Document:

EXHIBIT 10.17

THIS AGREEMENT IS ENTERED INTO AS OF THE 31st DAY OF AUGUST, 2004.

AMONG:            VITALSTATE CANADA LTD., a company duly incorporated according
                  to law, herein represented by Tom Torolcvei., (hereinafter
                  referred to as "VCanada")

AND:              VITALSTATE, INC., a company duly incorporated according to
                  law, herein represented by Tom Torolcvei, (hereinafter
                  referred to as "VUSA")

                  (VCanada and VUSA arc hereinafter collectively referred to as
                  "Vitalstate")

AND               LASAR MULTIMEDIA PRODUCTIONS INC., a company duly incorporated
                  according to law, herein represented by James Klein;

                  (hereinafter referred to as the "Consultant")

A.    WHEREAS the Consultant has valuable expertise and Vitalstate wishes to
      retain the services of the Consultant as described in Schedule 2 hereto;.

B.    WHEREAS the parties wish to define the terms of their relationship.

NOW THEREFORE, IN CONSIDERATION of the mutual premises and the following
covenants, conditions and agreements, the patties hereby agree as follows:

1.          TERM OF AGREEMENT

            The term of this Agreement (the "Term") shall commence on September
            1st, 2004 and terminate on, June 30th, 2005.

2.          SCOPE OF_SERVICES

            For the Term, Vitalstate hereby engages the Consultant, who hereby
            accepts, to provide the services described in Schedule l hereto (the
            "Services") in the manner referred to in Schedule 1 hereto.

3.          CONSIDERATION

3.1         In consideration of the performance of the Services by the
            Consultant, Vitalstate shall pay to the Consultant the aggregate
            amount of one hundred sixty-eight thousand seven hundred fifty
            Canadian dollars (CDN$168,750.00), payable by way of ten equal and
            consecutive monthly installments of sixteen thousand eight hundred
            seventy-five Canadian dollars (CDN$16,875.00), the first of which
            shall be payable to the Consultant on September 1st, 2004 and
            thereafter on, the first of each of the next following nine (9)
            calendar months. All of the foregoing amounts are exclusive of the
            applicable federal Goods and Services Taxes and provincial Sales
            Taxes.

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3.2         In addition to the foregoing, throughout the Term, the Consultant's
            representative, namely James Klein, shall have the right to
            participate in the health and dental plan of Vitalstate, without any
            cost. The said health and dental plan shall be consistent with the
            health and dental plan made available to James Klein during his
            employment with Vitalstate.

3.3         For the purposes of this Agreement, VCanada and VUSA are solidarily
            liable between them with respect to all of the obligations of
            Vitalstate .hereunder. Without limiting the generality of the
            foregoing, the obligations of Vitalstate hereunder shall apply to
            each of VCanada and VUSA, solidarily (jointly and severally),
            without the benefit of division, discussion and subrogation,
            including for greater certainty, the provisions o(pound) Article
            1531 of the Civil Code of Quebec or any similar legislation.

4.          INDEPENDENT CONTRACTOR

4.1         The Consultant is as an independent consultant and not an agent or
            employee of Vitalstate, and the Consultant shall make no
            representation as an agent or employee of Vitalstate. The Consultant
            shall have no authority to bind Vitalstate or incur other
            obligations on behalf of Vitalstate. The Consultant shall be
            responsible for all of the Consultant's taxes incurred in the
            capacity of independent consultant.

5.          GENERAL PROVISIONS

5.1         The preamble and the Schedules attached hereto form an integral part
            of the Agreement.

5.2         Nothing in this Agreement shall grant to any party the right to make
            commitments of any kind for or on behalf of any other party without
            the prior written consent of such other party.

5.3         This Agreement shall be binding upon. and inure to the benefit of
            the parties and their respective successors and permitted assigns
            and shall be read with all changes in number and gender as may be
            required by the context.

5.4         This Agreement shall not be assignable by either of the parties
            without the prior written. consent of the other party and any
            purported assignment not permitted under this Agreement shall be
            void.

5.5         All notices required or permitted to be given hereunder shall be in
            writing and shall be delivered either by personal delivery,
            registered ,mail or by telecopier or other similar form of
            communication and addressed as follows:

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            (a) In the case of the Consultant, to:

                LASAR MULTIMEDIA PRODUCTIONS INC.
                4929 Ponsard
                Montreal, Quebec H3W 2A6

            (b) In the ease of Vitalstate, to:

                VITALSTATE CANADA, LTD.
                2191 Hampton Avenue
                Montreal, Quebec H4A 2K5

                Attention: The President

            Any notice, consent or other communication given as aforesaid shall
            be deemed to have been effectively given and received when delivered
            or if sent by telecopy or similar telecommunications device, on the
            business day next following receipt of such transmission and
            following receipt by the sender of such telecopy or similar
            telecommunication of a report printout indicating successful
            transmission, or on the date of its delivery, if delivered by
            registered mail, messenger or courier, provided that if such
            delivery date is not a business day then it shall be deemed to have
            been given and received on the business day next following the date
            of such delivery. An address may be modified by written notice given
            as aforesaid. In the event of interruption, for any reason, of one
            or more of the forms of transmissions listed above, the parties
            shall use a form which is not so interrupted with the intent that
            the addressee receive timely notice of the communication.

