Document:

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                                   CYNET, INC.

                     STATEMENT OF THE POWERS, DESIGNATIONS,
                          PREFERENCES AND RIGHTS OF THE
                  SERIES C REDEEMABLE CALLABLE PREFERRED STOCK,
                                  NO PAR VALUE

         Pursuant to Section 2.13 of the Texas Business Corporation Act

     The following resolution was duly adopted by the Board of Directors of
CyNet, Inc. (the "Corporation"), pursuant to the provisions of Section 2.13 of
the Texas Business Corporation Act (the "TBCA"), on January 31, 2000, by the
unanimous written consent of the Board of Directors:

     WHEREAS, the Board of Directors is authorized, within the limitations
and restrictions stated in the Articles of Incorporation of the Corporation, to
provide by resolution or resolutions for the issuance of shares of preferred
stock, no par value, of the Corporation, in one or more series with such voting
powers, full or limited, or without voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions as shall be stated and expressed in
the resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors, and as are not stated and expressed in the Articles of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets and
such other subjects or matters as may be fixed by resolution or resolutions of
the Board of Directors under the TBCA; and

     WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of preferred
stock and the number of shares consisting such series.

     NOW, THEREFORE, BE IT RESOLVED:

     1. DESIGNATION AND NUMBER OF SHARES. There shall be hereby created and
established a series of Preferred Stock designated as "Series C Redeemable
Callable Preferred Stock" (the "Series C Preferred Stock"). The authorized
number of shares of Series C Preferred Stock shall be one million six hundred
thousand (1,600,000) shares.

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     2. RANK. The Series C Preferred Stock shall with respect to
distributions of assets and rights upon the occurrence of a Liquidation rank (i)
senior to (A) all classes of common stock of the Corporation (including, without
limitation, the Class A Common Stock, no par value (the " Class A Common
Stock"), of the Corporation and the Class B Common Stock, no par value (the
"Class B Common Stock"), of the Corporation, (B) the Series D Redeemable
Convertible Preferred Stock, no par value, of the Corporation (the "Series D
Preferred Stock") and (C) each other class or series of Capital Stock of the
Corporation hereafter created which does not expressly rank PARI PASSU with or
senior to the Series C Preferred Stock (the "Junior Stock") and (ii) junior to
(A) all currently outstanding shares of Series A Convertible Non Voting
Preferred Stock, no par value, of the Corporation (the "Series A Preferred
Stock"), and (B) all currently outstanding shares of Series B Cumulative Non
Voting Preferred Stock, no par value, of the Corporation (the " Series B
Preferred Stock").

     3. DIVIDENDS. The shares of Series C Preferred Stock shall not be
entitled to any dividends except liquidating dividends as provided in Section 4
below. Except as provided for in Section 4 below, the Series C Preferred Stock
shall be entitled to no other dividends.

     4.   LIQUIDATION PREFERENCE.

          (a) In the event of a Liquidation, the holders of shares of
Series C Preferred Stock then outstanding shall be entitled to be paid for each
share of Series C Preferred Stock held thereby, out of the assets of the
Corporation available for distribution to its stockholders, before any payment
shall be made or any assets distributed to the holders of any shares of Junior
Stock, an amount (the "Liquidation Amount") in cash equal to the Call Redemption
Price per share (the "Liquidation Preference") (subject to adjustment under
conditions analogous to those provided in Section 7(d)). If the assets of the
Corporation are not sufficient to pay in full the foregoing Liquidation Amounts
to the holders of outstanding shares of the Series C Preferred Stock, then the
holders of all shares of Series C Preferred Stock shall share ratably in such
distribution of assets in accordance with the amount that would be payable on
such distribution if the amounts to which the holders of outstanding shares of
Series C Preferred Stock are entitled were paid in full.

          (b) Upon completion of the distribution required by subsection
(a) of this Section 4, the holders of shares of Series C Preferred Stock shall
not be entitled to any further participation in any distribution of assets by
the Corporation.

     5. REDEMPTION. (a) On or after the date of issuance of the Series C
Preferred Stock, unless a Notice of Redemption (defined herein in Section
5(c) below) has been given by the holders of the Series C Preferred Stock
pursuant to Section 5(b) below, the Corporation may redeem all or any portion
of the shares of Series C Preferred Stock then outstanding at the applicable
Call Redemption Price.

(b) On or after February 3, 2001, the holders of the Series C Preferred Stock
may put to the Corporation for mandatory redemption all or any portion of the
shares of Series C Preferred Stock then outstanding held by each such holder at
the applicable Redemption Price. If the funds of the

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Corporation legally available for redemption of shares of Series C Preferred
Stock are insufficient to redeem the total number of shares of Series C
Preferred Stock on a redemption date set pursuant to this Section 5(b), those
funds which are legally available will be used to redeem the maximum possible
number of whole shares ratably among the holders of such shares. The shares
of Series C Preferred Stock not redeemed shall remain outstanding and
entitled to all rights and preferences provided herein.

