If and whenever the Company
          issues or sells, or in accordance with Section 11(b)(ii) hereof is
          deemed to have issued or sold, any shares of Common Stock for an
          effective consideration per share of less than the then Exercise Price
          or for no consideration (such lower price, the "Base Share Price" and
          such issuances collectively, a "Dilutive Issuance"), then, the
          Exercise Price shall be reduced to equal the Base Share Price. Such
          adjustment shall be made whenever shares of Common Stock or Common
          Stock Equivalents are issued.

               (ii)  Effect on Exercise Price of Certain Events. For purposes of
          determining the adjusted Exercise Price under Section 11(b) hereof,
          the following will be applicable:

                         (A) Issuance of Rights or Options. If the Company in
               any manner issues or grants any warrants, rights or options,
               whether or not immediately exercisable, to subscribe for or to
               purchase Common Stock or Common Stock Equivalents (such warrants,
               rights and options to purchase Common Stock or Common Stock
               Equivalents are hereinafter referred to as "Options") and the
               effective price per share for which Common Stock

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               is issuable upon the exercise of such Options is less than the
               Exercise Price ("Below Base Price Options"), then the maximum
               total number of shares of Common Stock issuable upon the exercise
               of all such Below Base Price Options (assuming full exercise,
               conversion or exchange of Common Stock Equivalents, if
               applicable) will, as of the date of the issuance or grant of such
               Below Base Price Options, be deemed to be outstanding and to have
               been issued and sold by the Company for such price per share and
               the maximum consideration payable to the Company upon such
               exercise (assuming full exercise, conversion or exchange of
               Common Stock Equivalents, if applicable) will be deemed to have
               been received by the Company. For purposes of the preceding
               sentence, the "effective price per share for which Common Stock
               is issuable upon the exercise of such Below Base Price Options"
               is determined by dividing (i) the total amount, if any, received
               or receivable by the Company as consideration for the issuance or
               granting of all such Below Base Price Options, plus the minimum
               aggregate amount of additional consideration, if any, payable to
               the Company upon the exercise of all such Below Base Price
               Options, plus, in the case of Common Stock Equivalents issuable
               upon the exercise of such Below Base Price Options, the minimum
               aggregate amount of additional consideration payable upon the
               exercise, conversion or exchange thereof at the time such Common
               Stock Equivalents first become exercisable, convertible or
               exchangeable, by (ii) the maximum total number of shares of
               Common Stock issuable upon the exercise of all such Below Base
               Price Options (assuming full conversion of Common Stock
               Equivalents, if applicable). No further adjustment to the
               Exercise Price will be made upon the actual issuance of such
               Common Stock upon the exercise of such Below Base Price Options
               or upon the exercise, conversion or exchange of Common Stock
               Equivalents issuable upon exercise of such Below Base Price
               Options.

                         (B) Issuance of Common Stock Equivalents. If the
               Company in any manner issues or sells any Common Stock
               Equivalents, whether or not immediately convertible (other than
               where the same are issuable upon the exercise of Options) and the
               effective price per share for which Common Stock is issuable upon
               such exercise, conversion or exchange is less than the Exercise
               Price, then the maximum total number of shares of Common Stock
               issuable upon the exercise, conversion or exchange of all such
               Common Stock Equivalents will, as of the date of the issuance of
               such Common Stock Equivalents, be deemed to be outstanding and to
               have been issued and sold by the Company for such price per share
               and the maximum consideration payable to the Company upon such
               exercise (assuming full exercise, conversion or exchange of
               Common Stock Equivalents, if applicable) will be deemed to have
               been received by the Company. For the purposes of the preceding
               sentence, the "effective price per share for which Common Stock
               is issuable upon such exercise, conversion or exchange" is
               determined by dividing (i) the total amount, if

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               any, received or receivable by the Company as consideration for
               the issuance or sale of all such Common Stock Equivalents, plus
               the minimum aggregate amount of additional consideration, if any,
               payable to the Company upon the exercise, conversion or exchange
               thereof at the time such Common Stock Equivalents first become
               exercisable, convertible or exchangeable, by (ii) the maximum
               total number of shares of Common Stock issuable upon the
               exercise, conversion or exchange of all such Common Stock
               Equivalents. No further adjustment to the Exercise Price will be
               made upon the actual issuance of such Common Stock upon exercise,
               conversion or exchange of such Common Stock Equivalents.