5.6         Neither party will issue any press release or other public
            announcement relating to this Agreement or any activities related
            thereto without the prior written consent of the other party, except
            where such announcements are required by law or regulation, in which
            the event the parties will use all reasonable efforts to consult
            with each other and cooperate with respect to the wording of any
            such announcement.

5.7         This Agreement supersedes any and all agreements, either oral or
            written, between the parties hereto with respect to the Services and
            contains all of the covenants and agreements between the parties
            with respect to the rendering of the Services.

5.8         This Agreement shall be governed by and construed in accordance with
            the laws of the Province of Quebec and the laws of Canada applicable
            therein.

5.9         The parties shall keep the existence of this letter and the terms
            contained herein confidential and neither party nor any of its
            directors, officers, employees, agents or representatives, where
            applicable, shall disclose the existence of this letter or any of
            the terns contained herein without the express written consent of
            the other party.

5.10        This Agreement has been drafted in the English language at the
            express request of the parties. Cette convention a ete redigee en
            langue anglaise a la demande explicite des parties.

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IN WITNESS WHEREOF, Vitalstate and the Consultant have executed this Agreement,
by their duly authorized representatives, as of the day and year first above
written.

                                   VITALSTATE CANADA LTD.

                                   per:
-------------------------------    ---------------------------------------------
Witness                            Name:  Tom Torokvei

                                   VITALSTATE, INC.

-------------------------------    ---------------------------------------------
Witness                            Name:  Tom Torokvei

                                   LASAR MULTIMEDIA PRODUCTIONS INC.

-------------------------------    ---------------------------------------------
Witness                            Name:  James Klein
                                   Title: President

<PAGE>

                                   SCHEDULE 1

                           TO THE CONSULTANT AGREEMENT

                                      Among

                             VITALSTATE CANADA LTD.

                                       And

                                VITALSTATE, INC.

                                       And

                        LASAR MULTIMEDIA PRODUCTIONS INC.

                                     Dated:

                                August 31st, 2004

                                SCOPE OF SERVICES

The Consultant hereby agrees, during the Term, to provide the following services
(collectively the "Services) to Vitalstate.

            A. Functions. The Consultant shall be available to Vitalstate
periodically (but no more than 5 hours per week) for consultation by phone or by
telecopier regarding the general business operations of Vitalstate.

In providing the Services, the Consultant shall:

      a)    conduct all of his business in its own name, pay all expenses
            whatsoever related to the operation of its office and the carrying
            out of activities and be responsible for the acts and expenses of
            its employees, if any;

      b)    abide by the reasonable policies, procedures, rules, regulations,
            guidelines and instructions which are established or conveyed by
            Vitalstate, whether orally or in writing, to the Consultant, as the
            same may be amended from time to time, at the sole discretion of
            Vitalstate (the "Policies");

      c)    always act in a professional and courteous manner and in accordance
            with all applicable laws, regulations and other governmental
            requirements.Exhibit 4.1

                           RCG COMPANIES INCORPORATED

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

                         PURSUANT TO SECTION 151 OF THE
                        DELAWARE GENERAL CORPORATION LAW

         The undersigned,  Michael Pruitt,  Chief Executive Officer, and Melinda
Morris Zanoni, Secretary, do hereby certify that:

         A. They are the President and Secretary, respectively, of RCG Companies
Incorporated, a Delaware corporation (the "Company").

         B. The Certificate of Incorporation of the Company, as amended to date,
provides for a class of authorized stock known as preferred stock,  comprised of
10,000,000  shares,  $0.01 par value,  issuable from time to time in one or more
series.

         C. 6,000 shares of preferred  stock of the Company have been designated
as Series A 6% Convertible  Preferred  Stock,  and 3,000,000 shares of preferred
stock of the Company have been designated  Series B 6% Redeemable  Participating
Preferred Stock.

         D. The Board of  Directors  of the  Company  is  authorized  to fix the
rights,  preferences,  restrictions  and other  matters of any  wholly  unissued
series of preferred stock of the Company,  and the number of shares constituting
ay such series and the designation thereof.

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

         RESOLVED,  that the  undersigned  approve the  designation of up to 450
shares of preferred stock as Series C Preferred Stock,  with the preferences and
rights as follows:

                            TERMS OF PREFERRED STOCK

         1.  Designation,  Amount and Par Value.  The series of preferred  stock
shall be designated  the Series C Convertible  Preferred  Stock (the  "PREFERRED
STOCK")  and the  number of shares so  designated  shall be 450.  Each  share of
Preferred  Stock  shall  have a par value of $.001 per share and a stated  value
equal to the sum of $100,000 plus all  accumulated  and unpaid  dividends to the
date of determination (the "STATED VALUE").