      (c) Notice of a redemption of shares of Series C Preferred
Stock pursuant to either subparagraph (a) or (b of this Section 5 shall be
delivered by the requesting party to the other party not less than ten (10) nor
more than thirty (30) days prior to the date proposed by the requesting party
for the redemption. Notices to be delivered to the holders of Series C Preferred
Stock shall be made to each such holder at its addresses as it appears on the
transfer books of the Corporation. Notices to be delivered to the Corporation
shall be sent to 12777 Jones Road, Suite 400, Houston, Texas 77070, attention
President. All notices placed in the mail shall be deemed delivered on the date
it is placed into the custody of any office of the United States Post Office,
properly addressed and stamped.

      (d) A notice of redemption shall include (i) the name of the
requesting party, (ii) the number of shares of Series C Preferred Stock to be
redeemed, (iii) the proposed date of redemption, (iv) the aggregate and per
share redemption prices and (iv) if the notice is for a redemption pursuant to
Section 5(b), the certificate(s) evidencing the shares of Series C Preferred
Stock to be redeemed.

      (e) The redemption date with respect to any shares of Series C
Preferred Stock shall be the day in which such redemption occurs.

   5A. MANDATORY AUTOMATIC REDEMPTION. After the date hereof, the Corporation
shall redeem shares of Series C Preferred Stock then outstanding at the
applicable Call Redemption Price upon each issuance of any equity or debt
security of the Corporation. The amount of shares of Series C Preferred Stock
to be redeemed pursuant to this Section 5A shall equal the aggregate dollar
amount of consideration received by the Corporation, other than for
outstanding stock options and warrants, from any such equity or debt issuance
divided by the applicable Call Redemption Price on the date of redemption.
Any redemption required by this Section 5A shall occur within five (5)
business days after each issuance of debt or equity by the Corporation. Each
issuance of debt or equity of the Corporation shall automatically, without
notice or confirmation, give rise to the obligation of the Corporation to
redeem shares of Series C Preferred Stock pursuant to this Section 5A.

   6. VOTING RIGHTS: ELECTION OF DIRECTOR. The holders of Series C
Preferred Stock shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the shareholders of the Corporation.

   7. CONVERSION. The Shares of Series C Preferred Stock shall not be
convertible, whether at the option of the holder therefore or the Corporation

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   8. PROTECTIVE PROVISIONS. So long as any shares of Series C Preferred
Stock remain outstanding, the Corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least sixty six and two thirds of the then outstanding shares of Series C
Preferred Stock:

      (a) sell, convey or otherwise dispose of all or substantially
all of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than (50%) of the
voting power of the Corporation is disposed of;

      (b) alter or change the rights, preferences or privileges of
the shares of Series C Preferred Stock so as to affect adversely the shares;

      (c) increase or decrease the total number of authorized shares
of Series C Preferred Stock (other than by redemption);

      (d) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security, except for any securities to be issued pursuant to (i)
that certain Subscription Agreement, dated July 22, 1998 and amended on January
3, 2000, by and between the Corporation and CyNet Holding, L.LC. or (ii) any
options, warrants or other commitments to issue equity securities of the
Corporation, in each such case, issued and outstanding as of January 31, 2000;

      (e) declare or pay dividends on its Class A Common Stock or
Class B Common Stock;

      (f) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Series A
Preferred Stock (except upon conversion thereof), Series B Preferred Stock
(except upon conversion thereof), Class A Common Stock or Class B Common Stock
(except upon the exchange thereof for shares of Class A Common Stock); PROVIDED,
HOWEVER, that this restriction shall not apply to the repurchase of shares of
Common Stock from employees, officers, directors, consultants or other persons
performing services for the Corporation or any subsidiary pursuant to agreements
under which the Corporation has the option to repurchase such shares at cost
upon the occurrence of certain events, such as the termination of employment;

      (g) increase the authorized number of directors of the
Corporation to a number greater than nine (9); or

      (h) incur any debt, obligation or other liabilities of the
Corporation, except ordinary trade payable and accrued operating expenses.

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     9. REACQUIRED SHARES. Any shares of Series C Preferred Stock redeemed,
converted, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
No such shares of Series C Preferred Stock shall upon their cancellation be
reissued or restored by the Corporation to the status of authorized but unissued
capital stock.

     10. CERTAIN REMEDIES. Any registered holder of Series C Preferred Stock
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Statement of Designations and to enforce specifically the
terms and provisions of this Statement of Designations in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which such holder may be entitled at law or in equity.

     11. BUSINESS DAY. If any payment shall be required by the terms hereof
to be made on a day that is not a Business Day, such payment shall be made on
the immediately succeeding Business Day.