                         (C) Change in Option Price or Conversion Rate. If there
               is a change at any time in (i) the amount of additional
               consideration payable to the Company upon the exercise of any
               Options; (ii) the amount of additional consideration, if any,
               payable to the Company upon the exercise, conversion or exchange
               of any Common Stock Equivalents; or (iii) the rate at which any
               Common Stock Equivalents are convertible into or exchangeable for
               Common Stock (in each such case, other than under or by reason of
               provisions designed to protect against dilution), the Exercise
               Price in effect at the time of such change will be readjusted to
               the Exercise Price which would have been in effect at such time
               had such Options or Common Stock Equivalents still outstanding
               provided for such changed additional consideration or changed
               conversion rate, as the case may be, at the time initially
               granted, issued or sold.

                         (D) Calculation of Consideration Received. If any
               Common Stock, Options or Common Stock Equivalents are issued,
               granted or sold for cash, the consideration received therefor for
               purposes of this Warrant will be the amount received by the
               Company therefor, before deduction of reasonable commissions,
               underwriting discounts or allowances or other reasonable expenses
               paid or incurred by the Company in connection with such issuance,
               grant or sale. In case any Common Stock, Options or Common Stock
               Equivalents are issued or sold for a consideration part or all of
               which shall be other than cash, the amount of the consideration
               other than cash received by the Company will be the fair market
               value of such consideration, except where such consideration
               consists of securities, in which case the amount of consideration
               received by the Company will be the fair market value (closing
               bid price, if traded on any market) thereof as of the date of
               receipt. In case any Common Stock, Options or Common Stock
               Equivalents are issued in connection with any merger or
               consolidation in which the Company is the surviving corporation,
               the amount of consideration therefor will be deemed to be the
               fair market value of such portion of the net assets and business
               of the non-surviving corporation as is attributable to such
               Common Stock, Options or Common Stock Equivalents, as the case
               may be. The fair market value of any consideration other than
               cash or securities will be determined in good

                                        9

<PAGE>

               faith by an investment banker or other appropriate expert of
               national reputation selected by the Company and reasonably
               acceptable to the holder hereof, with the costs of such appraisal
               to be borne by the Company.

                         (E) Exceptions to Adjustment of Exercise Price.
               Notwithstanding the foregoing, no adjustment will be made under
               this Section 11(b) in respect of an Exempt Issuance.

               (iii) Minimum Adjustment of Exercise Price. No adjustment of the
          Exercise Price shall be made in an amount of less than 1% of the
          Exercise Price in effect at the time such adjustment is otherwise
          required to be made, but any such lesser adjustment shall be carried
          forward and shall be made at the time and together with the next
          subsequent adjustment which, together with any adjustments so carried
          forward, shall amount to not less than 1% of such Exercise Price.

          12.  Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, at the option of the
Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event or (b) cash equal to the value of
this Warrant as determined in accordance with the Black Scholes option pricing
formula. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which

                                       10

<PAGE>

are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.

          13.  Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

          14.  Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

          15.  Notice of Corporate Action. If at any time:

               (a) the Company shall take a record of the holders of its Common
     Stock for the purpose of entitling them to receive a dividend or other
     distribution, or any right to subscribe for or purchase any evidences of
     its indebtedness, any shares of stock of any class or any other securities
     or property, or to receive any other right, or

               (b) there shall be any capital reorganization of the Company, any
     reclassification or recapitalization of the capital stock of the Company or
     any consolidation or merger of the Company with, or any sale, transfer or
     other disposition of all or substantially all the property, assets or
     business of the Company to, another corporation or,

               (c) there shall be a voluntary or involuntary dissolution,
     liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their

                                       11

<PAGE>

Warrant Shares for securities or other property deliverable upon such
disposition, dissolution, liquidation or winding up. Each such written notice
shall be sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
17(d).

          16.  Authorized Shares. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.

          Except and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

          Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.

          17.  Miscellaneous.

               (a) Jurisdiction. All questions concerning the construction,
     validity, enforcement and interpretation of this Warrant shall be
     determined in accordance with the provisions of the Purchase Agreement.