         2.  Definitions.  As used  in  this  Certificate  of  Designation,  the
following terms shall have the meanings set forth in this Section 2:

               "ALTERNATE  CONSIDERATION"  shall have the  meaning  set forth in
Section 6(f)(iii).

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               "AUTOMATIC  CONVERSION  DATE" shall have the meaning set forth in
         Section 6(a).

               "AUTOMATIC  NOTICE"  shall have the  meaning set forth in Section
         6(a).

               "BANKRUPTCY  EVENT" means any of the  following  events:  (a) the
         Company or any Subsidiary  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  Company  or any  Subsidiary
         thereof;  (b) there is commenced  against the Company or any Subsidiary
         thereof any such case or  proceeding  that is not  dismissed  within 60
         days after  commencement;  (c) the Company or any 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 Company or
         any 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 Company or any Subsidiary
         thereof makes a general  assignment  for the benefit of creditors;  (f)
         the Company or any  Subsidiary  thereof fails to pay, or states that it
         is  unable to pay or is unable  to pay,  its  debts  generally  as they
         become due; (g) the Company or any  Subsidiary  thereof calls a meeting
         of its creditors with a view to arranging a composition,  adjustment or
         restructuring  of its  debts;  or (h)  the  Company  or any  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.

               "BLOOMBERG" means Bloomberg L.P. (or any successor  providing the
         service of reporting share prices).

               "BUY-IN" shall have the meaning set forth in Section 6(d).

               "CHANGE OF CONTROL  TRANSACTION"  means the  occurrence of any of
         the  following  in one or a  series  of  related  transactions:  (i) an
         acquisition  after the date hereof by an  individual or legal entity or
         "group" (as  described in Rule  13d-5(b)(1)  under the Exchange Act) of
         more than  one-half  of the voting  rights or equity  interests  in the
         Company; (ii) a replacement of more than one-half of the members of the
         Company's  board of directors in a single election of directors that is
         not  approved  by those  individuals  who are  members  of the board of
         directors on the date hereof (or other directors previously approved by
         such  individuals  or  such  directors  also  so  approved);   (iii)  a
         Fundamental  Transaction,  a merger or  consolidation of the Company or
         any  Subsidiary  or a sale of more than  one-half  of the assets of the
         Company in one or a series of related  transactions,  unless  following
         such  transaction  or  series  of  transactions,  the  holders  of  the
         Company's  securities prior to the first such  transaction  continue to
         hold at least one-half of the voting rights and equity interests in the
         surviving entity or acquirer of such assets;  (iv) a  recapitalization,
         reorganization  or  other  transaction  involving  the  Company  or any
         Subsidiary  that  constitutes  or results  in a  transfer  of more than
         one-half  of the  voting  rights or equity  interests  in the  Company,
         unless  following  such  transaction  or  series of  transactions,  the
         holders of the Company's securities prior to the first such transaction
         continue  to hold at least  one-half  of the  voting  rights and equity
         interests  in the  surviving  entity or  acquirer of such  assets;  (v)

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         consummation  of a "Rule  13e-3  transaction"  as defined in Rule 13e-3
         under  the  Exchange  Act  with  respect  to the  Company,  or (vi) the
         execution  by  the  Company  or  its  controlling  shareholders  of  an
         agreement  providing for or  reasonably  likely to result in any of the
         foregoing events.

               "CLOSING  DATE" shall have the meaning set forth in the  Purchase
         Agreement.

               "CLOSING PRICE" 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 Trading  Market (other than the OTC Bulletin
         Board),  the closing  sale price per share of the Common Stock for such
         date (or if the  Common  Stock did not  trade on such date the  nearest
         preceding date on which the Common Stock traded) on the primary Trading
         Market (other than the OTC Bulletin Board) on which the Common Stock is
         then  listed or quoted;  (b) if prices  for the  Common  Stock are then
         quoted on the OTC Bulletin  Board,  the closing sale price per share of
         the  Common  Stock for such  date (or the  nearest  preceding  date) so
         quoted;  (c) 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 sale 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 Holders  holding a majority of the shares of
         Preferred  Stock then  outstanding  and  reasonably  acceptable  to the
         Company.

               "COMMISSION" means the Securities and Exchange Commission.

               "COMMON STOCK" means the Company's  common stock,  par value $.04
         per share,  and stock of any other  class into which such shares may be
         reclassified or changed.

               "COMMON STOCK EQUIVALENTS" means any securities of the Company or
         any Subsidiary which entitle the holder thereof to acquire Common Stock
         at any time, including,  without limitation, any debt, preferred stock,
         rights,  options,  warrants  or  other  instrument  that is at any time
         convertible  into or  exchangeable  or  exercisable  for, or  otherwise
         entitles  the  holder  thereof  to  receive,   Common  Stock  or  other
         securities that entitle the holder to receive,  directly or indirectly,
         Common Stock.