     12. DEFINITIONS. As used in this Statement of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:

      "Articles of Incorporation" shall mean the Articles of Incorporation
of the Corporation as filed with the Secretary of State of the State of Texas.

     "Board of Directors" means the Board of Directors of the Corporation.

     "Business Day" means any day except a Saturday, a Sunday, or other day
on which commercial banks in the State of Texas are authorized or required by
law or executive order to close.

     "Call Redemption Price" means, with respect to a Call Redemption, (i)
from the date of issuance to July 31, 2000, $1.09, (ii) from August 1, 2000 to
January 31, 2001, $1.18, (iii) from February 1, 2001 to July 31, 2001, $1.31,
(iv) from August 1, 2001 to January 31, 2002, $1.45, (v) from February 1, 2002
to July 31, 2002, $1.64 and (vi) on and after August 1, 2002, $1.86.

     "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).

     "Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.

     "Corporation" shall have the meaning ascribed to it in the first
paragraph of this Resolution.

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      "Exchange Act" means the Securities Exchange Act of 1934, and the
rules and regulations of the Commission promulgated thereunder.

     "Junior Stock" shall have the meaning ascribed to it in Section 2 hereof.

     "Liquidation" shall mean the voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, dissolution or winding up
of the Corporation. For purposes of Section 4, "Liquidation" shall be deemed to
be occasioned by, or to include (unless the holders of at least a majority of
the them outstanding shares of Series C Preferred Stock shall determine
otherwise), (A) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the
Corporation; or (B) a sale of all or substantially all of the assets of the
Corporation.

     "Liquidation Amount" shall have the meaning ascribed to it in Section
4(a) hereof.

     "Liquidation Preference" shall have the meaning ascribed to it in
Section 4(a) hereof.

     "Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.

     "Redemption Price" means (i) from February 1, 2001 to July 31, 2001,
$1.31, (ii) from August 1, 2001 to January 31, 2002, $1.45, (iii) from February
1, 2002 to July 31, 2002, $1.64 and (iv) on and after August 1, 2002, $1.86.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

     "Series C Preferred Stock" shall have the meaning ascribed to it in
Section 1 hereof.

      "Statement of Designations" shall mean this statement of the Powers,
Designations, Preferences and Rights of the Series C Redeemable Callable
Preferred Stock, no par value, adopted by the Board of Directors and filed with
the Secretary of State of State of Texas.

     IN WITNESS WHEREOF, the undersigned authorized officer of the Company
has executed and subscribed this statement and does affirm the foregoing as true
this 3rd day of February, 2000.

                                       CYNET, INC.

                                       By: /s/ Bernard B. Beale
                                           -----------------------------------
                                       Bernard B. Beale, Vice President

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                                   CYNET, INC.

                     STATEMENT OF THE POWERS, DESIGNATIONS,
                          PREFERENCES AND RIGHTS OF THE
                SERIES D REDEEMABLE CONVERTIBLE PREFERRED STOCK,
                                  NO PAR VALUE

         Pursuant to Section 2.13 of the Texas Business Corporation Act

     The following resolution was duly adopted by the Board of Directors of
CyNet, Inc. (the "Corporation"), pursuant to the provisions of Section 2.13 of
the Texas Business Corporation Act (the "TBCA"), on January 31, 2000, by the
unanimous written consent of the Board of Directors:

     WHEREAS, the Board of Directors is authorized, within the limitations
and restrictions stated in the Articles of Incorporation of the Corporation, to
provide by resolution or resolutions for the issuance of shares of preferred
stock, no par value, of the Corporation, in one or more series with such voting
powers, full or limited, or without voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions as shall be stated and expressed in
the resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors, and as are not stated and expressed in the Articles of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets and
such other subjects or matters as may be fixed by resolution or resolutions of
the Board of Directors under the TBCA; and

     WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of preferred
stock and the number of shares consisting such series.

     NOW, THEREFORE, BE IT RESOLVED:

     1. DESIGNATION AND NUMBER OF SHARES. There shall be hereby created and
established a series of Preferred Stock designated as "Series D Redeemable
Convertible Preferred Stock" (the "Series D Preferred Stock"). The authorized
number of shares of Series D Preferred Stock shall be one million seven hundred
sixty six thousand four hundred twenty three (1,766,423) shares.

     2. RANK. The Series D Preferred Stock shall with respect to
distributions of assets and rights upon the occurrence of a Liquidation rank (i)
senior to (A) all classes of common stock of the Corporation (including, without
limitation, the Class A voting Common Stock, no par value (the "Class A Common
Stock"), of the Corporation and the Class B non voting Common Stock, no par
value (the "Class B Common Stock"), of the Corporation) and (B) each other class
or series of Capital Stock of the Corporation hereafter created which does not
expressly rank PARI PASSU with

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or senior to the Series D Preferred Stock (the "Junior Stock") and (ii)
junior to (A) all currently outstanding shares of Series A Convertible Non
Voting Preferred Stock, no par value, of the Corporation (Series A Preferred
Stock"), (B) all currently outstanding shares of Series B Cumulative Non
Voting Preferred Stock, no par value, of the Corporation (the " Series B
Preferred Stock") and (C) all shares of the Series C Redeemable Callable
Preferred Stock, no par value, of the Corporation (the "Series C Preferred
Stock").