               (b) Restrictions. The Holder acknowledges that the Warrant Shares
     acquired upon the exercise of this Warrant, if not registered, will have
     restrictions upon resale imposed by state and federal securities laws.

                                       12

<PAGE>

               (c) Nonwaiver and Expenses. No course of dealing or any delay or
     failure to exercise any right hereunder on the part of Holder shall operate
     as a waiver of such right or otherwise prejudice Holder's rights, powers or
     remedies, notwithstanding all rights hereunder terminate on the Termination
     Date. If the Company willfully and knowingly fails to comply with any
     provision of this Warrant, which results in any material damages to the
     Holder, the Company shall pay to Holder such amounts as shall be sufficient
     to cover any costs and expenses including, but not limited to, reasonable
     attorneys' fees, including those of appellate proceedings, incurred by
     Holder in collecting any amounts due pursuant hereto or in otherwise
     enforcing any of its rights, powers or remedies hereunder.

               (d) Notices. Any notice, request or other document required or
     permitted to be given or delivered to the Holder by the Company shall be
     delivered in accordance with the notice provisions of the Purchase
     Agreement.

               (e) Limitation of Liability. No provision hereof, in the absence
     of any affirmative action by Holder to exercise this Warrant or purchase
     Warrant Shares, and no enumeration herein of the rights or privileges of
     Holder, shall give rise to any liability of Holder for the purchase price
     of any Common Stock or as a stockholder of the Company, whether such
     liability is asserted by the Company or by creditors of the Company.

               (f) Remedies. Holder, in addition to being entitled to exercise
     all rights granted by law, including recovery of damages, will be entitled
     to specific performance of its rights under this Warrant. The Company
     agrees that monetary damages would not be adequate compensation for any
     loss incurred by reason of a breach by it of the provisions of this Warrant
     and hereby agrees to waive the defense in any action for specific
     performance that a remedy at law would be adequate.

               (g) Successors and Assigns. Subject to applicable securities
     laws, this Warrant and the rights and obligations evidenced hereby shall
     inure to the benefit of and be binding upon the successors of the Company
     and the successors and permitted assigns of Holder. The provisions of this
     Warrant are intended to be for the benefit of all Holders from time to time
     of this Warrant and shall be enforceable by any such Holder or holder of
     Warrant Shares.

               (h) Amendment. This Warrant may be modified or amended or the
     provisions hereof waived with the written consent of the Company and the
     Holder.

               (i) Severability. Wherever possible, each provision of this
     Warrant shall be interpreted in such manner as to be effective and valid
     under applicable law, but if any provision of this Warrant shall be
     prohibited by or invalid under applicable law, such provision shall be
     ineffective to the extent of such prohibition or invalidity, without
     invalidating the remainder of such provisions or the remaining provisions
     of this Warrant.

               (j) Headings. The headings used in this Warrant are for the
     convenience of reference only and shall not, for any purpose, be deemed a
     part of this Warrant.

                              ********************

                                       13

<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

Dated:  March ____, 2004

                                        INNOVATIVE COMPANIES, INC.

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

                                       14

<PAGE>

                               NOTICE OF EXERCISE

To: Innovative Companies, Inc.

          (1) The undersigned hereby elects to purchase ________ Warrant Shares
of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.

          (2) Payment shall take the form of (check applicable box):

               [ ] in lawful money of the United States; or

               [ ] the cancellation of such number of Warrant Shares as is
               necessary, in accordance with the formula set forth in subsection
               3(d), to exercise this Warrant with respect to the maximum number
               of Warrant Shares purchasable pursuant to the cashless exercise
               procedure set forth in subsection 3(d).

          (3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:

               -------------------------------------------

The Warrant Shares shall be delivered to the following:

               -------------------------------------------

               -------------------------------------------

               -------------------------------------------

          (4) Accredited Investor. The undersigned is an "accredited investor"
as defined in Regulation D under the Securities Act of 1933, as amended.

                                        [PURCHASER]

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

                                        Dated:
                                               ---------------------------------

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

          FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

                                         Dated: ______________, _______

               Holder's Signature:  _____________________________

               Holder's Address:    _____________________________

                                    _____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

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