               "CONVERSION   PRICE"  means  $0.55   (subject  to  adjustment  in
         accordance with Section 6(f)).

               "CONVERSION RATIO" means, at any time, a fraction,  the numerator
         of which is Stated Value subject to conversion  and the  denominator of
         which is the Conversion Price at such time.

               "DIVIDEND  PAYMENT  DATE"  shall  have the  meaning  set forth in
         Section 3.

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

               "EQUITY  CONDITIONS  ARE  SATISFIED"  means,  with  respect  to a
         specified  issuance  of  Common  Stock,  that  each  of  the  following
         conditions is satisfied:  (i) the number of authorized but unissued and
         otherwise  unreserved  shares of Common  Stock is  sufficient  for such

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         issuance;  (ii)(a) the  Company  shall have  complied  in all  material
         respects,  and  not  be in  default  with  its  obligations  under  the
         Transaction  Documents,  (b) the  Common  Stock  shall at all  times be
         listed or  quoted  (and is not  suspended  from  trading)  on a Trading
         Market,  and (b) if  required  under  the rules or  regulation  of such
         Trading Market, such shares of Common Stock are approved for listing on
         Trading Market upon issuance; (iii) such issuance would be permitted in
         full without  violating the rules or  regulations of the Trading Market
         on which such shares are listed or quoted; (iv) no Bankruptcy Event has
         occurred;  and (v) no  public  announcement  of a pending  or  proposed
         Change of Control Transaction has occurred that has not been abandoned,
         terminated or consummated.

               "FAREQUEST  NOTE"  means  that  certain   promissory  note  dated
         February  1,  2004,   which  the  Company   issued  to  the   Farequest
         stockholders  representative  in connection with that certain Agreement
         and Plan of Merger  dated  November  30, 2004 by and among the Company,
         WTI  Acquisition,  Inc.,  Farequest  and the  other  parties  set forth
         therein.

               "FAREQUEST  VOTING AGREEMENT" means that certain voting agreement
         and proxy, by and between the Investors' voting  representative and the
         Farequest stockholders' representative as holder of the Farequest Note,
         dated as of April 14, 2005.

               "FUNDAMENTAL  TRANSACTION" any (i) merger or consolidation of the
         Company  with  or  into  another  Person,  (ii)  any  sale  of  all  or
         substantially  all  of  its  assets  in  one  or a  series  or  related
         transactions  in one or a series  of  related  transactions,  (iii) any
         tender  offer or  exchange  offer  (whether  by the  Company or another
         Person)  pursuant to which  holders of Common  Stock are  permitted  to
         tender or exchange their shares for other securities, cash or property,
         or (iv) 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" means a holder of one or more shares of Preferred Stock.

               "JUNIOR  SECURITIES"  means the Common Stock and all other equity
         securities and Common Stock  Equivalents of the Company,  including any
         existing  or  hereinafter  created  class  of  preferred  stock  of the
         Company,  other than the Series A 6% Convertible Preferred Stock (which
         shall rank pari passu with the Preferred Stock).

               "LIQUIDATION" means for any Person, any liquidation,  dissolution
         or  winding-up of such Person,  whether  voluntary or  involuntary,  by
         operation or law or otherwise.

               "ORIGINAL ISSUE DATE" means 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 an individual or corporation,  partnership, trust,
         incorporated  or  unincorporated  association,  joint venture,  limited
         liability  company,  joint stock  company,  government (or an agency or
         subdivision thereof) or other entity of any kind.

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               "PURCHASE  AGREEMENT"  means the Securities  Purchase  Agreement,
         dated as of April 14,  2005,  to which  the  Company  and the  original
         Holders are parties, as amended,  modified or supplemented from time to
         time in accordance with its terms.

               "REDEMPTION DATE" shall have the meaning set forth in Section 7.

               "REDEMPTION PRICE" shall have the meaning set forth in Section 7.

               "REGISTRATION  RIGHTS  AGREEMENT" means the  Registration  Rights
         Agreement,  dated as of April 14,  2005,  to which the  Company and the
         original Holders are parties, as amended, modified or supplemented from
         time to time in accordance with its terms.

               "REGISTRATION  STATEMENT" means a registration  statement meeting
         the requirements of the Registration  Rights Agreement and covering the
         resale of all Underlying  Shares by the Holders,  who shall be named as
         "selling stockholders" thereunder.

               "RESET  AMOUNT"  shall  have the  meaning  set  forth in  Section
         6(f)(ii).

               "RESET  PERIOD"  shall  have the  meaning  set  forth in  Section
         6(f)(ii).

               "REVERSE  STOCK SPLIT"  means a 1-10  reverse  stock split of the
         Company's Common Stock.