     3. DIVIDENDS. Beginning on the date of issuance of the Series D
Preferred Stock, if the Board of Directors of the Corporation shall declare a
dividend or make any other distribution (including, without limitation, in cash
or other property or assets), to holders of shares of Class A Common Stock, then
the holders of each share of Series D Preferred Stock shall be entitled to
receive, out of funds legally available therefore, a dividend or distribution in
an amount equal to the amount of such dividend or distribution which such holder
would be entitled to receive if such holder were the holder of the number of
shares of Class A Common Stock for which such share of Series D Preferred Stock
is convertible on the record date for such dividend or distribution. Any such
amount shall be paid to the holders of shares of Series D Preferred Stock at the
same time such dividend or distribution is made to holders of Class A Common
Stock. Except as provided for above, the Series D Preferred Stock shall be
entitled to no other dividends.

     4.       LIQUIDATION PREFERENCE.

          In the event of a Liquidation, the holders of shares of Series
D Preferred Stock then outstanding shall be entitled to be paid for each share
of Series D Preferred Stock held thereby, out of the assets of the Corporation
available for distribution to its stockholders, before any payment shall be made
or any assets distributed to the holders of any shares of Junior Stock, an
amount (the "Liquidation Amount") in cash equal to (i) $1.51 per share (the
"Liquidation Preference") (subject to adjustment under conditions analogous to
those provided in Section 7(d)) plus (ii) all declared and unpaid dividends
thereon to the date fixed for the Liquidation. If the assets of the Corporation
are not sufficient to pay in full the foregoing Liquidation Amounts to the
holders of outstanding shares of the Series D Preferred Stock, then the holders
of all shares of Series D Preferred Stock shall share ratably in such
distribution of assets in accordance with the amount that would be payable on
such distribution if the amounts to which the holders of outstanding shares of
Series D Preferred Stock are entitled were paid in full.

     5. REDEMPTION. (a) From the date of issuance of the Series D Preferred
Stock until the day prior to the second annual anniversary after the date of
issuance of the Series D Preferred Stock, the holders of the Series D Preferred
Stock may put to the Corporation for mandatory redemption all or any portion of
the shares of Series D Preferred Stock then outstanding held by each such holder
at a redemption price of $1.51 per share (the "Redemption Price").

        (b) Notice of a redemption of shares of Series D Preferred
Stock pursuant to subparagraph (a) of this Section 5 shall be delivered by the
holder of the Series D Preferred Stock to the Corporation not less than ten (10)
nor more than thirty (30) days prior to the date proposed by such holder for the
redemption. Such notice shall be made to 12777 Jones Road, Suite 400,

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Houston, Texas 77070, attention President. All notices placed in the mail
shall be deemed delivered on the date it is placed into the custody of any
office of the United States Post Office, properly addressed and stamped.

        (c) A notice of redemption shall include (i) the name of the
holder, (ii) the number of shares of Series D Preferred Stock to be redeemed,
(iii) the proposed date of redemption, (iv) the aggregate and per share
redemption prices and (iv) the certificate(s) evidencing the shares of Series D
Preferred Stock to be redeemed.

        (d) The redemption date with respect to any shares of Series D
Preferred Stock shall be the day in which such redemption occurs.

     6. VOTING RIGHTS: ELECTION OF DIRECTOR.

        (a) The holders of Series D Preferred Stock, except as set
forth in subsection (b) below, shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by holders of the Class A Common
Stock of the Corporation.

        (b) Each outstanding share of Series D Preferred Stock shall
entitle the holder thereof to vote, in person or by proxy, at a special or
annual meeting of stockholders, on all matters entitled to be voted on by
holders of Class A Common Stock voting together as a single class with other
shares entitled to vote thereon. With respect to any such vote, each share of
Series D Preferred Stock shall entitle the holder thereof to cast that number of
votes per share as is equal to the number of votes that such holder would be
entitled to cast had such holder converted its shares of Series D Preferred
Stock into shares of Class A Common Stock on the record date for determining the
stockholders of the Corporation eligible to vote on any such matters. Except as
provided below, the Series D Preferred Stock shall not be entitled to vote as a
separate class.