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

               "SHORT SALES" include,  without limitation,  all "short sales" as
         defined in Rule 200 promulgated under Regulation SHO under the Exchange
         Act and all types of direct and indirect  stock  pledges,  forward sale
         contracts,   options,  puts,  calls,  swaps  and  similar  arrangements
         (including on a total return basis),  and sales and other  transactions
         through non-US broker dealers or foreign regulated brokers.

               "STOCKHOLDER  APPROVAL"  shall have the  meaning set forth in the
         Purchase Agreement.

               "SUBSIDIARY"  means any  "significant  subsidiary"  as defined in
         Rule 1-02(w) of the Regulation S-X promulgated by the Commission  under
         the Exchange Act.

               "TRADING DAY" means (i) a day on which the Common Stock is traded
         on a Trading Market (other than the OTC Bulletin Board), or (ii) if the
         Common  Stock is not  listed on a Trading  Market  (other  than the OTC
         Bulletin Board), a day on which the Common Stock is traded or quoted in
         the over-the-counter  market, as reported by the OTC Bulletin Board, or
         (iii) if the Common Stock is not quoted on a Trading  Market,  a day on
         which the  Common  Stock is quoted  in the  over-the-counter  market as
         reported by the National Quotation Bureau  Incorporated (or any similar
         organization  or  agency  succeeding  to  its  functions  of  reporting
         prices);  provided,  that in the  event  that the  Common  Stock is not
         listed  or quoted as set  forth in (i),  (ii) and  (iii)  hereof,  then
         Trading Day shall mean a Business Day.

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<PAGE>

               "TRADING  MARKET" means whichever of the New York Stock Exchange,
         the American Stock  Exchange,  the NASDAQ National  Market,  the NASDAQ
         SmallCap  Market or the OTC Bulletin Board on which the Common Stock is
         listed or quoted for trading on the date in question.

               "TRANSACTION  DOCUMENTS"  shall have the meaning set forth in the
         Purchase Agreement.

               "UNDERLYING  SHARES"  means,  collectively,  the shares of Common
         Stock issuable upon conversion of the Preferred Stock.

               "VOTING   AGREEMENT"  means  collectively  those  certain  voting
         agreements  and  proxies,   by  and  between  the   Investors'   voting
         representative  and the stockholders  identified  therein,  dated as of
         April 14, 2005.

               "VWAP"  means,  with  respect to any date of  determination,  the
         daily volume weighted average price (as reported by Bloomberg using the
         VAP function) of the Common Stock on such date of determination,  or if
         there is no such  price on such date of  determination,  then the daily
         volume weighted average price on the date nearest preceding such date.

               "WARRANTS"  shall  have the  meaning  set  forth in the  Purchase
         Agreement.

         3.  Dividends.  Each Holder shall be entitled to receive,  out of funds
legally available therefor,  and the Company shall pay, cumulative  dividends on
the Preferred  Stock on an as converted basis with the Common Stock when, and as
if,  declared by the Board of  Directors,  in arrears  within three days of each
March 31, June 30, September 30 and December 31, commencing June 30, 2005 except
if such date is not a Trading Day, in which case such dividend  shall be payable
on the next succeeding Trading Day (each, a "DIVIDEND PAYMENT DATE").  Dividends
on each share of Preferred  Stock shall be  calculated on the basis of a 360-day
year,  shall  accumulate daily commencing on the Original Issue Date (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
shares of Preferred Stock), 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 Company legally available for the payment of dividends. The Company
will pay dividends to each Holder in the same manner as such  dividends are paid
to the holders of Common Stock (i.e., if the Company paid cash to the holders of
Common Stock to satisfy a dividend  payment then the Company  shall be obligated
to pay cash to each Holder in  satisfaction  thereof).  Any dividends to be paid
hereunder  that are not paid by the date due to such Holders  shall  continue to
accumulate  and shall entail a late fee, which must be paid in cash, at the rate
of 10% per  annum or if such rate  would  violate  applicable  law,  the  lesser
maximum rate as permitted by applicable law (such fees to accrue daily, from the
date such dividend is due hereunder through and including the date of payment).

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         4. Certain Protective Rights.

                  For so  long  as any of the  shares  of  Preferred  Stock  are
outstanding,   neither  the  Company  nor  any  Subsidiary  shall,  without  the
affirmative  vote  of the  Holders  of at  least a  majority  of the  shares  of
Preferred Stock then outstanding:

                           (i) alter or change the powers, preferences or rights
given to the Preferred Stock or alter or amend this Certificate of Designation;

                           (ii)  authorize  or create  (by  reclassification  or
otherwise) any class of equity security or Common Stock Equivalent ranking as to
dividends or distribution  of assets upon a Liquidation  senior to the Preferred
Stock;

                           (iii)  directly  or  indirectly  pay or  declare  any
dividend  or make any  distribution  (other than  dividends  due and paid in the
ordinary course on preferred stock of the Company at such times when the Company
is in compliance with its payment  obligations to the Preferred Stock) upon, nor
shall any distribution be made in respect of, any Junior  Securities,  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 securities  pari passu
with the Preferred Stock;

                           (iv)  alter,  amend or  waive  any  provision  of the
Voting Agreement or the Farequest Voting Agreement;

                           (v) amend or waive any  provision in its  Certificate
of Incorporation in a manner adverse to the Preferred Stock; or

                           (vi) enter  into any  agreement  with  respect to the
foregoing clauses.

         5.Liquidation.  Upon any Liquidation,  the Holders shall be entitled to
receive  out of the assets of the  Company,  whether  such assets are capital or
surplus,  for each share of Preferred  Stock an amount equal to the Stated Value
per share before any distribution or payment shall be made to the holders of any
Junior Securities, and if the assets of the Company shall be insufficient to pay
in full such amounts to all Holders, then the entire assets to be distributed to
the Holders shall be distributed  among the Holders  ratably in accordance  with
the respective  Stated Values  represented  by the Preferred  Stock then held by
them.  The Company shall mail written notice of any such  Liquidation,  not less
than 45 days prior to the payment date stated therein,  to each record Holder. A
Change of Control Transaction shall not constitute a Liquidation.

         6. Conversion.

                  (a) Automatic Conversion. Within one (1) Trading Day following
the date on which the Company  obtains  the  Stockholder  Approval,  the Company
shall deliver to each Holder a notice ("AUTOMATIC NOTICE") as to all of the then
outstanding  Preferred  Stock,  notifying  the  Holders  that  all of  the  then
outstanding Preferred Stock shall be converted on the date which is the later of
(i) the 25th Trading Day following delivery of the Automatic Notice and (ii) the
21st Trading Day following the filing of a Current Report on Form 8-K disclosing

                                       7
<PAGE>

the  effectiveness  of the Reverse  Stock Split on the American  Stock  Exchange
(such later date, the "AUTOMATIC CONVERSION DATE").

                  (b) Mechanics of Conversion.  The number of Underlying  Shares
issuable upon any  conversion  hereunder  shall be determined by the  Conversion
Ratio.

                  (c)  On  the  Automatic  Conversion  Date  the  Company  shall
promptly  (but in no event later than three  Trading  Days after such  Automatic
Conversion Date),  issue and deliver to the applicable Holder, a certificate for
the  Underlying  Shares  issuable  in such  conversion  against  receipt  of the
certificate  representing such Holder's Preferred Stock (if the Company does not
receive such certificate  within three Trading Days of the Automatic  Conversion
Date,  it shall  send a notice  to such  Holder  stating  that they have not yet
received such Preferred  Stock  certificate and requesting the same) and convert
such Holder's Preferred Stock,  whereupon such Holder's Preferred Stock shall be
cancelled and no longer outstanding.

                  (d) If by the third Trading Day after the Automatic Conversion
Date the Company fails to deliver the required  number of  Underlying  Shares in
the manner  required  pursuant to Section 6(c),  and if after such third Trading
Day and prior to the receipt of such Underlying  Shares,  the applicable  Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Holder of the Underlying  Shares which
such Holder  anticipated  receiving upon such conversion (a "BUY-IN"),  then the
Company  shall  (1) pay in cash to such  Holder  the  amount  by which  (x) such
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 Underlying Shares that the Company was required to
deliver  to the Holder in  connection  with the  conversion  at issue by (B) the
Closing  Price on the Automatic  Conversion  Date and (2) deliver to such Holder
the number of shares of Common Stock that would have been issued had the Company
timely  complied with its conversion and delivery  obligations  hereunder.  Such
Holder shall provide the Company  written notice  indicating the amounts payable
to such Holder in respect of the Buy-In.

                  (e) The Company's  obligations to issue and deliver Underlying
Shares in  accordance  with the terms  hereof are  absolute  and  unconditional,
irrespective  of any action or  inaction  by a 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 such Holder or any other  Person of any  obligation  to the Company or
any  violation or alleged  violation of law by such Holder or any other  Person,
and  irrespective  of any other  circumstance  which might  otherwise limit such
obligation  of the Company to such  Holder in  connection  with the  issuance of
Underlying  Shares.  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 conversions of Preferred Stock as required  pursuant
to the terms hereof.