        (c) For so long as any authorized shares of Series D Preferred
Stock remain outstanding, then the holders of the Series D Preferred Stock or
its representative shall be entitled to attend meetings of the Corporation's
Board of Directors as a non voting observer. The Corporation agrees to notify
such holder's designated representative of the time and place of any such
meetings in the same manner as Directors of the Corporation are notified and to
deliver to such holder's designated representative all materials that are made
available to Directors of the Corporation at the same time that such material is
made available to Directors.

     7. CONVERSION.

        (a) Each holder of the Series D Preferred Stock shall have the
right, at its option, at any time and from time to time after the issuance
hereof, to convert, subject to the terms and provisions of this Section 7, all
or any portion of such holder's shares of Series D Preferred Stock into such
number of fully paid and non-assessable shares of Class A Common Stock at the
rate of one (1) share of Class A Common Stock for each share of Series D
Preferred Stock surrendered for conversion, subject to adjustment as provided in
Section 7(d). Such conversion right shall be

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exercised by the surrender of the shares of Series D Preferred Stock to be
converted to the Corporation at any time during usual business hours at its
principal place of business to be maintained by it, accompanied by written
notice that the holder elects to convert such shares of Series D Preferred
Stock and specifying the name or names (with address) in which a certificate
or certificates for shares of Class A Common Stock are to be issued and (if
so required by the Corporation) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation duly executed by
the holder or its duly authorized legal representative and transfer tax
stamps or funds therefore, if required pursuant to Section 7(j). All shares
of Series D Preferred Stock surrendered for conversion shall be delivered to
the Corporation for cancellation and canceled by it and no shares of Series D
Preferred Stock shall be issued in lieu thereof.

        (b) As promptly as practicable after the surrender, as herein
provided, of any shares of Series D Preferred Stock for conversion pursuant to
Section 7(a), the Corporation shall deliver to or upon the written order of the
holder of such shares of Series D Preferred Stock so surrendered a certificate
or certificates representing the number of fully paid and non-assessable shares
of Class A Common Stock into which such shares of Series D Preferred Stock may
be or have been converted in accordance with the provisions of this Section 7.
Subject to the following provisions of this Section and of Section 7(d), such
conversion shall be deemed to have been made immediately prior to the close of
business on the date that such shares of Series D Preferred Stock shall have
been surrendered in satisfactory form for conversion, and the Person or Persons
entitled to receive the shares of Class A Common Stock deliverable upon
conversion of such shares of Series D Preferred Stock shall be treated for all
purposes as having become the record holder or holders of such shares of Class A
Common Stock at such appropriate time, and such conversion shall be at one to
one subject to all adjustments in effect at such time; PROVIDED, HOWEVER, that
no surrender shall be effective to constitute the Person or Persons entitled to
receive the shares of Class A Common Stock deliverable upon such conversion as
the record holder or holders of such shares of Class A Common Stock while the
share transfer books of the Corporation shall be closed (but not for any period
in excess of five days), but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of Class A Common Stock as the
record holder or holders thereof for all purposes immediately prior to the close
of business on the next succeeding day on which such share transfer books are
open, and such conversion shall be deemed to have been made at, and shall be
made at one to one subject to all adjustments in effect at, such time on such
next succeeding day.

        (c) To the extent permitted by law, when shares of Series D
Preferred Stock are converted, all dividends declared and unpaid on the shares
of Series D Preferred Stock so converted to the date of conversion shall be
immediately due and payable and must accompany the shares of Class A Common
Stock issued upon such conversion.

        (d) The conversion of the Series D Preferred Stock shall be
subject to adjustment as follows:

             (i) In the event that the Corporation shall at any
time or from time to time (w) pay a dividend or make a distribution (other than
a dividend or distribution paid or made to

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holders of shares of Series D Preferred Stock in the manner provided in
Section 3) on the outstanding shares of Class A Common Stock in Capital
Stock, (x) subdivide the outstanding shares of Class A Common Stock into a
larger number of shares, (y) combine the outstanding shares of Class A Common
Stock into a smaller number of shares or (z) issue any shares of its Capital
Stock in a reclassification of the Class A Common Stock, then, and in each
such case, the number of shares of Class A Common Stock to be received by the
holder of any share of Series D Preferred Stock immediately prior to such
event shall be adjusted (and any other appropriate actions shall be taken by
the Corporation) so that the holder of any share of Series D Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Class A Common Stock or other securities of the Corporation that
such holder would have owned or would have been entitled to receive upon or
by reason of any of the events described above, had such share of Series D
Preferred Stock been converted immediately prior to the occurrence of such
event. An adjustment made pursuant to this Section 7(d)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution,
to a date immediately following the close of business on the record date for
the determination of holders of Class A Common Stock entitled to receive such
dividend or distribution or (y) in the case of any such subdivision,
combination or reclassification, to the close of business on the day upon
which such corporate action becomes effective.

             (ii) In case the Corporation shall at any time or
from time to time distribute to all holders of shares of its Class A Common
Stock (including any such distribution made in connection with a merger or
consolidation in which the Corporation is the resulting or surviving Person and
the Class A Common Stock is not changed or exchanged) cash, evidences of
indebtedness of the Corporation or another issuer, securities of the Corporation
or another issuer or other assets (excluding dividends or distributions paid or
made to holders of shares of Series D Preferred Stock in the manner provided in
Section 3, and dividends payable in shares of Class A Common Stock for which
adjustment is made under Section 7(d)(i)) or rights or warrants to subscribe for
or purchase securities of the Corporation (excluding those distributions in
respect of which an adjustment is made pursuant to Section 7(d)(i)), then, the
holders of Series D Preferred shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Class A Common Stock of the Corporation into which their shares of Series D
Preferred Stock are convertible as of the record date fixed for the
determination of Class A Common Stock of the Corporation entitled to receive
such distribution.

             (iii) In the case the Corporation, at any time or
from time to time, shall take any action affecting its Class A Common Stock
similar to or having an effect similar to any of the actions described in any of
Section 7(d)(i) or Section 7(d)(ii), inclusive, or Section 7(g) (but not
including any action described in any such Section) and the Board of Directors
in good faith determines that it would be equitable in the circumstances to
adjust the one to one conversion rate as a result of such action, then, and in
each such case, such conversion rate shall be adjusted in such manner and at
such time as the Board of Directors of the Corporation in good faith determines
would be equitable in the circumstances (such determination to be evidenced in a
resolution, a certified copy of which shall be mailed to the holders of the
shares of Series D Preferred Stock).

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<PAGE>

             (iv) Notwithstanding anything herein to the contrary,
no adjustment under this Section 7(d) shall be made upon the grant of options to
employees, consultants or directors of the Corporation pursuant to benefit plans
approved by the Board of Directors.

             (v) (A) If the Corporation shall issue, after the
date upon which any shares of Series D Preferred Stock were first issued (the
"Purchase Date"), any Additional Stock (as defined below) without consideration,
the number of shares of Class A Common Stock to be received by the holder of
each share of Series D Preferred Stock shall forthwith be adjusted by
multiplying such number of shares of Class A Common Stock by a fraction, the
numerator of which shall be the number of shares of Class A Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock; and the denominator of which shall be the number of shares of
Class A Common Stock outstanding immediately prior to such issuance.

                 (B) In the case of the issuance of Class A
Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefore before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by this corporation for any
underwriting or otherwise in connection with the issuance and sale thereof.

                 () In the case of the issuance of the Class A Common Stock
for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.

                 () In the case of the issuance (whether on or after the
applicable Purchase Date) of options to purchase or rights to subscribe for
Class A Common Stock, securities by their terms convertible into or
exchangeable for Class A Common Stock or options to purchase or rights to
subscribe for such convertible or exchangeable securities, the following
provisions shall apply for all purposes of this Section 7(d)(v) and Section
7(d)(vi):

                     (1) The aggregate maximum number of shares of Class A
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of
time, but without taking into account potential antidilution adjustments) of
such options to purchase or rights to subscribe for Class A Common Stock
shall be deemed to have been issued at the time such options or rights were
issued and for a consideration equal to the consideration (determined in the
manner provided in Sections 7(d)(v)(B) and (d)(v)(C)), if any, received by
the Corporation upon the issuance of such options or rights plus the minimum
exercise price provided in such options or rights (without taking into
account potential antidilution adjustments) for the Class A Common Stock
covered thereby.

                     (2) The aggregate maximum number of shares of Class A
Common Stock deliverable upon conversion of, or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking into
account potential antidilution adjustments) for, any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights
to subscribe for such

                                      -6-

<PAGE>

convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
the consideration, if any, received by the Corporation for any such
securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the minimum
additional consideration, if any, to be received by the Corporation (without
taking into account potential antidilution adjustments) upon the conversion
or exchange of such securities or the exercise of any related options or
rights (the consideration in each case to be determined in the manner
provided in Sections 7(d)(v)(B) and (d)(v)(C)).

                     (3) In the event of any change in the number of shares
of Class A Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options or rights or upon conversion of or
in exchange for such convertible or exchangeable securities, including, but
not limited to, a change resulting from the antidilution provisions thereof
(unless such options or rights or convertible or exchangeable securities were
merely deemed to be included in the numerator and denominator for purposes of
determining the number of shares of Class A Common Stock outstanding for
purposes of Section 7(d)(v)(A)), the number of shares of Class A Common Stock
to be received by a holder of one share of Series D Preferred Stock, to the
extent in any way affected by or computed using such options, rights or
securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Class A Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.