                  (f) Adjustments to Conversion  Price.  The Conversion Price in
effect on the  Automatic  Conversion  Date shall be subject  to  adjustments  in
accordance with this Section 6(f):

                                       8
<PAGE>

                           (i) Stock  Dividends and Splits.  If the Company,  at
any time  while  shares of  Preferred  Stock are  outstanding:  (1) pays a stock
dividend on its Common Stock or otherwise  makes a distribution  on any class of
capital  stock  that is  payable  in  shares  of Common  Stock,  (2)  subdivides
outstanding  shares of Common  Stock  into a larger  number  of  shares,  or (3)
combines  outstanding  shares of Common  Stock into a smaller  number of shares,
then in each such case the Conversion Price shall be multiplied by a fraction of
which the  numerator  shall be the number of shares of Common Stock  outstanding
immediately  before such event and of which the denominator  shall be the number
of shares  of  Common  Stock  outstanding  immediately  after  such  event.  Any
adjustment made pursuant to clause (1) of this paragraph shall become  effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution,  and any adjustment pursuant to clause
(2) or (3) of this  paragraph  shall  become  effective  immediately  after  the
effective date of such subdivision or combination.

                           (ii) Adjustment Upon Reverse Stock Split. Pursuant to
the Purchase  Agreement,  the Company has agreed to  effectuate a Reverse  Stock
Split. If the average of the VWAP for the 20 Trading Days immediately  following
the filing of a Current Report on Form 8-K disclosing the  effectiveness  of the
Reverse Stock Split on the American  Stock  Exchange  (such  average  VWAP,  the
"RESET AMOUNT" and such period,  the "RESET PERIOD") is less than the Conversion
Price then in effect,  the Conversion  Price shall  automatically  adjust to the
Reset  Amount.  The Company  shall notify the Holders in writing  within one (1)
Trading Day should such adjustment  occur. Each Holder covenants that neither it
nor any Person  acting on its behalf or  pursuant to any  understanding  with it
will engage in or close out any  transactions  in the  securities of the Company
(including Short Sales) prior to the Trading Day following the Reset Period.

                           (iii) Fundamental Transactions. If, at any time while
shares of Preferred  Stock are  outstanding the Company engages in a Fundamental
Transaction,  then each Holder shall have the right thereafter to receive,  upon
conversion of shares of such Holder's  Preferred Stock, the same amount and kind
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 the number of Underlying Shares
then issuable upon  conversion of all of such Holder's shares of Preferred Stock
(the  "ALTERNATE  CONSIDERATION").  For  purposes  of any such  conversion,  the
determination of the Conversion  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 Company  shall  apportion the  Conversion  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 each Holder shall be given the same choice as
to the Alternate  Consideration it receives upon any conversion of such Holder's
Preferred Stock following such Fundamental Transaction.  At each Holder's option
and  request,  any  successor  to  the  Company  or  surviving  entity  in  such
Fundamental  Transaction  shall,  either  (1)  issue to such  Holder  shares  of
preferred stock having rights,  privileges and preferences substantially similar
to the rights,  privileges and preferences of the Preferred Stock and consistent
with the foregoing  provisions and evidencing such Holder's right to receive the
Alternate Consideration for the Conversion Price upon conversion thereof, or (2)

                                       9
<PAGE>

purchase the Preferred Stock from such Holder for a purchase  price,  payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the sum of (1) the greater of (A)
the Stated Value of the  Preferred  Stock held by such Holder and (B) the Stated
Value of the Preferred Stock divided by the Conversion  Price on the Trading Day
immediately  preceding (x) the date of such  Fundamental  Transaction or (y) the
date the amount set forth in this  section is paid in full,  whichever  is less,
multiplied by the Closing Price on (x) the date of the  Fundamental  Transaction
or (y) the date the amount set forth in this section is paid in full,  whichever
is greater and (2) all then accrued and unpaid dividends, liquidated damages and
other  amounts  owing in  respect  of such  Preferred  Stock.  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 paragraph and insuring that the Preferred  Stock (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.

                           (iv)   Calculations.   All  calculations  under  this
Section 6 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
Company,  and the disposition of any such shares shall be considered an issue or
sale of Common Stock.

                           (v) Notice of  Adjustments.  Upon the  occurrence  of
each  adjustment  pursuant to the terms hereof,  the Company at its expense will
promptly compute such adjustment in accordance with the terms hereof and prepare
a  certificate  setting  forth such  adjustment,  including a  statement  of the
Conversion  Price  and  adjusted  number or type of  Underlying  Shares or other
securities   issuable  upon  conversion  of  a  share  of  Preferred  Stock  (as
applicable),  describing the  transactions  giving rise to such  adjustments and
showing in detail the facts upon which such  adjustment  is based.  Upon written
request,  the Company will promptly  deliver a copy of each such  certificate to
each Holder and to the Company's Transfer Agent.

                           (vi)  Reclassifications;  Share Exchanges. In case of
any  reclassification  of the Common Stock,  or any  compulsory  share  exchange
pursuant to which the Common Stock is converted into other  securities,  cash or
property (other than  compulsory  share  exchanges  which  constitute  Change of
Control Transactions), each Holder of the Preferred Stock then outstanding shall
have the right  thereafter  to convert such shares only into the shares of stock
and other securities,  cash and property receivable upon or deemed to be held by
holders of Common Stock following such  reclassification or share exchange,  and
such  Holders  shall be  entitled  upon such  event to  receive  such  amount of
securities, cash or property as a holder of the number of shares of Common Stock
of the  Company  into  which  such  shares of  Preferred  Stock  could have been
converted  immediately  prior to such  reclassification  or share exchange would
have  been  entitled.   This  provision  shall  similarly  apply  to  successive
reclassifications or share exchanges.