                     (4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the number of shares of Class A Common Stock to be received by a
holder of one share of the Series D Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities or options
or rights related to such securities (unless such options or rights were
merely deemed to be included in the numerator and denominator for purposes of
determining the number of shares of Class A Common Stock outstanding for
purposes of Section 7(d)(v)(A)), shall be recomputed to reflect the issuance
of only the number of shares of Class A Common Stock (and convertible or
exchangeable securities that remain in effect) actually issued upon the
exercise of such options or rights, upon the conversion or exchange of such
securities or upon the exercise of the options or rights related to such
securities.

                     (5) The number of shares of Class A Common Stock deemed
issued and the consideration deemed paid therefor pursuant to Sections
7(d)(v)(D)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either Section
7(d)(v)(D)(3) or (4).

             (vii) "Additional Stock" shall mean any shares of Class A Common
Stock issued (or deemed to have been issued pursuant to Section 7(d)(v)(D))
by the Corporation after the Purchase Date other than:

                                      -7-
<PAGE>

                    (A) Class A Common Stock issued pursuant to
a transaction described in Section 7(d)(i) hereof;

                    (B) shares of Class A Common Stock issuable
or issued to (i) employees, consultants, directors or vendors (if in
transactions with primarily non-financing purposes) of the Corporation directly
or pursuant to a stock option plan or restricted stock plan approved by the
Board of Directors of the Corporation or (ii) CyNet Holdings, LLC pursuant to
the Subscription Agreement, dated July 22, 1998, as amended on January 3, 2000,
between the Corporation and CyNet Holdings, LLC (the "Subscription Agreement");

                    (C) shares of Class A Common Stock issuable
or issued in a firm commitment underwritten public offering;

                    (D) shares of Class A Common Stock issuable
or issued upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, or Series D Preferred Stock or as dividends or distributions on the
Series D Preferred Stock;

                    (E) the issuance of securities in connection
with a bona fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise;

                    (F) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Corporation has
business relationships, provided such issuances are for other than primarily
equity financing purposes and are approved by the Board of Directors;

                    (G) the issuance of shares of Class A Common
Stock solely in exchange for an equal number of shares of outstanding Class B
Common Stock; or

                    (H) the issuance of shares of Class A Common
Stock upon conversion of the Corporation's Series A Eight Percent (8%)
Convertible Notes Due January 31, 2002.

     (e) If the Corporation shall take a record of the holders of its Class
A Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the conversion rate then in
effect shall be required by reason of the taking of such record.

     (f) Upon any change in the conversion rate, then, and in each such
case, the Corporation shall within a reasonable period (not to exceed 45 days)
following any of the foregoing transactions deliver to each registered holder of
Series D Preferred Stock a certificate, signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the change in the number of

                                      -8-

<PAGE>

shares of Class A Common Stock to be received by a holder of one share of
Series D Preferred Stock then in effect following such adjustment.

     (g) In case of (x) any capital reorganization or reclassification or
other change of outstanding shares of Class A Common Stock (other than a change
in par value, or from par value to no par value, or from no par value to par
value), (y) any merger or consolidation of the Corporation with or into another
Person (other than a merger or consolidation in which the Corporation is the
resulting or surviving Person and which does not result in any reclassification
or change of outstanding Class A Common Stock) or (z) any sale or other
disposition to another Person of all or substantially all of the assets of the
Corporation (any of the foregoing, a "Transaction"), the Corporation, or such
successor or purchasing Person, as the case may be, shall execute and deliver to
each holder of Series D Preferred Stock at least fifteen (15) Business Days
prior to effecting any of the foregoing Transactions a certificate that the
holder of each share of Series D Preferred Stock then outstanding shall have the
right thereafter to convert such share of Series D Preferred Stock into the kind
and amount of shares of stock or other securities (of the Corporation or another
issuer) or property or cash receivable upon such Transaction by a holder of the
number of shares of Class A Common Stock into which such share of Series D
Preferred Stock could have been converted immediately prior to such Transaction.
Such certificate shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
7. If, in the case of any such Transaction, the stock, other securities, cash or
property receivable thereupon by a holder of Class A Common Stock includes
shares of stock or other securities of a Person other than the successor or
purchasing Person and other than the Corporation, which controls or is
controlled by the successor or purchasing Person or which, in connection with
such Transaction, issues stock, securities, other property or cash to holders of
Class A Common Stock, then such certificate also shall be executed by such
Person, and such Person shall, in such certificate, specifically acknowledge the
obligations of such successor or purchasing Person and acknowledge its
obligations to issue such stock, securities, other property or cash to the
holders of Series D Preferred Stock upon conversion of the shares of Series D
Preferred Stock as provided above. The provisions of this Section 7(g) and any
equivalent thereof in any such certificate similarly shall apply to successive
Transactions.

     (h) In case at any time or from time to time:

          (w) the Corporation shall declare a dividend (or any other
distribution) on its shares of Class A Common Stock;

          (x) the Corporation shall authorize the granting to the
holders of its Class A Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or warrants
other than as issued to the holder of the Series D Preferred Stock;

          (y) there shall be any reorganization or reclassification of
the Class A Common Stock; or

          (z) there shall occur a Liquidation, merger or sale of assets
of the Corporation;

                                      -9-

<PAGE>

then the Corporation shall mail to each holder of shares of Series D Preferred
Stock at such holder's address as it appears on the transfer books of the
Corporation, as promptly as possible but in any event at least ten (10) days
prior to the applicable date hereinafter specified, a notice stating (A) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants or, if a record is not to be taken, the date
as of which the holders of Class A Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (B) the date on which
such reclassification or Liquidation, merger or sale of assets is expected to
become effective; provided that in the case of any event to which Section 7(g)
applies, the Corporation shall give at least ten (10) Business Days' prior
written notice as aforesaid. Such notice also shall specify the date as of which
it is expected that holders of Class A Common Stock of record shall be entitled
to exchange their Class A Common Stock for shares of stock or other securities
or property or cash deliverable upon such reclassification or Liquidation, sale
of assets or merger.

                                      -10-

<PAGE>

     (i) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series D Preferred Stock, such number of its
authorized but unissued shares of Class A Common Stock as will from time to time
be sufficient to permit the conversion of all outstanding shares of Series D
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Class A Common Stock if at any time there shall be
insufficient authorized but unissued shares of Class A Common Stock to permit
such reservation or to permit the conversion of all outstanding shares of Series
D Preferred Stock.

     (j) The issuance or delivery of certificates for Class A Common Stock
upon the conversion of shares of Series D Preferred Stock shall be made without
charge to the converting holder of shares of Series D Preferred Stock for such
certificates or for any tax in respect of the issuance or delivery of such
certificates or the securities represented thereby, and such certificates shall
be issued or delivered in the respective names of, or (subject to compliance
with the applicable provisions of federal and state securities laws) in such
names as may be directed by, the holders of the shares of Series D Preferred
Stock converted; PROVIDED, HOWEVER, that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
holder of the shares of Series D Preferred Stock converted, and the Corporation
shall not be required to issue or deliver such certificate unless or until the
Person or Persons requesting the issuance or delivery thereof shall have paid to
the Corporation the amount of such tax or shall have established to the
reasonable satisfaction of the Corporation that such tax has been paid.

     8. CERTAIN REMEDIES. Any registered holder of Series D Preferred Stock
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Statement of Designations and to enforce specifically the
terms and provisions of this Statement of Designations in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which such holder may be entitled at law or in equity.

     9. BUSINESS DAY. If any payment shall be required by the terms hereof
to be made on a day that is not a Business Day, such payment shall be made on
the immediately succeeding Business Day.

     10. DEFINITIONS. As used in this Statement of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:

     "Affiliate" shall mean, with respect to any Person, any other Person
who is an "affiliate" as defined in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.

     "Articles of Incorporation" shall mean the Articles of Incorporation of
the Corporation as filed with the Secretary of State of the State of Texas.

     "Board of Directors" means the Board of Directors of the Corporation.

                                      -11-

<PAGE>

     "Business Day" means any day except a Saturday, a Sunday, or other day
on which commercial banks in the State of Texas are authorized or required by
law or executive order to close.

     "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).

     "Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.

     "Class A Common Stock" shall have the meaning ascribed to it in Section
2 hereof.

     "Corporation" shall have the meaning ascribed to it in the first
paragraph of this Resolution.

     "Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission promulgated thereunder.

     "Junior Stock" shall have the meaning ascribed to it in Section 2 hereof.

     "Liquidation" shall mean the voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, dissolution or winding up
of the Corporation. For purposes of Section 4, "Liquidation" shall be deemed to
be occasioned by, or to include (unless the holders of at least a majority of
the them outstanding shares of Series D Preferred Stock shall determine
otherwise), (A) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the
Corporation; or (B) a sale of all or substantially all of the assets of the
Corporation.

     "Liquidation Amount" shall have the meaning ascribed to it in Section
4(a) hereof.

     "Liquidation Preference" shall have the meaning ascribed to it in
Section 4(a) hereof.

      "Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

     "Series D Preferred Stock" shall have the meaning ascribed to it in
Section 1 hereof.

                                      -12-

<PAGE>

     "Statement of Designations" shall mean this statement of the Powers,
Designations, Preferences and Rights of the Series D Redeemable Convertible
Preferred Stock, no par value, adopted by the Board of Directors and filed with
the Secretary of State of State of Texas.

     "Transaction" shall have the meaning ascribed to it in Section 7(g) hereof.

     IN WITNESS WHEREOF, the undersigned authorized officer of the Company
has executed and subscribed this statement and does affirm the foregoing as true
this 3rd day of February, 2000.

                                       CYNET, INC.

                                       By: /s/ Bernard B. Beale
                                           ------------------------------------
                                             Bernard B. Beale, Vice President

                                      -13-

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