                  (g) The Company  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

                                       10
<PAGE>

outstanding  shares of Preferred Stock. The Company covenants that all shares of
Common Stock that shall be so issuable  shall,  upon issue,  be duly and validly
authorized and issued and be fully paid and nonassessable.

                  (h) Upon a  conversion  hereunder  the  Company  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 Closing Price on the Automatic Conversion
Date.

                  (i)  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 Company
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.

         7.Redemption. All shares of Preferred Stock which remain outstanding on
the date which is twelve  (12) months  from the  Closing  Date (the  "REDEMPTION
DATE")  shall be redeemed by the  Company  for a  redemption  price equal to the
Stated Value plus accrued but unpaid  dividends and any other amounts then owing
on the account thereof to the Holder (the  "REDEMPTION  PRICE").  The Redemption
Price will be paid in full on the Redemption Date in immediately available funds
to an account designated by the Holder for such purpose. If the Company does not
pay the Redemption Price in full on the Redemption Date, then in addition to any
other remedy the Holder may have under this  Certificate  of  Designation or the
Purchase Agreement,  the applicable Redemption Price payable to the Holder shall
bear interest at the rate of 1% per month  (prorated for partial months) or such
lesser maximum amount as then permitted by applicable law, until paid in full.

         8. Miscellaneous.

                  (a) Notice of Corporate  Events. If the Company (i) declares a
dividend or any other  distribution  of cash,  securities  or other  property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits  stockholder  approval for any Fundamental  Transaction or Change of
Control Transaction or (iii) authorizes the voluntary  dissolution,  liquidation
or winding up of the affairs of the Company,  then the Company  shall deliver to
the  Holders a notice  describing  the  material  terms and  conditions  of such
transaction,  at least  10  calendar  days  prior to the  applicable  record  or
effective  date on which a Person  would need to hold  Common  Stock in order to
participate  in or vote with respect to such  transaction,  and the Company will
take all steps reasonably  necessary in order to insure that the Holder is given
the practical  opportunity to convert its Preferred  Stock prior to such time so
as to  participate  in or  vote  with  respect  to such  transaction;  provided,
however, that the failure to deliver such notice or any defect therein shall not
affect the  validity of the  corporate  action  required to be described in such
notice.

                  (b) Cancellation of Preferred Stock. Shares of Preferred Stock
converted  into Common  Stock or redeemed in  accordance  with the terms  hereof
shall be canceled and may not be reissued.

                                       11
<PAGE>

                  (c) Notices.  Any and all notices or other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (a) the date of
transmission,  if such  notice  or  communication  is  delivered  via  facsimile
(provided the sender  receives a  machine-generated  confirmation  of successful
transmission)  at the facsimile  number  specified in this Section prior to 5:30
p.m.  (New York City time) on a Trading  Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section on a day that is not a Trading
Day or later than 5:30 p.m.  (New York City time) on any  Trading  Day,  (c) the
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service,  or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and  communications
shall be as follows:

         If to the Company:         RCG Companies Incorporated
                                    6836 Morrison Boulevard, Suite 200
                                    Charlotte, NC 28211
                                    Attn:  Chief Financial Officer
                                    Facsimile: (704) 366-5056

         With a copy to:            Katten Muchin Zavis Rosenman
                                    525 West Monroe Street
                                    Chicago, IL 60661
                                    Attn.:  Matthew S. Brown
                                    Facsimile:  (312) 577-8726

         If to a Holder:            To the address or facsimile telephone number
                                    of such Holder appearing on the books of the
                                    Company,  or if no such address or facsimile
                                    telephone  number appears,  at the principal
                                    place of business of the Holder;

                  (d) or such  other  address  as may be  designated  in writing
hereafter, in the same manner, by such Person.

                                      * * *

                                       12
<PAGE>

         RESOLVED, that the proper officers of the Company, and any other person
from  time to time  designated  by any such  officers,  are  hereby  authorized,
empowered  and directed to take all steps and do all acts and things,  including
the execution,  delivery and filing of documents,  agreements,  certificates  or
instruments,  as are or may  become  necessary  or  appropriate  to  effect  the
purposes and intents of the forgoing  recitals and  resolutions  and the actions
contemplated thereby.

         IN WITNESS WHEREOF, the undersigned have executed this Certificate this
13th day of April, 2005.

\s\ Michael D. Pruit                             \s\ Melinda Morris Zanoni
-------------------------------                  --------------------------
Name:  Michael D. Pruitt                         Name:  Melinda Morris Zanoni
Title: President                                 Title: Secretary

                                       13

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